Century Communities Inc.
10/29/2026 | Press release | Distributed by Public on 10/29/2026 04:02
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
As used in this Quarterly Report on Form 10-Q (which we refer to as this "Form 10-Q"), references to "we," "us," "our," "Century" or the "Company" refer to Century Communities, Inc., a Delaware corporation, and, unless the context otherwise requires, its subsidiaries and affiliates.
The following discussion and analysis of our financial condition and results of operations is intended to help the reader understand our Company, business, operations and present business environment and is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the related notes to those statements included elsewhere in this Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. We use certain non-GAAP financial measures that we believe are important for purposes of comparison to prior periods. This information is also used by our management to measure the profitability of our ongoing operations and analyze our business performance and trends.
Cautionary Note Regarding Forward-Looking Statements
Some of the statements included in this Form 10-Q constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, beliefs, projections, forecasts, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual results could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "will," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential," "outlook," the negative of such terms and other comparable terminology and the use of future dates. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors.
The forward-looking statements included in this Form 10-Q reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. Statements regarding the following subjects, among others, may be forward-looking and subject to risks and uncertainties including among others:
the cyclical nature of the homebuilding industry, which is particularly susceptible to economic changes, either nationally or in the regional and local markets in which we operate, including continued elevated and recent and any future increases in interest rates and the resulting impact on the accessibility and cost of mortgage loans to homebuyers; persistent inflation; decreased employment levels and job insecurity concerns due in part to the rapid adoption of artificial intelligence; cautious consumer sentiment; affordability concerns; and increased recessionary conditions;
unstable economic and political conditions as well as geopolitical conflicts, including in the Middle East, which have adversely affected and could continue to adversely affect our supply chain by causing shortages or increases in costs for materials necessary to construct homes and/or increases to the price of gasoline and other fuels, and cause higher interest rates, inflation, reduced consumer confidence, general economic uncertainty, and/or other adverse effects;
other shortages of or increased prices for labor, land or raw materials used in housing construction and resource shortages, including as a result of, among other factors, supply chain disruptions, tariffs, and immigration laws or the enforcement thereof
the availability of qualified personnel and contractors and our ability to obtain additional or retain existing key personnel and contractor relationships and successfully transition key executive positions in the future;
the availability and price of land to acquire, and our ability to acquire such land on favorable terms or at all or dispose of it when appropriate or on favorable terms or at all;
a downturn in the homebuilding industry, including a reduction in demand for our homes, increased cancellation rates, or a decline in real estate values or market conditions resulting in an adverse impact on our business, operating results and financial condition, which may include a continued elevated use of sales incentives adversely affecting our margins and possible future additional impairment, lot abandonment, or restructuring charges;
changes in assumptions used to make industry forecasts, population growth or decline rates, or trends affecting housing availability, demand or prices;
the availability or cost of mortgage financing and the substantial increase in the use of adjustable-rate mortgages which involve additional risk since rates fluctuate based on current interest rates potentially leading to increased cancellation rates and foreclosure rates;
delays in land development, home construction or the completion of projects, or reduced consumer demand for housing, resulting from significant weather conditions or natural or manmade disasters in the geographic areas where we operate, regulatory or tax changes, or other events outside our control;
the impact of construction defect, product liability, and/or home warranty claims, including the adequacy of accruals and the applicability and sufficiency of our insurance coverage;
the degree and nature of our competition, including the supply and pricing of new and existing homes and other housing alternatives, and recent consolidation within the homebuilding industry, and the effect on our business and operating results;
changes in, or the failure or inability to comply with, governmental laws and regulations and the evolving nature of such laws and regulations;
the timing of receipt of municipal, utility and other regulatory approvals and the opening of projects and construction and completion of our homes;
the impact and cost of compliance with evolving environmental, health and safety, and other laws and regulations and third-party challenges to required permits and other approvals and potential legal liability in connection therewith;
the ability of our homebuyers to obtain or afford homeowners or flood insurance policies, and/or typical or lender-required policies for other hazards or events, for their homes, which may depend on the ability and willingness of insurers or government-funded or -sponsored programs to offer coverage at an affordable price or at all;
our ability to continue to fund and succeed in our mortgage lending business and the additional risks involved in that business;
risks associated with and the success of our multi-family rental business;
our future business operations, operating results and financial condition; additional future impairment and restructuring charges; and changes in our business, investment and capital allocation strategy;
our leverage, debt service obligations, and exposure to changes in interest rates and our ability to obtain additional or refinance our existing debt when needed or on favorable terms;
volatility and uncertainty in the credit markets and broader financial markets and the impact on such markets and our ability to access them, including as a result of, among other factors, geopolitical conditions, U.S. government shutdowns, and in the event of a threatened or actual sovereign default;
availability, terms and deployment of our capital and possible challenges to our capital allocation;
the effect of and risks associated with recent and any future acquisitions, including the recent HistoryMaker Homes acquisition;
the effect of recent consolidation in the homebuilding industry and the effect on the competitive environment;
income tax expense variability due to, among other factors, the expiration of or changes in the availability and amount of federal home tax credits, and volatility associated with stock-based compensation;
our ability to continue to pay dividends and make stock repurchases in the future at current levels or at all;
taxation and tax policy changes, tax rate changes, new tax laws, or new or revised tax law interpretations or guidance;
the effect of recent federal housing legislation; and
the effect of a public health issue, such as a major epidemic or pandemic, on the economy and our business.
Forward-looking statements are based on our beliefs, assumptions and expectations of future events, taking into account all information currently available to us. Forward-looking statements are not guarantees of future events or of our performance. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these events and factors are described above and in this "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" and in "Part I, Item 1A. Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and other risks and uncertainties detailed in this report, including "Part II, Item 1A. Risk Factors," and our other reports and filings with the SEC. If a change occurs, our business, financial condition, liquidity, cash flows and results of operations may vary materially from those expressed in or implied by our forward-looking statements. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Therefore, you should not rely on these forward-looking statements as of any date subsequent to the date of this Form 10-Q.
Business Overview
Century is engaged in the development, design, construction, marketing and sale of single-family attached and detached homes in 16 states. In many of our projects, in addition to building homes, we entitle and develop the underlying land. We build and sell homes under our Century Communities and Century Complete brands. Our Century Communities brand has an emphasis on serving the affordable homebuilding market but offers a wide range of buyer profiles including: entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the limited ability to personalize their homes through certain option and upgrade selections. Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios, centralized locations, and the internet, and generally provides no option or upgrade selections.
Our homebuilding operations are organized into the following five reportable segments: West, Mountain, Texas, Southeast, and Century Complete. Our indirect wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, IHL Home Insurance Agency, LLC, and IHL Escrow Inc., which provide mortgage, title, insurance brokerage and escrow services, respectively, primarily to our homebuyers, have been identified as our Financial Services segment. Additionally, our Century Living segment is engaged in the development, construction, management, and sales of multi-family rental properties, currently all located in Colorado.
While we offer homes that appeal to a broad range of entry-level, move-up, and lifestyle homebuyers, our offerings are heavily weighted towards providing affordable housing options in each of our homebuyer segments. Additionally, we prefer building move-in-ready homes over built-to-order homes, which we believe allows for a faster construction process, advantageous pricing with subcontractors, and shortened time period from home sale to home delivery, thus allowing our customers greater certainty on their financing and allowing us to more appropriately price the homes and deploy our capital. Of the 6,961 homes delivered during the first nine months of 2026, approximately 96% of homes delivered had purchase prices below the Federal Housing Administration-insured mortgage limits and approximately 98% of homes delivered were built as move-in ready homes.
Market conditions in the homebuilding industry have continued to be impacted by elevated mortgage rates, which increased further during the third quarter of 2026; macro-economic and geopolitical uncertainty; cautious homebuyer sentiment, especially in light of persistent inflation and rising commodity and oil prices; and ongoing affordability pressures for homebuyers. Against this backdrop, there remains an underlying need for affordable new homes, supported by solid demographic trends and an ongoing undersupply of homes. In response to market conditions, we have continued to provide, when necessary, incentive offerings across our communities, including discounts on base home prices, lot premiums, options and upgrades, and financing incentives, including interest rate buydowns and closing cost concessions. Further, during the first nine months of 2026, we experienced continued acceptance to adjustable-rate mortgages among our homebuyers, which adjustable-rate mortgages accounted for nearly 35% of the mortgages that we originated by volume of principal during third quarter of 2026, consistent with the second quarter of 2026, and an increase from first quarter 2026 levels of approximately 30% and well above first quarter 2025 levels of less than 5%.
We anticipate the homebuilding markets in each of our operating segments will continue to be tied to both the macro-economic environment and the local economy, and we expect our operating strategy will continue to adapt to market changes, though we cannot provide any assurance that our strategies will remain consistent or continue to be successful. We believe future demand for our homes remains uncertain as future economic, market and geopolitical conditions remain uncertain, in particular with respect to inflation and consumer confidence, both of which have been and may continue to be adversely affected by the conflict in the Middle East, especially if it persists or intensifies; continued elevated interest rates, which rose further during the third quarter of 2026, and the impact of potential future increases or decreases to the U.S. Federal funds interest rate by the U.S. Federal Reserve; availability and cost of mortgage loans to homebuyers; financial, credit and mortgage markets; the extent to which and how long government monetary directives and actions will impact the U.S. economy; the effect of tariffs and/or duties; consumer confidence; wage growth; household formations; levels of new and existing homes for sale; prevailing home and rental prices; availability and cost of land, labor and construction materials; demographic trends; housing demand; increased energy and fuel prices; the possibility of an economic recession; and other factors, including those described elsewhere in this Form 10-Q. Specifically, changes in mortgage interest rates impact the costs of owning a home and affect the purchasing power of our customers and could impact homebuyer confidence. Changes in demand for our homes or cancellations due to mortgage interest rates, consumer confidence, or otherwise, could affect our operating results in future periods, including our net sales, home deliveries, gross margin, origination volume of loans and revenues from our Financial Services segment, and net income.
Disruptions to energy markets related to geopolitical developments in the Middle East have increased fuel and transportation prices, and certain tariffs that became effective in late 2025 relate to various imported products used in the homebuilding industry, including cabinets, lumber, and certain other wood products. As of September 30, 2026, we have not experienced significant cost increases or supply chain disruptions for raw materials and construction cycle times remained approximately three to four months during the first nine months of 2026; however, we could experience increases in the costs of materials utilized for the construction of our homes and/or supply chain disruptions that, in turn, would impact our business and our consolidated financial statements in future reporting periods. Mortgage rates remained elevated and increased further during the first nine months of 2026 and are influenced by a range of market factors, and we cannot provide any assurance as to the impact of future market or policy developments on mortgage rates or our current or future business. Further, in July 2026, a broad package of federal housing provisions became law, though the timing and magnitude
of any impact on the housing market conditions remains uncertain. The potential extent and effect of these and other factors on our business is highly uncertain and outside our control, and our past performance may not be indicative of our future results.
