Century Communities, Inc. (NYSE: CCS) after market close Thursday reported net income for the fourth quarter 2019 of $53.4 million, or $1.63 per diluted share, an increase of 104% compared to $26.2 million or $0.85 per diluted share for the prior year quarter. Adjusted net income, including write downs and impairments for the fourth quarter, increased 44% to $49.4 million, or $1.50 per diluted share, as compared to $34.4 million, or $1.11 per diluted share, for the prior year quarter. ended December 31, 2019. Analysts were expecting a gain of $1.27 per share.
Home sales revenues for the fourth quarter 2019 increased 21% to $775.7 million, compared to $640.2 million for the prior year quarter. The growth in home sales revenues was primarily due to a 22% increase in deliveries to 2,479 homes compared to 2,028 homes for the prior year quarter. Average sales price of home deliveries for the fourth quarter 2019 decreased to $312,900, compared to $315,700 in the prior year quarter.
Adjusted home building gross margin percentage, excluding interest and impairments, increased to 21.0% in the fourth quarter 2019, as compared to 20.4% in the prior year quarter. Home building gross margin percentage in the fourth quarter 2019 increased to 18.2%, as compared to 16.5% in the prior year quarter. SG&A as a percent of home sales revenues improved to 10.9%, compared to 11.4% in the prior year quarter.
Net new home contracts in the fourth quarter 2019 increased 45% to 1,775 homes, compared to 1,221 homes in the prior year quarter. At the end of the fourth quarter 2019, the company had 2,070 homes in backlog, representing $637.8 million of backlog dollar value.
In the fourth quarter, the company expensed an intangible asset of $2.8 million for the Wade Jurney Homes name, along with approximately $2.0 million in one time inventory impairments. The company also incurred approximately $4.7 million of additional non-recurring items of which $3.0 million related to 45L consulting fees due to the recent extension of the energy-efficient home tax credit and $1.5 million related to various one-time insurance settlements.
Financial services generated pre-tax income of $4.7 million in the fourth quarter 2019 as compared to $3.3 million in the prior year quarter, an increase of 42%.
Full Year 2019 Results
Net income for the full year 2019 was $113.0 million, or $3.62 per share compared to $96.5 million, or $3.17 per share. Adjusted net income increased to a record $126.2 million, or $4.05 per share, compared to $119.9 million, or $3.94 per share, for the prior year.
Home sales revenues for 2019 increased 18% to $2.5 billion, compared to $2.1 billion for 2018. The increase in home sales revenues was primarily due to home deliveries increasing 31% to 8,000 homes. Average selling price of homes delivered decreased to $310,200 compared to $346,000 in the prior year.
Adjusted home building gross margin percentage, excluding interest, impairments and purchase price accounting, was 20.3% compared to 21.6% in the prior year. Home building gross margin percentage in 2019 was 17.7%, compared to 17.5% in 2018. SG&A as a percent of home sales revenues decreased 30 basis points to 12.2% compared to 12.5% the prior year, with tight cost controls offsetting numerous investment and integration initiatives to support growth objectives.
Net new home contracts in 2019 increased to 7,861 homes, an increase of 39%, compared to 5,657 homes in the prior year, primarily attributable to an increased absorption pace and the full year results of Wade Jurney Homes.
Financial services generated pre-tax income of $10.7 million in the full year 2019 as compared to $8.8 million in the prior year, a 22% increase.
Balance Sheet and Liquidity
Stockholders’ equity increased by $202 million or 24% during the year to end at a record $1.06 billion. As of December 31, 2019, the company had $571.3 million of availability under its credit facility. The company had total liquidity of $662 million.
During the fourth quarter, the company improved its net home building debt to net capital to 45.2%, down 680 basis points from 52.0% at the end of 2018 and 860 basis points from 53.8% at the end of the third quarter.
Separately, the company said that its subsidiary Wade Jurney Homes, acquired in 2018, has now become Century Complete. The name change represents the company formerly known as Wade Jurney Homes’ full integration into the Century brand. It also conveys that home buyers receive a well-appointed home and enjoy a completely streamlined experience with Century Complete’s online “Buy Now” feature.
Century Complete homes will include designer color schemes, granite kitchen and bathroom countertops, stainless-steel appliances—like smooth-top ranges, dishwashers, microwaves and refrigerators—and garage door openers, among other popular features.
Dale Francescon, co-CEO, stated, “2019 proved to be another milestone year for Century in which we closed a record 8,000 homes, grew home sales revenues to a record $2.5 billion and generated $113 million of net income, achieving our 17th consecutive year of profitability. We broadened our national footprint to 17 states, adding deliveries in Iowa, Indiana, Michigan and Ohio, not only expanding our scale and scope but strengthening our competitive position across high-potential markets. Additionally, we improved our SG&A leverage demonstrating our success in maintaining tight financial discipline and driving operational efficiencies within the business. While we are very pleased with our progress over the past year, we believe this is only the beginning of our extraordinary growth potential.”
Rob Francescon, co-CEO, said, “Looking ahead, we are better positioned than ever before to capitalize on our 2019 momentum to propel our trajectory as we more deeply penetrate and increase our market share in the nation’s most robust metro environments. We are razor-focused on expanding our differentiated leadership position in the attractive, lower-priced home category, generating even further efficiencies from our substantial national platform and are encouraged that improved macro trends and positive home building fundamentals are creating a positive demand environment. Furthermore, we are excited about our rebranding of Wade Jurney Homes to Century Complete announced today, a logical incorporation into the Century brand designed to maximize the potential of this important part of our business. We anticipate 2020 will be another year of outsized growth and performance and remain committed to delivering long-term value creation to our shareholders.”
