Century Communities, Inc. (NYSE:CCS), Greenwood Village, Col., yesterday announced net income for the fourth quarter ended Dec. 31, 2016 was $15.1 million, or $0.71 per share, compared to $13.2 million, or $0.62 per share, for the prior year quarter.
Home sales revenues for the fourth quarter 2016 increased 43% to $292.4 million, compared to $204.5 million for the prior year quarter. The growth in home sales revenues was primarily due to an increase of 26% in homes delivered to 812, compared to 645 in the prior year quarter, and a higher average selling price of homes delivered, increasing to $360,100, compared to $317,100 in the prior year quarter.
Net new home contracts in the third quarter 2016 increased to 569 homes, an increase of 25.1%, compared to 455 homes in the prior year quarter, largely attributable to stronger demand trends in most divisions, driving an overall increase in absorption rates, led by Nevada, Colorado and Central Texas. At the end of the fourth quarter 2016, the Company had 749 homes in backlog, representing $302.8 million of backlog dollar value, compared to 714 homes, representing $271.1 million of backlog dollar value in the prior year quarter.
Home building gross margin percentage in the fourth quarter 2016 was 19.2%, as compared to 20.4% in the prior year quarter. Adjusted home building gross margin percentage, excluding interest and purchase price accounting, was 21.4%, compared to 22.0% in the prior year quarter, largely due to product and geographical mix, along with higher costs across U.S. home building markets. SG&A as a percent of home sales revenues was 11.9% compared to 10.7% in the prior year quarter, mainly as a result of numerous investment initiatives to support growth objectives in 2017.
Net income for the full year 2016 was $49.5 million, or $2.33 per share, compared to $39.9 million, or $1.88 per share for the prior year. Home sales revenues for 2016 increased 34.9% to $978.7 million, compared to $725.4 million for 2015. The increase in home sales revenues was primarily due to home deliveries increasing 17.7% to 2,825 homes and the average selling price of homes delivered increasing to $346,500 compared to $302,100 in the prior year helped by a shift in regional and product mix.
“Record full year earnings of $2.33 per share represents an exciting milestone for our rapidly growing company,” stated Dale Francescon, Co-CEO of the company. “Our healthy pace of activity continued through the fourth quarter with an increase of 25% in net new home contracts. This progress included a 43% increase in home sales revenue on the strength of deliveries up 26% and ASP rising 13% as a direct result of our diversified product offerings throughout our carefully selected markets. Our period over period growth has all been realized organically from our existing or start-up operations. We are pleased to enter full year 2017 with record backlog value, up 12% from the prior year and confident in our ability to deliver another year of record earnings.”
Rob Francescon, Co-Chief Executive Officer of the Company, stated, “Buyer demand remained firm into the fourth quarter with our absorption pace improving by 24% while increasing ASP in backlog. We are pleased with this progress and the exciting addition of home building operations and adjacent opportunities which are poised to generate attractive returns. Not only are our Salt Lake City operations steadily ramping up, but in December, we entered the rapidly growing Charlotte, North Carolina market where we expect to begin opening communities in the second half of 2017. Our recent 50% joint venture in the Southeast is operating smoothly and optimally situated to capture incremental first time buyers. Our recently started financing division is also on track to start contributing earnings in the second half of 2017. Overall, we have very strong momentum into 2017 and we look forward to driving enhanced returns on equity.”
At the end of full year 2016, the Company had 89 open communities, an increase of 1.1%, compared to 88 open communities at the end of full year 2015. The company had total assets of $1.0 billion and inventories of $857.9 million. Liabilities totaled $533.9 million, which included $454.1 million of long-term debt. As of December 31, 2016, the Company had $185.0 million of availability under its credit facility.
In November 2016, Century purchased a 50% ownership interest in Wade Jurney Homes, Inc. and Wade Jurney of Florida, Inc. (collectively “Wade Jurney”) through a total $18 million investment in a newly formed entity, WJH, LLC. Wade Jurney, the 60th largest and fastest growing private U.S. home builder, based on 2015 closings, specializing in providing first time home buyers with quality affordable homes within North Carolina, South Carolina, Florida and Georgia. Wade Jurney sales prices generally range from $100,000 to $180,000 and home sizes generally range from 1,000 to 3,000 square feet. Its operations are exceptionally streamlined and its homes are uniquely sold through retail outlets as opposed to model homes.
Looking forward, David Messenger, Century CFO, “We are encouraged by the pace of activity in our communities during 2016 and the potential for continued success in 2017. Based on our current market outlook, we expect home deliveries to be in the range of 3,000 to 3,300 homes and our home sales revenues to be in the range of $1.0 billion to $1.2 billion. We expect our active selling community count to be in the range of 90 to 100 communities at the end of the full year 2017.”