We believe we are well-positioned to benefit from the favorable demographics and an ongoing undersupply of homes that support the need for new affordable housing. We believe our operations are prepared to withstand volatility in future market conditions as a result of our product offerings, which both span the home buying segment and focus on affordable price points, our efficiencies in direct construction costs and cycle times, and our current and future inventories of attractive land positions, including our use of a flexible land strategy.
Recent Acquisition
On October 7, 2026, we completed the acquisition of substantially all of the assets and assumed certain liabilities of HMH Lifestyles, L.P., doing business as HistoryMaker Homes ("HMH"), a homebuilder with operations in the greater Dallas, Texas area, for initial cash consideration of approximately $160.2 million, subject to customary holdbacks and post-closing adjustments based on the final closing balance sheet. The acquisition expands our presence within our Texas segment, adding 29 active communities. Because the acquisition was completed subsequent to September 30, 2026, the acquired assets and assumed liabilities are not reflected in the accompanying condensed consolidated financial statements.
Results of Operations
During the three and nine months ended September 30, 2026, we generated $15.8 million and $98.2 million in income before income tax expense, as compared to $47.8 million and $147.4 million in the respective prior year periods. Our results for the three and nine months ended September 30, 2026 included $19.6 million of impairment charges, as compared to $3.2 million and $11.0 million, respectively, in the prior year periods. During the three and nine months ended September 30, 2026, we generated net income of $12.6 million, or $0.44 per diluted share, and $73.2 million, or $2.54 per diluted share, respectively, as compared to $37.4 million, or $1.25 per diluted share, and $111.6 million, or $3.65 per diluted share in the respective prior year periods.
During the three and nine months ended September 30, 2026, we generated total revenues of $864.5 million and $2.6 billion, respectively, as compared to $980.3 million and $2.9 billion in the respective prior year periods. During the three and nine months ended September 30, 2026, we delivered 2,442 and 6,961 new homes with an average sales price of $345.0 thousand and $355.4 thousand, respectively. Our new home deliveries decreased by 1.8% and 5.4%, respectively, as compared to the respective prior year periods, primarily due to slower absorption rates as a result of lower demand amid challenging homebuilding market conditions, and the average sales price per new home decreased 10.2% and 7.1% as compared to the respective prior year periods, primarily due to an increased use of incentives during the three and nine months ended September 30, 2026. For the three months ended September 30, 2026, net new contracts decreased 4.3% to 2,284, and for the nine months ended September 30, 2026, net new contracts decreased 4.5% to 7,278, in each case compared to the respective prior year period.
We have continued to take a balanced approach to capital allocation, guided by market conditions and our priorities of investing in land and land development to support anticipated future growth and returning capital to our stockholders. We ended the third quarter of 2026 with $86.1 million of cash and cash equivalents and $33.7 million of cash held in escrow. We had $456.0 million outstanding under our revolving line of credit, with a homebuilding debt to capital ratio of 36.8% and a net homebuilding debt to net capital ratio of 34.9%. We have continued to strategically manage our lot pipeline in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts, resulting in 60,969 lots owned and controlled at September 30, 2026. During the three and nine months ended September 30, 2026, we repurchased an aggregate of 169.9 thousand and 1.1 million shares, respectively, under our stock repurchase program for a total purchase price of approximately $11.6 million and $71.2 million, respectively, and a weighted average per share price of $68.16 and $62.45, respectively. Also, during each of the first three quarters of 2026, we paid a quarterly cash dividend to our stockholders of $0.32 per share, a 10% increase from the $0.29 per share quarterly dividend paid during each of the first three quarters of 2025.
For the three and nine months ended September 30, 2026, our Financial Services segment generated income before income tax expense of $6.2 million and $23.7 million, respectively, as compared to $3.0 million and $11.6 million in the respective prior year periods. During the three and nine months ended September 30, 2026, the number of mortgages originated decreased 1.6% and 2.5%, respectively, in each case, as compared to the respective prior year period. During the three and nine months ended September 30, 2026, the number of loans sold to third parties increased 5.9% and 0.2%, respectively, as compared to the respective prior year periods.
The following table summarizes our results of operations for the three and nine months ended September 30, 2026 and 2025:
|
(in thousands, except per share amounts) |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
||||||||||||||
|
Condensed Consolidated Statements of Operations: |
|||||||||||||||||
|
Revenues |
|||||||||||||||||
|
Home sales revenues |
$ |
842,493 |
$ |
955,162 |
$ |
2,474,127 |
$ |
2,815,365 |
|||||||||
|
Land sales and other revenues |
823 |
5,764 |
38,249 |
7,209 |
|||||||||||||
|
Total homebuilding revenues |
843,316 |
960,926 |
2,512,376 |
2,822,574 |
|||||||||||||
|
Financial services revenues |
21,151 |
19,358 |
68,991 |
61,666 |
|||||||||||||
|
Total revenues |
864,467 |
980,284 |
2,581,367 |
2,884,240 |
|||||||||||||
|
Homebuilding cost of revenues |
|||||||||||||||||
|
Cost of home sales revenues(1) |
(716,082) |
(783,746) |
(2,054,741) |
(2,296,184) |
|||||||||||||
|
Cost of land sales and other revenues |
(26) |
(6,303) |
(24,275) |
(7,199) |
|||||||||||||
|
Total homebuilding cost of revenues |
(716,108) |
(790,049) |
(2,079,016) |
(2,303,383) |
|||||||||||||
|
Financial services costs |
(14,962) |
(16,371) |
(45,261) |
(50,095) |
|||||||||||||
|
Selling, general and administrative expense |
(118,837) |
(119,895) |
(362,335) |
(369,491) |
|||||||||||||
|
Other income (expense), net |
1,275 |
(6,131) |
3,479 |
(13,832) |
|||||||||||||
|
Income before income tax expense |
15,835 |
47,838 |
98,234 |
147,439 |
|||||||||||||
|
Income tax expense |
(3,218) |
(10,435) |
(25,060) |
(35,798) |
|||||||||||||
|
Net income |
$ |
12,617 |
$ |
37,403 |
$ |
73,174 |
$ |
111,641 |
|||||||||
|
Earnings per share: |
|||||||||||||||||
|
Basic |
$ |
0.44 |
$ |
1.26 |
$ |
2.55 |
$ |
3.69 |
|||||||||
|
Diluted |
$ |
0.44 |
$ |
1.25 |
$ |
2.54 |
$ |
3.65 |
|||||||||
|
Adjusted diluted earnings per share(2) |
$ |
1.01 |
$ |
1.52 |
$ |
3.22 |
$ |
4.39 |
|||||||||
|
Other Operating Information |
|||||||||||||||||
|
Number of new homes delivered |
2,442 |
2,486 |
6,961 |
7,357 |
|||||||||||||
|
Average sales price of new homes delivered |
$ |
345.0 |
$ |
384.2 |
$ |
355.4 |
$ |
382.7 |
|||||||||
|
Homebuilding gross margin percentage |
15.0 |
% |
17.9 |
% |
17.0 |
% |
18.4 |
% |
|||||||||
|
Adjusted homebuilding gross margin excluding interest, inventory impairment, and purchase price accounting for acquired work in process inventory (2) |
19.3 |
% |
20.1 |
% |
19.7 |
% |
20.6 |
% |
|||||||||
|
Backlog at end of period, number of homes |
1,106 |
1,117 |
1,106 |
1,117 |
|||||||||||||
|
Backlog at end of period, aggregate sales value |
$ |
413,956 |
$ |
416,924 |
$ |
413,956 |
$ |
416,924 |
|||||||||
|
Average sales price of homes in backlog |
$ |
374.3 |
$ |
373.3 |
$ |
374.3 |
$ |
373.3 |
|||||||||
|
Net new home contracts |
2,284 |
2,386 |
7,278 |
7,624 |
|||||||||||||
|
Selling communities at period end |
343 |
321 |
343 |
321 |
|||||||||||||
|
Average selling communities |
339 |
321 |
324 |
319 |
|||||||||||||
|
Total owned and controlled lot inventory |
60,969 |
62,239 |
60,969 |
62,239 |
|||||||||||||
|
Adjusted EBITDA(2)(3) |
$ |
63,412 |
$ |
87,740 |
$ |
197,013 |
$ |
252,352 |
|||||||||
|
Adjusted income before income tax expense(2) |
$ |
38,659 |
$ |
60,368 |
$ |
124,438 |
$ |
177,325 |
|||||||||
|
Adjusted net income(2) |
$ |
28,797 |
$ |
45,711 |
$ |
92,693 |
$ |
134,271 |
|||||||||
|
Homebuilding debt to capital |
36.8 |
% |
34.5 |
% |
36.8 |
% |
34.5 |
% |
|||||||||
|
Net homebuilding debt to net capital(2) |
34.9 |
% |
31.4 |
% |
34.9 |
% |
31.4 |
% |
|||||||||
(1)Beginning in the fourth quarter of 2025, inventory impairment was reclassified to be included in cost of home sales revenues in our consolidated statements of operations rather than presented as a separate line item and prior year period amounts have been reclassified to conform to this presentation.
(2)This is a non-GAAP financial measure and should not be used as a substitute for our operating results prepared in accordance with GAAP. See the reconciliations to the most comparable GAAP measure and other information within our "-Homebuilding Gross Margin" and "-Non-GAAP Financial Measures" sections in this Management's Discussion and Analysis of Financial Condition and Results of Operations. An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.
(3)Beginning in the fourth quarter of 2025, we added "Stock-based compensation expense" as an adjustment in our non-GAAP adjusted EBITDA (Earnings Before Income tax expense, Interest, Depreciation, and Amortization) calculation. Accordingly, we have recast the corresponding prior year period adjusted EBITDA amount to conform to the current presentation and calculation.
