{"id":55925,"date":"2021-02-12T01:07:28","date_gmt":"2021-02-12T09:07:28","guid":{"rendered":"https:\/\/drduru.com\/onetwentytwo\/?p=55925"},"modified":"2021-02-12T01:11:14","modified_gmt":"2021-02-12T09:11:14","slug":"what-century-communities-said-to-reignite-the-home-builder-trade","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2021\/02\/12\/what-century-communities-said-to-reignite-the-home-builder-trade\/","title":{"rendered":"What Century Communities Said To Reignite the Home Builder Trade"},"content":{"rendered":"\n

“We are confident our positive trajectory will continue as not only did our fourth quarter net new contracts increase 45% over last year but we have seen our sales pace accelerate, with December up 54% and January increasing 77%. We are solidly positioned with a backlog of 3,439 sold homes, an increase of 66%, along with nearly 50,000 owned and controlled lots which will support further increases in deliveries, contracts and community count…”<\/p>Century Communities Fourth Quarter and Full Year 2020 Results<\/a>, February 4, 2021<\/em><\/strong><\/cite><\/blockquote>\n\n\n\n

With the above statement, mid-size home builder Century Communities (CCS) declared that the business of building and selling homes was strong as ever and getting even stronger. Moreover, the company has sufficient capacity to deliver the homes needed to satisfy the robust market demand. This confidence and bullish outlook earned CCS a 19.5% post-earnings gain and a breakout to an all-time high.<\/p>\n\n\n\n

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Century Communities<\/a> (CCS) trades at all-time highs and is up 503% from its pandemic lows.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

The news also helped reignite the home builder trade with fresh momentum across home builders. The iShares U.S. Home Construction ETF (ITB) gained 2.8% and is still printing all-time highs. <\/p>\n\n\n\n

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The iShares U.S. Home Construction ETF (ITB) trades at all-time highs and is up 169% from its pandemic lows.<\/em><\/strong><\/figcaption><\/figure><\/div>\n\n\n\n

Century Communities’s results were truly impressive. The following table presents key year-over-year highlights from the earnings presentation:
<\/p>\n\n\n\n

Performance Measure<\/strong><\/td>Q4<\/strong><\/td>2020<\/strong><\/td><\/tr>
Total revenues<\/td>25%<\/td>25%<\/td><\/tr>
Home deliveries<\/td>14%<\/td>18%<\/td><\/tr>
New contracts<\/td>45%<\/td>38%<\/td><\/tr>
Gross Margin<\/td>200bps<\/td>60bps<\/td><\/tr>
Pre-Tax Income<\/td>125%<\/td>104%<\/td><\/tr>
Land (lot count)<\/td>28%<\/td>7%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Century Communities set company records with each performance measure as it continues to focus on the affordable, entry-level market (about 80% of deliveries). Moreover, the company recorded its 18th straight year of profitability. Improved pricing power “across markets” drove gross margin gains in the fourth quarter and January. Sequential margin gains are on an 8-month streak. However, Century Communities does not anticipate ASPs returning to 2019 levels. Year-over-year order growth in December increased 54% and January beat that growth with 77%.<\/p>\n\n\n\n

Guidance<\/strong><\/h2>\n\n\n\n

Forward-looking guidance carried over the strength from 2020 and reflects expectations for a “favorable” Spring selling season and rest-of-year. From the Seeking Alpha transcript of the earnings conference call<\/a>:<\/p>\n\n\n\n