Results of Operations by Segment
(dollars in thousands)
|
Three Months Ended September 30, 2026 |
|||||||||||||||||||||||||||
|
West |
Mountain |
Texas |
Southeast |
Century Complete |
Financial Services |
Century Living |
Corporate |
Total |
|||||||||||||||||||
|
New homes delivered |
278 |
386 |
540 |
310 |
928 |
- |
- |
- |
2,442 |
||||||||||||||||||
|
Average sales price of new homes delivered |
$ |
550.7 |
$ |
467.0 |
$ |
286.1 |
$ |
389.7 |
$ |
252.0 |
$ |
- |
$ |
- |
$ |
- |
$ |
345.0 |
|||||||||
|
Revenues |
$ |
153,134 |
$ |
180,338 |
$ |
154,563 |
$ |
120,885 |
$ |
234,396 |
$ |
21,151 |
$ |
- |
$ |
- |
$ |
864,467 |
|||||||||
|
Cost of home sales revenues(1) |
(149,906) |
(153,055) |
(127,790) |
(97,977) |
(190,431) |
- |
- |
3,077 |
(716,082) |
||||||||||||||||||
|
Financial services costs |
- |
- |
- |
- |
- |
(14,962) |
- |
- |
(14,962) |
||||||||||||||||||
|
Selling, general and administrative expense |
(16,467) |
(19,599) |
(19,444) |
(13,312) |
(23,019) |
- |
(279) |
(26,717) |
(118,837) |
||||||||||||||||||
|
Other segment items(2) |
(215) |
(962) |
(406) |
(561) |
(47) |
- |
124 |
3,316 |
1,249 |
||||||||||||||||||
|
Income (loss) before tax expense |
$ |
(13,454) |
$ |
6,722 |
$ |
6,923 |
$ |
9,035 |
$ |
20,899 |
$ |
6,189 |
$ |
(155) |
$ |
(20,324) |
$ |
15,835 |
|||||||||
|
Three Months Ended September 30, 2025 |
|||||||||||||||||||||||||||
|
West |
Mountain |
Texas |
Southeast |
Century Complete |
Financial Services |
Century Living |
Corporate |
Total |
|||||||||||||||||||
|
New homes delivered |
369 |
401 |
460 |
423 |
833 |
- |
- |
- |
2,486 |
||||||||||||||||||
|
Average sales price of new homes delivered |
$ |
591.0 |
$ |
506.0 |
$ |
293.8 |
$ |
413.8 |
$ |
268.9 |
$ |
- |
$ |
- |
$ |
- |
$ |
384.2 |
|||||||||
|
Revenues |
$ |
218,149 |
$ |
208,058 |
$ |
135,150 |
$ |
175,162 |
$ |
224,407 |
$ |
19,358 |
$ |
- |
$ |
- |
$ |
980,284 |
|||||||||
|
Cost of home sales revenues(1) |
(177,720) |
(167,994) |
(115,267) |
(144,944) |
(180,899) |
- |
- |
3,078 |
(783,746) |
||||||||||||||||||
|
Financial services costs |
- |
- |
- |
- |
- |
(16,371) |
- |
- |
(16,371) |
||||||||||||||||||
|
Selling, general and administrative expense |
(17,999) |
(18,653) |
(14,590) |
(15,679) |
(22,953) |
- |
(488) |
(29,533) |
(119,895) |
||||||||||||||||||
|
Other segment items(2) |
(1,224) |
(6,608) |
(196) |
(1,347) |
(426) |
- |
190 |
(2,823) |
(12,434) |
||||||||||||||||||
|
Income (loss) before tax expense |
$ |
21,206 |
$ |
14,803 |
$ |
5,097 |
$ |
13,192 |
$ |
20,129 |
$ |
2,987 |
$ |
(298) |
$ |
(29,278) |
$ |
47,838 |
|||||||||
|
Nine Months Ended September 30, 2026 |
|||||||||||||||||||||||||||
|
West |
Mountain |
Texas |
Southeast |
Century Complete |
Financial Services |
Century Living |
Corporate |
Total |
|||||||||||||||||||
|
New homes delivered |
877 |
1,146 |
1,438 |
987 |
2,513 |
- |
- |
- |
6,961 |
||||||||||||||||||
|
Average sales price of new homes delivered |
$ |
563.0 |
$ |
470.0 |
$ |
287.5 |
$ |
388.6 |
$ |
256.6 |
$ |
- |
$ |
- |
$ |
- |
$ |
355.4 |
|||||||||
|
Revenues |
$ |
493,990 |
$ |
538,799 |
$ |
417,153 |
$ |
416,327 |
$ |
646,107 |
$ |
68,991 |
$ |
- |
$ |
- |
$ |
2,581,367 |
|||||||||
|
Cost of home sales revenues(1) |
(436,795) |
(449,544) |
(340,616) |
(310,096) |
(521,018) |
- |
- |
3,328 |
(2,054,741) |
||||||||||||||||||
|
Financial services costs |
- |
- |
- |
- |
- |
(45,261) |
- |
- |
(45,261) |
||||||||||||||||||
|
Selling, general and administrative expense |
(49,581) |
(58,825) |
(54,233) |
(42,903) |
(68,963) |
- |
(852) |
(86,978) |
(362,335) |
||||||||||||||||||
|
Other segment items(2) |
(993) |
(1,497) |
(2,066) |
(23,465) |
(849) |
- |
649 |
7,425 |
(20,796) |
||||||||||||||||||
|
Income (loss) before tax expense |
$ |
6,621 |
$ |
28,933 |
$ |
20,238 |
$ |
39,863 |
$ |
55,277 |
$ |
23,730 |
$ |
(203) |
$ |
(76,225) |
$ |
98,234 |
|||||||||
|
Nine Months Ended September 30, 2025 |
|||||||||||||||||||||||||||
|
West |
Mountain |
Texas |
Southeast |
Century Complete |
Financial Services |
Century Living |
Corporate |
Total |
|||||||||||||||||||
|
New homes delivered |
1,007 |
1,226 |
1,418 |
1,127 |
2,579 |
- |
- |
- |
7,357 |
||||||||||||||||||
|
Average sales price of new homes delivered |
$ |
597.4 |
$ |
517.2 |
$ |
295.6 |
$ |
427.5 |
$ |
263.2 |
$ |
- |
$ |
- |
$ |
- |
$ |
382.7 |
|||||||||
|
Revenues |
$ |
601,763 |
$ |
639,476 |
$ |
419,252 |
$ |
482,082 |
$ |
680,001 |
$ |
61,666 |
$ |
- |
$ |
- |
$ |
2,884,240 |
|||||||||
|
Cost of home sales revenues(1) |
(478,680) |
(519,295) |
(346,087) |
(394,939) |
(558,393) |
- |
- |
1,210 |
(2,296,184) |
||||||||||||||||||
|
Financial services costs |
- |
- |
- |
- |
- |
(50,095) |
- |
- |
(50,095) |
||||||||||||||||||
|
Selling, general and administrative expense |
(52,104) |
(57,400) |
(49,121) |
(46,404) |
(70,412) |
- |
(869) |
(93,181) |
(369,491) |
||||||||||||||||||
|
Other segment items(2) |
(3,389) |
(9,418) |
(470) |
(2,180) |
(2,249) |
- |
605 |
(3,930) |
(21,031) |
||||||||||||||||||
|
Income (loss) before tax expense |
$ |
67,590 |
$ |
53,363 |
$ |
23,574 |
$ |
38,559 |
$ |
48,947 |
$ |
11,571 |
$ |
(264) |
$ |
(95,901) |
$ |
147,439 |
|||||||||
(1)Beginning in the fourth quarter of 2025, inventory impairment was reclassified to be included in cost of home sales revenues in our consolidated statements of operations rather than presented as a separate line item and prior year period amounts have been reclassified to conform to this presentation.
(2)Includes cost of land sales and other revenues, and other income (expense).
West
During the three and nine months ended September 30, 2026, our West segment generated loss before income tax expense of $13.5 million and income before income tax expense of $6.6 million, respectively, representing decreases of 163.4% and 90.2%, respectively, as compared to the respective prior year periods. These decreases were primarily driven by decreases in homebuilding gross margin percentage and revenue. Homebuilding gross margin percentage decreased from the respective prior year periods, due to impairment charges of $19.1 million during the three and nine months ended September 30, 2026, as well as increased use of incentives as compared to the respective prior year periods. Revenue decreased $65.0 million and $107.8 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 24.7% and 12.9%, respectively, in the number of homes delivered and decreases of 6.8% and 5.8%, respectively, in the average sales price per home. The decreases in the number of homes delivered were primarily attributable to slower absorption rates and the decreases in average sales price per home resulted from increased use of incentives.
Mountain
During the three and nine months ended September 30, 2026, our Mountain segment generated income before income tax expense of $6.7 million and $28.9 million, respectively, representing decreases of 54.6% and 45.8%, respectively, as compared to the respective prior year periods. These decreases were primarily driven by decreases in revenue and homebuilding gross margin percentage. During the three and nine months ended September 30, 2026, revenue decreased $27.7 million and $100.7 million, respectively, as compared to the respective prior year periods, primarily driven by decreases of 3.7% and 6.5%, respectively, in the number of homes delivered and decreases of 7.7% and 9.1%, respectively, in the average sales price per home. The decreases in the number of homes delivered were primarily attributable to slower absorption rates and the decreases in average sales price per home resulted from increased use of incentives. During the three and nine months ended September 30, 2026, homebuilding gross margin percentage decreased from the respective prior year periods, due primarily to increased use of incentives as compared to the respective prior year periods.
Texas
During the three and nine months ended September 30, 2026, our Texas segment generated income before income tax expense of $6.9 million and $20.2 million, respectively, representing an increase of 35.8% and a decrease of 14.2%, respectively, as compared to the respective prior year periods. The three-month increase was primarily driven by increases in homebuilding gross margin percentage and revenue, while the nine-month decrease was primarily driven by an increase in selling, general and administrative expense and a decrease in revenue. During the three and nine months ended September 30, 2026, revenue increased $19.4 million and decreased $2.1 million, respectively. The three-month increase was primarily driven by a 17.4% increase in the number of homes delivered, partially offset by a 2.6% decrease in the average sales price per home, while the nine-month decrease was primarily driven by a 2.7% decrease in the average sales price per home, partially offset by a 1.4% increase in the number of homes delivered. The increases in homes delivered were primarily attributable to an increase in the average number of selling communities, while the decreases in average sales price per home were primarily driven by increased use of incentives. Homebuilding gross margin percentage for each of the three and nine month ended September 30, 2026 increased from the respective prior year periods, due primarily to lower direct construction costs and lower
inventory impairment charges of $0.2 million during the current year periods compared to $0.5 million in the prior year periods, partially offset by increased use of incentives.
Southeast
During the three and nine months ended September 30, 2026, our Southeast segment generated income before income tax expense of $9.0 million and $39.9 million, respectively, representing a decrease of 31.5% and an increase of 3.4%, respectively, as compared to the respective prior year periods. The decrease in income before income tax expense for the three-month comparison was primarily driven by a decrease in revenue, partially offset by an increase in homebuilding gross margin percentage. The increase in income before income tax expense for the nine-month comparison was primarily driven by a land sale transaction in Georgia during the first quarter of 2026, partially offset by a decrease in home sales revenue. During the three and nine months ended September 30, 2026, revenue decreased $54.3 million and $65.8 million, respectively, as compared to the respective prior year periods. The decrease in revenue for the three-month comparison was primarily driven by a 26.7% decrease in the number of homes delivered and a 5.8% decrease in the average sales price per home. The decrease in revenue for the nine-month comparison was primarily driven by a 12.4% decrease in the number of homes delivered and a 9.1% decrease in the average sales price per home, partially offset by the first quarter land sale transaction of $32.5 million included in land sales and other revenue. The decreases in the number of homes delivered were primarily attributable to a decrease in the average number of selling communities, while the decreases in average sales price per home resulted primarily from increased use of incentives. During the three and nine months ended September 30, 2026, homebuilding gross margin percentage increased from the respective prior year periods, due primarily to inventory impairment charges of $2.4 million and $6.2 million recorded in the prior year periods, respectively, that did not recur in the current year periods, and was partially offset by the impact of increased use of incentives as compared to the respective prior year periods.
Century Complete
During the three and nine months ended September 30, 2026, our Century Complete segment generated income before income tax expense of $20.9 million and $55.3 million, respectively, representing increases of 3.8% and 12.9%, respectively, as compared to the respective prior year periods. The increase in income before income tax expense for the three-month comparison was primarily driven by an increase in revenue, partially offset by a decrease in homebuilding gross margin percentage. The increase in income before income tax expense for the nine-month comparison was primarily driven by an increase in homebuilding gross margin percentage, partially offset by a decrease in revenue. During the three and nine months ended September 30, 2026, revenue increased $10.0 million and decreased $33.9 million, respectively, as compared to the respective prior year periods. The increase in revenue for the three-month comparison was primarily driven by an 11.4% increase in the number of homes delivered, partially offset by a 6.3% decrease in the average sales price per home. The decrease in revenue for the nine-month comparison was primarily driven by a 2.6% decrease in the number of homes delivered and a 2.5% decrease in the average sales price per home. The increase in the number of homes delivered for the three-month comparison was primarily driven by a higher average number of selling communities, while the decrease in the number of homes delivered for the nine-month comparison was primarily driven by a lower average number of selling communities and slower absorption rates. The decreases in average sales price per home resulted primarily from increased use of incentives. For the three-month comparison, homebuilding gross margin percentage decreased, primarily driven by increased use of incentives. For the nine-month comparison, homebuilding gross margin percentage increased, driven primarily by lower direct construction costs and lower inventory impairment charges of $0.3 million compared to $4.2 million in the prior year period, partially offset by increased use of incentives as compared to the prior year period.
Financial Services
Our Financial Services segment originates mortgages for primarily our homebuyers, and as such, the volume of loans originated typically correlates to our number of homes delivered. Fluctuations in financial services income before income tax may occur because some components of revenue fluctuate differently than loan volumes, and some expenses are not directly related to mortgage loan volume or to changes in the amount of revenue earned. For the three and nine months ended September 30, 2026, our Financial Services segment generated income before income tax expense of $6.2 million and $23.7 million, respectively, as compared to $3.0 million and $11.6 million, respectively, in the respective prior year periods. For the three-month comparison, the increase was primarily attributable to higher loan margins, driven by favorable fair value adjustments on our hedging activity, and higher servicing fee income, partially offset by lower origination volume. For the nine-month comparison, the increase was primarily attributable to higher loans margins, driven by favorable fair value adjustments on our hedging activity, and favorable fair value adjustments on our mortgage servicing rights portfolio, partially offset by the prior year benefit from the sale of a portion of our mortgage servicing rights portfolio and lower origination volume. During the three and nine months ended September 30, 2026, the number of mortgages originated decreased 1.6% and 2.5%, respectively, in each case, as compared to the respective prior year period. During the three and nine months ended September 30, 2026, the number of loans sold to third parties increased 5.9% and 0.2%, respectively, as compared to the respective prior year periods.
The following table presents selected operational data for our Financial Services segment in relation to our loan origination activities (dollars in thousands):
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
||||||||||||
|
Total originations: |
|||||||||||||||
|
Number of loans |
1,581 |
1,607 |
4,676 |
4,796 |
|||||||||||
|
Principal |
$ |
541,461 |
$ |
578,011 |
$ |
1,610,188 |
$ |
1,700,470 |
|||||||
|
Capture rate of Century homebuyers |
84 |
% |
84 |
% |
82 |
% |
84 |
% |
|||||||
|
Century Communities |
87 |
% |
89 |
% |
86 |
% |
86 |
% |
|||||||
|
Century Complete |
78 |
% |
74 |
% |
76 |
% |
78 |
% |
|||||||
|
Average FICO score |
719 |
727 |
720 |
726 |
|||||||||||
|
Century Communities |
722 |
730 |
722 |
731 |
|||||||||||
|
Century Complete |
714 |
722 |
713 |
716 |
|||||||||||
|
Loans sold to third parties: |
|||||||||||||||
|
Number of loans sold |
1,715 |
1,619 |
4,966 |
4,957 |
|||||||||||
|
Principal |
$ |
583,726 |
$ |
580,971 |
$ |
1,718,591 |
$ |
1,755,136 |
|||||||
Century Living
Our Century Living operations are engaged in the development, construction, management, and sales of multi-family rental properties, currently all located in Colorado. For the three and nine months ended September 30, 2026, our Century Living segment generated losses before income tax expense of $155 thousand and $203 thousand, respectively, as compared to losses before income tax expense of $298 thousand and $264 thousand, respectively, in the respective prior year periods. As of September 30, 2026, the Company had three multi-family rental properties in Colorado, of which two were available for leasing. As of September 30, 2026, these three projects represented 868 total multi-family units, including 251 under active construction and 617 completed units, and 505 units were leased. As of September 30, 2025, we had three multi-family rental properties, two of which were completed and one of which was under active construction. We subsequently sold one multi-family rental property during the fourth quarter of 2025.
Corporate
During the three and nine months ended September 30, 2026, our Corporate segment generated losses of $20.3 million and $76.2 million, respectively, as compared to losses of $29.3 million and $95.9 million, respectively, during the respective prior year periods. The decreases were primarily related to lower general and administrative costs, including lower charitable contributions and decreased compensation related to adjustments in stock-based compensation expense to reflect a decreased estimate in the number of shares which will ultimately vest and be issued upon settlement of certain performance share unit awards.
Homebuilding Gross Margin
Homebuilding gross margin represents home sales revenues less cost of home sales revenues. Our homebuilding gross margin percentage, which represents homebuilding gross margin divided by home sales revenues, decreased to 15.0% for the three months ended September 30, 2026 from 17.9% for the prior year period and decreased to 17.0% for the nine months ended September 30, 2026 from 18.4% for the prior year period. The decrease for the three-month comparison was primarily driven by inventory impairment charges of $19.6 million, compared to $3.2 million in the prior year period, as well as increased use of incentives. The decrease for the nine-month comparison was primarily driven by increased use of incentives, as well as higher inventory impairment charges of $19.6 million, compared to $11.0 million in the prior year period.
In the following table, we calculate our homebuilding gross margin and our non-GAAP adjusted homebuilding gross margin to exclude inventory impairment, if applicable, and as further adjusted to exclude interest in cost of home sales revenues and the effect of purchase price accounting for acquired work in process inventory, if applicable. The following table also provides reconciliations of our non-GAAP adjusted homebuilding gross margin excluding inventory impairment and as further adjusted to exclude interest in cost of home sales revenues and the effect of purchase price accounting for acquired work in process inventory to homebuilding gross margin, which is the most comparable GAAP measure.
(dollars in thousands)
|
Three Months Ended September 30, |
||||||||||||
|
2026 |
% |
2025 |
% |
|||||||||
|
Home sales revenues |
$ |
842,493 |
100.0 |
% |
$ |
955,162 |
100.0 |
% |
||||
|
Cost of home sales revenues |
(716,082) |
(85.0) |
% |
(783,746) |
(82.1) |
% |
||||||
|
Homebuilding gross margin |
126,411 |
15.0 |
% |
171,416 |
17.9 |
% |
||||||
|
Add: Inventory impairment |
19,605 |
2.3 |
% |
3,180 |
0.3 |
% |
||||||
|
Adjusted homebuilding gross margin excluding inventory impairment(1) |
146,016 |
17.3 |
% |
174,596 |
18.3 |
% |
||||||
|
Add: Interest in cost of home sales revenues |
15,873 |
1.9 |
% |
15,005 |
1.6 |
% |
||||||
|
Add: Purchase price accounting for acquired work in process inventory |
899 |
0.1 |
% |
2,830 |
0.3 |
% |
||||||
|
Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory(1) |
$ |
162,788 |
19.3 |
% |
$ |
192,431 |
20.1 |
% |
||||
|
Nine Months Ended September 30, |
||||||||||||
|
2026 |
% |
2025 |
% |
|||||||||
|
Home sales revenues |
$ |
2,474,127 |
100.0 |
% |
$ |
2,815,365 |
100.0 |
% |
||||
|
Cost of home sales revenues |
(2,054,741) |
(83.0) |
% |
(2,296,184) |
(81.6) |
% |
||||||
|
Homebuilding gross margin |
419,386 |
17.0 |
% |
519,181 |
18.4 |
% |
||||||
|
Add: Inventory impairment |
19,605 |
0.8 |
% |
10,951 |
0.4 |
% |
||||||
|
Adjusted homebuilding gross margin excluding inventory impairment(1) |
438,991 |
17.7 |
% |
530,132 |
18.8 |
% |
||||||
|
Add: Interest in cost of home sales revenues |
45,385 |
1.8 |
% |
41,994 |
1.5 |
% |
||||||
|
Add: Purchase price accounting for acquired work in process inventory |
2,200 |
0.1 |
% |
6,763 |
0.2 |
% |
||||||
|
Adjusted homebuilding gross margin excluding interest, inventory impairment and purchase price accounting for acquired work in process inventory(1) |
$ |
486,576 |
19.7 |
% |
$ |
578,889 |
20.6 |
% |
||||
(1)This non-GAAP financial measure should not be used as a substitute for our operating results in accordance with GAAP. See the reconciliations to the most comparable GAAP measure, homebuilding gross margin, and other information presented in the table above and in the narrative below and under the heading "-Non-GAAP Financial Measures." An analysis of any non-GAAP financial measure should be used in conjunction with results presented in accordance with GAAP.
For the three and nine months ended September 30, 2026, our adjusted homebuilding gross margin percentage, excluding inventory impairment, interest in cost of home sales revenues, and purchase price accounting for acquired work in process inventory, was 19.3% and 19.7%, respectively, as compared to 20.1% and 20.6%, respectively, for the same respective periods in 2025. We believe the above non-GAAP adjusted homebuilding gross margin information is meaningful as it isolates the impact that inventory impairment, indebtedness, and acquisitions (in each case as applicable) during any period, have on our homebuilding gross margin and allows for comparability of our homebuilding gross margins to prior year periods and to homebuilding gross margins of our competitors.
Selling, General and Administrative Expense
|
(dollars in thousands) |
|||||||||||||||
|
Three Months Ended September 30, |
Change |
||||||||||||||
|
2026 |
2025 |
Amount |
% |
||||||||||||
|
Selling, general and administrative expense |
$ |
118,837 |
$ |
119,895 |
$ |
(1,058) |
(0.9) |
% |
|||||||
|
As a percentage of home sales revenue |
14.1 |
% |
12.6 |
% |
|||||||||||
|
Nine Months Ended September 30, |
Change |
||||||||||||||
|
2026 |
2025 |
Amount |
% |
||||||||||||
|
Selling, general and administrative expense |
$ |
362,335 |
$ |
369,491 |
$ |
(7,156) |
(1.9) |
% |
|||||||
|
As a percentage of home sales revenue |
14.6 |
% |
13.1 |
% |
|||||||||||
Our selling, general and administrative expense decreased $1.1 million and $7.2 million, respectively, for the three and nine months ended September 30, 2026 as compared to the same respective periods in 2025, primarily driven by decreased commissions expense, decreased charitable contributions and decreased compensation related to adjustments in stock-based compensation expense to reflect a decreased estimate in the number of shares which will ultimately vest and be issued upon settlement of certain performance share unit awards. As a percentage of home sales revenue, our selling, general and administrative expense increased 150 basis points during each of the three and nine months ended September 30, 2026, respectively, driven primarily by decreased revenue on a partially fixed cost base.
Income Tax Expense
At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and to use that rate to provide for income taxes for the current year-to-date reporting period. Our 2026 estimated annual effective tax rate, before discrete items, of 26.0%, is driven by our blended federal and state statutory rate of 24.6%, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation, partially offset by estimated federal energy home credits for current year home deliveries, which combined resulted in a net increase in our effective tax rate of 1.4%.
For the nine months ended September 30, 2026, our estimated annual rate of 26.0% was impacted by discrete items which decreased our rate by 0.5%, primarily reflecting favorable adjustments to prior-year income tax estimates upon completion of our federal income tax return.
On July 4, 2025, H.R.1, the One Big Beautiful Bill Act, was signed into law, which disallows Section 45L tax credits for new energy-efficient homes delivered after June 30, 2026. As a result, our income tax expense and effective tax rate for 2026 will not reflect a benefit from such tax credits related to homes delivered after June 30, 2026.
For the three months ended September 30, 2026 and 2025, we recorded income tax expense of $3.2 million and $10.4 million, respectively. For the nine months ended September 30, 2026 and 2025, we recorded income tax expense of $25.1 million and $35.8 million, respectively.
Segment Assets
(dollars in thousands)
|
September 30, |
December 31, |
Increase (Decrease) |
||||||||||
|
2026 |
2025 |
Amount |
Change |
|||||||||
|
West |
$ |
874,109 |
$ |
891,808 |
$ |
(17,699) |
(2.0) |
% |
||||
|
Mountain |
1,019,838 |
941,617 |
78,221 |
8.3 |
% |
|||||||
|
Texas |
988,646 |
891,763 |
96,883 |
10.9 |
% |
|||||||
|
Southeast |
676,566 |
581,228 |
95,338 |
16.4 |
% |
|||||||
|
Century Complete |
465,504 |
389,954 |
75,550 |
19.4 |
% |
|||||||
|
Financial Services |
320,710 |
436,515 |
(115,805) |
(26.5) |
% |
|||||||
|
Century Living |
250,338 |
198,815 |
51,523 |
25.9 |
% |
|||||||
|
Corporate |
194,314 |
128,195 |
66,119 |
51.6 |
% |
|||||||
|
Total assets |
$ |
4,790,025 |
$ |
4,459,895 |
$ |
330,130 |
7.4 |
% |
||||
Total assets increased by $330.1 million, or 7.4%, to $4.8 billion at September 30, 2026 as compared to December 31, 2025, primarily due to (1) changes in our inventory balances within our homebuilding segments related to the timing of home and land development construction activities and (2) changes in our Century Living multi-family rental properties inventory balances related to the timing of disposition, development, and construction activities. These increases were partially offset by a decrease in our Financial Services assets primarily related to a decrease in mortgage loans held for sale.
Homebuilding lots owned and controlled
|
September 30, 2026 |
December 31, 2025 |
% Change |
|||||||||||||||||||
|
Owned |
Controlled |
Total |
Owned |
Controlled |
Total |
Owned |
Controlled |
Total |
|||||||||||||
|
West |
3,562 |
2,309 |
5,871 |
3,432 |
2,354 |
5,786 |
3.8 |
% |
(1.9) |
% |
1.5 |
% |
|||||||||
|
Mountain |
7,314 |
2,501 |
9,815 |
7,972 |
2,169 |
10,141 |
(8.3) |
% |
15.3 |
% |
(3.2) |
% |
|||||||||
|
Texas |
13,293 |
5,235 |
18,528 |
14,298 |
3,348 |
17,646 |
(7.0) |
% |
56.4 |
% |
5.0 |
% |
|||||||||
|
Southeast |
5,141 |
5,729 |
10,870 |
5,240 |
6,293 |
11,533 |
(1.9) |
% |
(9.0) |
% |
(5.7) |
% |
|||||||||
|
Century Complete |
4,163 |
11,722 |
15,885 |
3,858 |
11,952 |
15,810 |
7.9 |
% |
(1.9) |
% |
0.5 |
% |
|||||||||
|
Total |
33,473 |
27,496 |
60,969 |
34,800 |
26,116 |
60,916 |
(3.8) |
% |
5.3 |
% |
0.1 |
% |
|||||||||
We have continued to strategically manage our lot pipeline resulting in 60,969 lots owned and controlled at September 30, 2026, compared to 60,916 at December 31, 2025. Of our total lots owned and controlled as of September 30, 2026, 54.9% were owned and 45.1% were controlled, as compared to 57.1% owned and 42.9% controlled as of December 31, 2025.
Other Homebuilding Operating Data
Net new home contracts
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||||
|
September 30, |
Increase (Decrease) |
September 30, |
Increase (Decrease) |
|||||||||||||||
|
2026 |
2025 |
Amount |
% Change |
2026 |
2025 |
Amount |
% Change |
|||||||||||
|
West |
268 |
337 |
(69) |
(20.5) |
% |
913 |
1,052 |
(139) |
(13.2) |
% |
||||||||
|
Mountain |
350 |
418 |
(68) |
(16.3) |
% |
1,216 |
1,216 |
- |
- |
% |
||||||||
|
Texas |
524 |
433 |
91 |
21.0 |
% |
1,565 |
1,436 |
129 |
9.0 |
% |
||||||||
|
Southeast |
302 |
388 |
(86) |
(22.2) |
% |
1,047 |
1,159 |
(112) |
(9.7) |
% |
||||||||
|
Century Complete |
840 |
810 |
30 |
3.7 |
% |
2,537 |
2,761 |
(224) |
(8.1) |
% |
||||||||
|
Total |
2,284 |
2,386 |
(102) |
(4.3) |
% |
7,278 |
7,624 |
(346) |
(4.5) |
% |
||||||||
Net new home contracts (new home contracts net of cancellations) for the three months ended September 30, 2026 decreased by 102 homes, or 4.3%, to 2,284 as compared to 2,386 for the same period in 2025. Net new home contracts (new home contracts net of cancellations) for the nine months ended September 30, 2026 decreased by 346 homes, or 4.5%, to 7,278 as compared to 7,624 for the same period in 2025.
Average monthly absorption rate
Our overall average monthly "absorption rate" (calculated as monthly net new home contracts divided by average selling communities) for the three and nine months ended September 30, 2026 and 2025 by segment is included in the table below:
|
Three Months Ended September 30, |
Increase (Decrease) |
||||||||
|
2026 |
2025 |
Amount |
% Change |
||||||
|
West |
2.3 |
3.1 |
(0.8) |
(25.8) |
% |
||||
|
Mountain |
2.1 |
2.8 |
(0.7) |
(25.0) |
% |
||||
|
Texas |
2.0 |
2.0 |
- |
- |
% |
||||
|
Southeast |
2.8 |
2.8 |
- |
- |
% |
||||
|
Century Complete |
2.3 |
2.3 |
- |
- |
% |
||||
|
Total |
2.2 |
2.5 |
(0.3) |
(12.0) |
% |
||||
|
Nine Months Ended September 30, |
Increase (Decrease) |
||||||||
|
2026 |
2025 |
Amount |
% Change |
||||||
|
West |
2.6 |
3.4 |
(0.8) |
(23.5) |
% |
||||
|
Mountain |
2.5 |
2.8 |
(0.3) |
(10.7) |
% |
||||
|
Texas |
2.1 |
2.1 |
- |
- |
% |
||||
|
Southeast |
3.3 |
2.9 |
0.4 |
13.8 |
% |
||||
|
Century Complete |
2.5 |
2.6 |
(0.1) |
(3.8) |
% |
||||
|
Total |
2.5 |
2.7 |
(0.2) |
(7.4) |
% |
||||
During the three months ended September 30, 2026, our total average monthly absorption rate decreased by 12.0% to 2.2 per month and during the nine months ended September, 30 2026, our total average monthly absorption rate decreased by 7.4% to 2.5 per month, in each case as compared to the prior year period. Market conditions during the three and nine months ended September 30, 2026 continued to be impacted by elevated mortgage rates, macro-economic and geopolitical uncertainty, including volatility in fuel and transportation prices related to the conflict in the Middle East, and broader concerns about affordability by homebuyers.
Selling communities
|
Selling Communities |
Average Selling Communities |
Average Selling Communities |
|||||||||||
|
As of September 30, |
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
2026 |
2025 |
2026 |
2025 |
2026 |
2025 |
||||||||
|
West |
41 |
38 |
39 |
36 |
39 |
34 |
|||||||
|
Mountain |
57 |
53 |
56 |
49 |
55 |
49 |
|||||||
|
Texas |
86 |
73 |
88 |
73 |
83 |
75 |
|||||||
|
Southeast |
37 |
45 |
36 |
46 |
35 |
44 |
|||||||
|
Century Complete |
122 |
112 |
120 |
117 |
112 |
117 |
|||||||
|
Total |
343 |
321 |
339 |
321 |
324 |
319 |
|||||||
Our selling communities increased by 22 communities to 343 communities as of September 30, 2026, as compared to 321 communities at September 30, 2025. This 6.9% increase was driven by new community openings in excess of community closeouts during the current year period.
Backlog
(dollars in thousands)
|
As of September 30, |
|||||||||||||||||||||||||
|
2026 |
2025 |
% Change |
|||||||||||||||||||||||
|
Homes |
Dollar Value |
Average Sales Price |
Homes |
Dollar Value |
Average Sales Price |
Homes |
Dollar Value |
Average Sales Price |
|||||||||||||||||
|
West |
155 |
$ |
86,808 |
$ |
560.0 |
204 |
$ |
115,035 |
$ |
563.9 |
(24.0) |
% |
(24.5) |
% |
(0.7) |
% |
|||||||||
|
Mountain |
178 |
95,939 |
539.0 |
139 |
73,330 |
527.6 |
28.1 |
% |
30.8 |
% |
2.2 |
% |
|||||||||||||
|
Texas |
263 |
76,233 |
289.9 |
195 |
59,212 |
303.6 |
34.9 |
% |
28.7 |
% |
(4.5) |
% |
|||||||||||||
|
Southeast |
160 |
64,684 |
404.3 |
139 |
61,170 |
440.1 |
15.1 |
% |
5.7 |
% |
(8.1) |
% |
|||||||||||||
|
Century Complete |
350 |
90,292 |
258.0 |
440 |
108,177 |
245.9 |
(20.5) |
% |
(16.5) |
% |
4.9 |
% |
|||||||||||||
|
Total / Weighted Average |
1,106 |
$ |
413,956 |
$ |
374.3 |
1,117 |
$ |
416,924 |
$ |
373.3 |
(1.0) |
% |
(0.7) |
% |
0.3 |
% |
|||||||||
Backlog reflects the number of homes, net of cancellations, for which we have entered into a sales contract with a customer but for which we have not yet delivered the home. As of September 30, 2026, we had 1,106 homes in backlog, which represents a decrease of 1.0% as compared to 1,117 homes in backlog at September 30, 2025. The total value of our backlog was $414.0 million as of September 30, 2026 as compared to $416.9 million as of September 30, 2025. Backlog dollar value decreased 0.7% due to the decrease in the number of backlog units in our West and Century Complete segments, and the average sales price of backlog units increased 0.3% generally due to mix within individual communities and partially offset by increased use of incentives, in each case as of September 30, 2026 as compared to September 30, 2025.
Supplemental Guarantor Information
Our 6.625% senior notes due 2033 (which we refer to collectively as our "2033 Notes") and our 3.875% senior notes due 2029 (which we refer to collectively as our "2029 Notes" and collectively with our 2033 Notes, the "Senior Notes") are our unsecured senior obligations and are fully and unconditionally guaranteed on an unsecured basis, jointly and severally, by substantially all of our direct and indirect wholly-owned operating subsidiaries (which we refer to collectively as the "Guarantors"). Our subsidiaries associated with our Financial Services operations (which we refer to as the "Non-Guarantors") do not guarantee the Senior Notes. The guarantees are senior unsecured obligations of the Guarantors that rank equal with all existing and future senior debt of the Guarantors and senior to all existing and future subordinated debt of the Guarantors. The guarantees are effectively subordinated to any secured debt of the Guarantors. As of September 30, 2026, Century Communities, Inc. had $1.0 billion in total principal amount of Senior Notes outstanding.
Each of the indentures governing our Senior Notes provides that the guarantees of a Guarantor will be automatically and unconditionally released and discharged: (1) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the equity interests of such Guarantor after which the applicable Guarantor is no longer a "Restricted Subsidiary" (as defined in the applicable indenture), which sale, transfer, exchange or other disposition does not constitute an "Asset Sale" (as defined in the applicable indenture) or is made in compliance with applicable provisions of the applicable indenture; (2) upon any sale, transfer, exchange or other disposition (by merger, consolidation or otherwise) of all of the assets of such Guarantor, which sale, transfer, exchange or other disposition does not constitute an Asset Sale or is made in compliance with applicable provisions of the applicable indenture; provided, that after such sale, transfer, exchange or other disposition, such Guarantor is an "Immaterial Subsidiary" (as defined in the applicable indenture); (3) unless a default has occurred and is continuing, upon the release or discharge of such Guarantor from its guarantee of any indebtedness for borrowed money of the Company and the Guarantors so long as such Guarantor would not then otherwise be required to provide a guarantee pursuant to the applicable indenture; provided that if such Guarantor has incurred any indebtedness in reliance on its status as a Guarantor in compliance with applicable provisions of the applicable indenture, such Guarantor's obligations under such indebtedness, as the case may be, so incurred are satisfied in full and discharged or are otherwise permitted to be incurred by a Restricted Subsidiary (other than a Guarantor) in compliance with applicable provisions of the applicable indenture; (4) upon the designation of such Guarantor as an "Unrestricted Subsidiary" (as defined in the applicable indenture), in accordance with the applicable indenture; (5) if the Company exercises its legal defeasance option or covenant defeasance option under the applicable indenture or if the obligations of the Company and the Guarantors are discharged in compliance with applicable provisions of the applicable indenture, upon such exercise or discharge; or (6) in connection with the dissolution of such Guarantor under applicable law in accordance with the applicable indenture.
If a Guarantor were to become a debtor in a case under the US Bankruptcy Code, a court may decline to enforce its guarantee of the Senior Notes. This may occur when, among other factors, it is found that the Guarantor originally received less than fair consideration for the guarantee and the Guarantor would be rendered insolvent by enforcement of the guarantee. On the basis of historical financial information, operating history and other factors, we believe that each of the Guarantors, after giving effect to the issuance of its guarantee of the Senior Notes when the guarantee was issued, was not insolvent and did not and has not incurred debts beyond its ability to pay
such debts as they mature. The Company cannot predict, however, what standard a court would apply in making these determinations or that a court would agree with our conclusions in this regard.
The offer and sale of the Senior Notes and the related guarantees were issued in reliance upon an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"), and other applicable securities laws. Unless we subsequently register the resale of the Senior Notes and related guarantees, they may be offered or sold only in transactions that are exempt from the registration requirements under the Securities Act and the applicable securities laws of any other jurisdiction.
The Guarantors' condensed supplemental financial information is presented in this report as if the guarantees of the Senior Notes existed during the periods presented. If any Guarantors are released from their respective guarantees in future periods, the changes are reflected prospectively. We have determined that separate, full financial statements of the Guarantors would not be material to investors, and accordingly, supplemental financial information is presented below.
Century Communities, Inc. and Guarantors
|
Summarized Condensed Supplemental Balance Sheet Data (in thousands) |
September 30, 2026 |
December 31, 2025 |
||||
|
Assets |
||||||
|
Cash and cash equivalents |
$ |
289 |
$ |
96 |
||
|
Cash held in escrow |
33,740 |
48,571 |
||||
|
Accounts receivable |
55,236 |
53,327 |
||||
|
Inventories |
3,744,023 |
3,361,158 |
||||
|
Prepaid expenses and other assets |
463,882 |
410,899 |
||||
|
Property and equipment, net |
75,009 |
69,025 |
||||
|
Deferred tax assets, net |
36,841 |
38,176 |
||||
|
Goodwill |
41,109 |
41,109 |
||||
|
Total assets |
$ |
4,450,129 |
$ |
4,022,361 |
||
|
Liabilities and stockholders' equity |
||||||
|
Liabilities: |
||||||
|
Accounts payable |
$ |
140,694 |
$ |
111,493 |
||
|
Accrued expenses and other liabilities |
258,981 |
280,914 |
||||
|
Due to non-guarantors |
124,121 |
128,827 |
||||
|
Notes payable |
1,165,321 |
1,102,376 |
||||
|
Revolving line of credit |
456,000 |
51,500 |
||||
|
Total liabilities |
2,145,117 |
1,675,110 |
||||
|
Stockholders' equity |
2,305,012 |
2,347,251 |
||||
|
Total liabilities and stockholders' equity |
$ |
4,450,129 |
$ |
4,022,361 |
||
|
Summarized Condensed Supplemental Statements of Operations Data (in thousands) |
Nine Months Ended |
|||||
|
September 30, 2026 |
||||||
|
Total homebuilding revenues |
$ |
2,512,376 |
||||
|
Total homebuilding cost of revenues |
(2,079,016) |
|||||
|
Selling, general and administrative expense |
(361,876) |
|||||
|
Other expense |
(3,968) |
|||||
|
Income before income tax expense |
67,516 |
|||||
|
Income tax expense |
(17,224) |
|||||
|
Net income |
$ |
50,292 |
||||
Critical Accounting Estimates
Critical accounting estimates are those that we believe are both significant and require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and the estimates included in our financial statements might be impacted if we used different assumptions or conditions. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the fiscal year ended December 31,
2025, filed with the SEC on January 29, 2026, in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies."
Liquidity and Capital Resources
Overview
Our liquidity, consisting of our cash and cash equivalents and cash held in escrow and current capacity under our revolving line of credit, was $863.8 million as of September 30, 2026, compared to $1.1 billion as of December 31, 2025.
Our principal uses of capital for the three and nine months ended September 30, 2026 were our land purchases, land development, home construction, construction of multi-family rental properties, stock repurchases, dividends, and the payment of routine liabilities.
Cash flows for each of our communities depend on the stage in the development cycle and can differ substantially from reported earnings. Early stages of development or expansion require significant cash outlays for land acquisitions, entitlements and other approvals, and construction of model homes, roads, utilities, general landscaping and other amenities. Because these costs are a component of our inventory and not recognized in our condensed consolidated statements of operations until a home closes, we incur significant cash outlays prior to our recognition of earnings. In the later stages of community development, cash inflows may significantly exceed earnings reported for financial statement purposes, as the cash outflow associated with home and land construction was previously incurred. From a liquidity standpoint, we continue to acquire and develop lots in our markets when they meet our current investment criteria and dispose of lots when they do not meet our investment criteria.
Short-term Liquidity and Capital Resources
We use funds generated by operations, available borrowings under our revolving line of credit, and proceeds from issuances of debt or equity to fund our short-term working capital obligations and our purchases of land, as well as land development, home construction activities, and other cash needs. On September 30, 2026, we entered into an amendment to our credit agreement, which, among other changes, increased the aggregate commitments under our revolving line of credit from $1.0 billion to $1.2 billion. We had $456.0 million outstanding under our revolving line of credit as of September 30, 2026, as compared to $51.5 million outstanding as of December 31, 2025.
Our Financial Services operations use funds generated from operations, and availability under our mortgage repurchase facilities to finance its operations, including originations of mortgage loans to our homebuyers.
Our Century Living operations use excess cash from our operations, as well as project specific secured financing under construction loan agreements, to fund development of multi-family projects.
We believe that we will be able to fund our current liquidity needs for at least the next 12 months with our cash on hand, anticipated cash generated from operations, and cash expected to be available under our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available or on acceptable terms based on the macro-economy and market conditions at the time. In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as under our revolving line of credit, repurchase facilities, and construction loan agreements. We believe we are well positioned from a cash and liquidity standpoint to operate in an uncertain environment and to pursue other ways to properly deploy capital to enhance returns, which may include taking advantage of strategic opportunities as they arise.
Long-term Liquidity and Capital Resources
Beyond the next 12 months, we believe that our principal uses of capital will be land and inventory purchases and other expenditures, as well as principal and interest payments on our long-term debt obligations. We believe that we will be able to fund our long-term liquidity needs with anticipated cash generated from operations and cash expected to be available under our revolving line of credit or through accessing debt or equity capital, as needed or appropriate, although no assurance can be provided that such additional debt or equity capital will be available, or on favorable terms, especially if interest rates remain high. In a higher interest rate environment, we may incur additional interest expense on borrowings that bear floating interest rates, such as under our revolving line of credit, repurchase facilities, and construction loan agreements. To the extent these sources of capital are insufficient to meet our needs, we may also conduct additional public or private offerings of our securities, refinance debt, or dispose of certain assets to fund our operating activities and capital needs.
Material Cash Requirements
In the normal course of business, we enter into contracts and commitments that obligate us to make payments in the future in addition to our outstanding debt obligations and debt service requirements described below. These obligations impact our short-term and long-term liquidity and capital resource needs. For the three and nine months ended September 30, 2026, there were no material changes to the contractual obligations we previously described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 that was filed with the SEC on January 29, 2026, other than: (i) an amendment to our credit agreement, which among other changes, increased our aggregate commitments under our revolving line of credit to $1.2 billion and extended the maturity date for participating extending lenders to November 1, 2030, and (ii) an increase in borrowings under our revolving line of credit as of September 30, 2026 to $456.0 million, as compared to $51.5 million as of December 31, 2025, which borrowings are subject to variable interest rates.
In the ordinary course of business, we enter into land purchase contracts in order to procure lots for the construction of our homes. We are subject to customary obligations associated with entering into contracts for the purchase of land and improved lots. Purchase and option contracts for the purchase of land enable us to defer acquiring portions of properties owned by third parties until we have determined whether to exercise our option, which may serve to reduce our financial risks associated with long-term land holdings. These purchase contracts typically require a cash deposit, and the purchase of properties under these contracts is generally contingent upon satisfaction of certain requirements, including obtaining applicable property and development entitlements. We also utilize option contracts with land sellers and others as a method of acquiring land in staged takedowns, to help us manage the financial and market risk associated with land holdings, and to reduce the use of funds from our corporate financing sources. Option contracts generally require payment by us of a non-refundable deposit for the right to acquire lots over a specified period of time at pre-determined prices. Our obligations with respect to purchase contracts and option contracts are generally limited to the forfeiture of the related non-refundable cash deposits.
We strive to strategically manage our lot pipeline, while selectively reducing our lot pipeline by terminating certain contracts in markets that do not meet our investment criteria, in light of current market conditions, in order to maintain a balance between the number of owned lots as compared to lots we control through option and other contracts. We believe this balance provides us flexibility to adjust to market conditions as they develop. As of September 30, 2026, we had outstanding purchase contracts and option contracts for an aggregate of 27,496 lots totaling approximately $2.0 billion and we had an aggregate of $84.6 million of deposits for land contracts, of which $77.5 million were non-refundable cash deposits pertaining to land contracts. For contracts for which cash deposits were non-refundable, and subject to the terms of the outstanding contracts continuing to meet our investment criteria, we currently anticipate performing on the majority of our purchase and option contracts during the next 24 months. Our performance, including the timing and amount of purchase, if any, under these outstanding purchase and option contracts is subject to change and dependent on future market conditions. Our utilization of land option contracts is dependent on, among other things, the availability of land sellers willing to enter into option takedown arrangements, the availability of capital to financial intermediaries to finance the development of optioned lots, general housing market conditions, and local market dynamics. Options may be more difficult to procure from land sellers in strong housing markets and are more or less prevalent in certain geographic regions.
In addition, in the ordinary course of business, we explore, and from time to time, enter into purchase agreements to opportunistically acquire other homebuilders to add existing and future lots to our land portfolio and augment the organic expansion of our land portfolio. These acquisitions may be legally structured as asset or entity acquisitions and conditioned upon a due diligence investigation by us of the business for a limited period of time, in addition to other standard and customary closing conditions.
Outstanding Debt Obligations and Debt Service Requirements
One of our principal liquidity needs is the payment of principal and interest on our outstanding indebtedness. Our outstanding indebtedness is described in detail in Note 9 - Debt in the Notes to the Condensed Consolidated Financial Statements. We are required to meet certain covenants, and as of September 30, 2026, we were in compliance with all such covenants and requirements under the agreements governing our senior notes, revolving line of credit, construction loan agreements, and mortgage repurchase facilities.
Our outstanding debt obligations included the following as of September 30, 2026 and December 31, 2025, respectively (in thousands):
|
September 30, |
December 31, |
|||||
|
2026 |
2025 |
|||||
|
3.875% senior notes, due August 2029(1) |
$ |
497,780 |
$ |
497,201 |
||
|
6.625% senior notes, due September 2033(1) |
494,002 |
493,355 |
||||
|
Construction loan agreements |
129,450 |
90,269 |
||||
|
Other financing obligations(2) |
44,089 |
21,551 |
||||
|
Notes payable |
1,165,321 |
1,102,376 |
||||
|
Revolving line of credit |
456,000 |
51,500 |
||||
|
Mortgage repurchase facilities |
191,266 |
289,269 |
||||
|
Total debt |
$ |
1,812,587 |
$ |
1,443,145 |
||
(1)The carrying value of the senior notes reflects the impact of premiums and/or discounts (if applicable), and issuance costs that are amortized to interest expense over the respective terms of the senior notes.
(2)As of September 30, 2026 and December 31, 2025, other financing obligations included certain secured borrowings and insurance premium notes, which bore a weighted average interest rate of 6.3% and 5.8%, respectively.
From time to time, we may seek to incur additional debt obligations, refinance or increase our outstanding debt, or retire or purchase our outstanding debt through additional debt issuances, cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, redemptions or otherwise. Such additional debt issuances, repurchases, exchanges or redemptions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual obligations and restrictions, and other factors. The amounts involved may or may not be material during any particular reporting period.
3.875% Senior Notes Due 2029
As of September 30, 2026, we had outstanding $500.0 million in aggregate principal amount of our 3.875% Senior Notes due 2029 (the "2029 Notes"), which principal balance is due in August 2029. Prior to that date, interest only payments are due semi-annually in February and August of each year. These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions, and contains various optional redemption provisions to redeem the 2029 Notes, in whole or in part, at a time before, on, or after, February 15, 2029, and a put provision triggered by certain change of control events. As of September 30, 2026, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $497.8 million.
6.625% Senior Notes Due 2033
As of September 30, 2026, we had outstanding $500.0 million in aggregate principal amount of our 6.625% Senior Notes due 2033 (the "2033 Notes"), which principal balance is due in September 2033. Prior to that date, interest only payments are due semi-annually in March and September of each year. These notes were issued under an indenture which contains certain restrictive covenants on issuing future secured debt and other transactions, and contains various optional redemption provisions to redeem the 2033 Notes, in whole or in part, at a time before, on, or after, September 15, 2028, and a put provision triggered by certain change of control events. As of September 30, 2026, the aggregate obligation, inclusive of unamortized financing costs on these notes, was $494.0 million.
Construction Loan Agreements
Certain wholly owned subsidiaries of Century Living, LLC are parties to secured construction loan agreements with various banks (which we collectively refer to as "the lenders"). These construction loan agreements collectively provide that we may borrow up to an aggregate of $140.1 million from the lenders for purposes of construction of multi-family projects in Colorado, with advances made by the lenders upon the satisfaction of certain conditions. Portions of the obligations under the secured construction loan agreements are guaranteed by us. Borrowings under the construction loan agreements bear interest at various rates, including floating interest rates per annum equal to the Secured Overnight Financing Rate (which we refer to as "SOFR") plus an applicable margin. The outstanding principal balances and all accrued and unpaid interest is due on varying maturity dates from December 31, 2026 through February 28, 2029, with certain of the construction loan agreements allowing for the option to extend the maturity dates for a period of 12 months if certain conditions are satisfied. The construction loan agreements contain customary affirmative and negative covenants (including covenants related to construction completion, and limitations on the use of loan proceeds, transfers of land, equipment, and improvements), as well as customary events of default. Interest on our construction loan agreements is capitalized to the multi-family properties assets included in prepaid expenses and other assets on the condensed consolidated balance sheets while the related multi-family rental properties are being actively developed.
As of September 30, 2026 and December 31, 2025, $129.5 million and $90.3 million was outstanding under the construction loan agreements respectively, with borrowings that bore a weighted average interest rate of 6.1% and 6.1% as of September 30, 2026 and December 31, 2025, respectively, and we were in compliance with all covenants thereunder.
Revolving Line of Credit
On September 30, 2026, we entered into a First Amendment to Credit Agreement (the "First Amendment") with the lenders party thereto and U.S. Bank National Association, as Administrative Agent, amending the Credit Agreement, dated as of November 1, 2024, among us, the lenders party thereto, U.S. Bank National Association, as Administrative Agent, and the other banks party thereto (as amended, supplemented or otherwise modified to the date hereof, including by the First Amendment, the "Credit Agreement").
The First Amendment increased the aggregate commitments under our senior unsecured revolving credit facility from $1.0 billion to $1.2 billion and extended the maturity date for participating extending lenders to November 1, 2030. The First Amendment also added new lenders, revised certain financial covenants, eliminated the 0.10% credit spread adjustment applicable to SOFR-based borrowings, and made certain related amendments to the schedules and exhibits to the Credit Agreement. The revolving line of credit includes a $250.0 million sublimit for letters of credit. Subject to the terms and conditions of the Credit Agreement, we are entitled to request an increase in the size of the revolving line of credit by an amount not exceeding $400.0 million. The obligations under the Credit Agreement are guaranteed by certain of our subsidiaries. Funds are available under the revolving line of credit for the construction of homes, for the acquisition and development of land, land under development and lots for the eventual construction of homes thereon, and for working capital in the ordinary course of business. Unless terminated earlier, $100.0 million will mature on November 1, 2028, with the $1.1 billion in remaining commitments maturing on November 1, 2030. The principal amount thereunder, together with all accrued unpaid interest and other amounts owing thereunder, if any, will be payable in full on such date. Subject to the terms and conditions of the Credit Agreement, we may request once per year a one-year extension of the maturity date, with up to three such extensions permitted during the term of the revolving line of credit, subject to the approval of the lenders and the Administrative Agent. The Credit Agreement contains customary affirmative and negative covenants (including limitations on our ability to grant liens, incur additional debt, pay dividends, redeem our common stock, make certain investments, issue certain equity securities, engage in transactions with affiliates and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default. Borrowings under the Credit Agreement bear interest at a floating rate equal to Term SOFR or Daily Simple SOFR (in each case as defined in the Credit Agreement), plus an applicable margin between 1.45% and 2.30% per annum, or if selected by us, a base rate plus an applicable margin between 0.45% and 1.30% per annum. The "applicable margins" described above are determined by a schedule based on our leverage ratio, as defined in the Credit Agreement. The Credit Agreement also provides for customary fees including commitment fees payable to each lender ranging from 0.20% to 0.35% per annum based on our leverage ratio of the unused portion of the revolving line of credit and other customary fees.
As of September 30, 2026 and December 31, 2025, $456.0 million and $51.5 million, respectively, was outstanding under the revolving line of credit, with borrowings that bore an interest rate of 5.3% and 5.2%, respectively, and we were in compliance with all covenants under the Credit Agreement.
Mortgage Repurchase Facilities - Financial Services
Inspire is party to mortgage warehouse facilities with J.P. Morgan Chase Bank, N.A. and U.S. Bank National Association, which provide Inspire with uncommitted repurchase facilities, and Truist Bank, which provides Inspire with a committed repurchase facility, collectively providing up to an aggregate of $300.0 million as of September 30, 2026, secured by the mortgage loans financed thereunder. The repurchase facilities have varying short term maturity dates through May 28, 2027. Borrowings under the mortgage repurchase facilities bear interest at variable interest rates per annum equal to SOFR plus an applicable margin, and bore a weighted average interest rate of 5.4% and 5.4% as of September 30, 2026 and December 31, 2025, respectively.
Amounts outstanding under the repurchase facilities are not guaranteed by us or any of our subsidiaries, and the agreements contain various affirmative and negative covenants applicable to Inspire that are customary for arrangements of this type. As of September 30, 2026 and December 31, 2025, we had $191.3 million and $289.3 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.
Letters of Credit and Performance Bonds
In the normal course of business, we post letters of credit and performance and other bonds primarily related to our land development performance obligations with local municipalities. As of September 30, 2026 and December 31, 2025, we had issued and outstanding letters of credit under various facilities of $42.3 million and $65.3 million, respectively, and we had issued and outstanding performance and other bonds of $431.4 million and $445.1 million, respectively. Although significant development and construction activities have been completed related to the improvements at these sites, the letters of credit and performance and other bonds are not generally fully released until all development and construction activities are completed.
Stock Repurchases
Our stock repurchase program authorizes us to repurchase up to 4.5 million shares of our outstanding common stock, of which 1.3 million shares remained available to be repurchased as of September 30, 2026. During the three and nine months ended September 30, 2026, an aggregate of 169.9 thousand shares and 1.1 million shares, respectively, were repurchased under our stock repurchase program for a total purchase price of approximately $11.6 million and $71.2 million, respectively, and a weighted average per share price of $68.16 and $62.45, respectively, excluding the excise tax accrued on our net share repurchases as a result of the Inflation Reduction Act of 2022. During the three and nine months ended September 30, 2025, an aggregate of 296.9 thousand shares and 1.9 million shares, respectively, were repurchased for a total purchase price of approximately $20.0 million and $123.6 million, respectively, and a weighted average per share price of $67.36 and $63.91, respectively.
Under the terms of our stock repurchase program, shares may be repurchased from time to time in open market transactions at prevailing market prices, in privately negotiated transactions or by other means in accordance with federal securities laws. The actual manner, timing, amount and value of repurchases under the stock repurchase program is determined by management at its discretion and depends on a number of factors, including, among others, the market price of our common stock, trading volume, our available cash balance, our anticipated working capital needs, other capital management objectives and opportunities, applicable legal requirements, applicable tax effects including the 1% excise tax instituted under the Inflation Reduction Act of 2022, and general market and economic conditions. We finance any stock repurchases through available cash and our revolving line of credit. Repurchases also may be made under a trading plan established under Rule 10b5-1 under the Securities Exchange Act of 1934, which would permit shares to be repurchased when we otherwise may be precluded from doing so because of self-imposed trading blackout periods or other regulatory restrictions. Our stock repurchase program has been approved by our Board of Directors and has no expiration date and may be extended, suspended or discontinued by our Board of Directors at any time without notice at our discretion. All shares of common stock repurchased under the program will be cancelled and returned to the status of authorized but unissued shares of common stock.
Cash Dividends
The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the three and nine months ended September 30, 2026 and 2025, respectively (in thousands, except per share information):
|
Nine Months Ended September 30, 2026 |
||||||||||
|
Cash Dividends Declared and Paid |
||||||||||
|
Declaration Date |
Record Date |
Payable Date |
Per Share |
Amount |
||||||
|
February 4, 2026 |
February 25, 2026 |
March 11, 2026 |
$ |
0.32 |
$ |
9,313 |
||||
|
May 6, 2026 |
May 27, 2026 |
June 10, 2026 |
$ |
0.32 |
$ |
9,154 |
||||
|
August 12, 2026 |
August 26, 2026 |
September 9, 2026 |
$ |
0.32 |
$ |
9,052 |
||||
|
Nine Months Ended September 30, 2025 |
||||||||||
|
Cash Dividends Declared and Paid |
||||||||||
|
Declaration Date |
Record Date |
Payable Date |
Per Share |
Amount |
||||||
|
February 5, 2025 |
February 26, 2025 |
March 12, 2025 |
$ |
0.29 |
$ |
8,922 |
||||
|
May 7, 2025 |
May 28, 2025 |
June 11, 2025 |
$ |
0.29 |
$ |
8,783 |
||||
|
August 13, 2025 |
August 27, 2025 |
September 10, 2025 |
$ |
0.29 |
$ |
8,607 |
||||
While we expect to continue to pay quarterly cash dividends on our common stock during the remainder of 2026, the declaration and payment of future cash dividends on our common stock, whether at current levels or at all, are at the discretion of our Board of Directors and depend upon, among other things, our expected future earnings, cash flows, capital requirements, access to external financing, debt structure and any adjustments thereto, operational and financial investment strategy, and general financial condition, as well as general business conditions.
Cash Flows- Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
For the nine months ended September 30, 2026 and 2025, the comparison of cash flows is as follows:
Our primary sources of cash flows from operations are from the sale of single-family attached and detached homes and mortgages. Our primary uses of cash flows from operations are the acquisition of land and expenditures associated with the construction of our single-family attached and detached homes and the origination of mortgages held for sale. Net cash used in operating activities was $267.5 million during the nine months ended September 30, 2026 as compared to $57.7 million during the prior year period. The increase in net cash used was primarily a result of (1) increased expenditures associated with the construction of homes during the nine months ended September 30, 2026 as compared to the nine months ended September 30, 2025 and (2) a $38.5 million decrease in net income during the first nine months of 2026 compared to the prior year period, partially offset by benefits from the net changes in assets and liabilities, including cash balances held in escrow, as compared to the prior year period.
Net cash used in investing activities was $23.2 million during the nine months ended September 30, 2026, compared to net cash provided by investing activities of $30.6 million during the prior year period. This change was primarily related to $44.9 million in cash proceeds related to the sale of our mortgage servicing rights portfolio during the nine months ended September 30, 2025.
Net cash provided by financing activities was $261.0 million during the nine months ended September 30, 2026, as compared to $14.9 million during the prior year period. This change was primarily attributable to (1) a $201.0 million increase in net borrowings under our revolving line of credit facility and (2) a $52.4 million decrease in stock repurchases, in each case during the current year period as compared to the prior year period.
As of September 30, 2026, our cash and cash equivalents and restricted cash balance was $109.8 million, as compared to $139.6 million as of December 31, 2025.
Non-GAAP Financial Measures
In this Form 10-Q, we use certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, net homebuilding debt to net capital, adjusted net income and adjusted diluted earnings per share. These non-GAAP financial measures are presented to provide investors additional information to facilitate the comparison of our past and present operations. We believe these non-GAAP financial measures provide useful information to investors because they are used to evaluate our performance on a comparable year-over-year or period-over-period basis. These non-GAAP financial measures are not in accordance with, or an alternative for, GAAP measures and may be different from non-GAAP financial measures used by other companies. In addition, these non-GAAP financial measures are not based on any comprehensive or standard set of accounting rules or principles. Accordingly, the calculation of our non-GAAP financial measures may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes. Non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with our financial results as determined in accordance with GAAP. These measures should only be used to evaluate our financial results in conjunction with the corresponding GAAP measures. Accordingly, we qualify our use of non-GAAP financial information in a statement when non-GAAP financial information is presented.
EBITDA and Adjusted EBITDA
The following table presents EBITDA and adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025. EBITDA and adjusted EBITDA are non-GAAP financial measures we use as a supplemental measure in evaluating operating performance. We define EBITDA as net income before (i) income tax expense, (ii) interest in cost of home sales revenues, (iii) interest expense (income), and (iv) depreciation and amortization expense. We define adjusted EBITDA as EBITDA before inventory impairment, abandonment of lot option contracts, stock-based compensation expense, restructuring costs, loss on debt extinguishment, impairment on other investment, and purchase price accounting for acquired work in process inventory, in each case as applicable during a period. We believe EBITDA and adjusted EBITDA provide an indicator of general economic performance that is not affected by fluctuations in interest rates or effective tax rates, levels of depreciation or amortization, and other specified factors that management believes affect comparability. Accordingly, our management believes that these measurements are useful for comparing general operating performance from period to period. EBITDA and adjusted EBITDA should be considered in addition to, and not as a substitute for, consolidated net income in accordance with GAAP as a measure of performance. Our presentation of adjusted EBITDA should not be construed as an indication that our future results will be unaffected by unusual or other specified factors that management believes affect comparability. Each of our EBITDA and adjusted EBITDA is limited as an analytical tool, and should not be considered in isolation or as a substitute for analysis of our results of operations as reported under GAAP.
(dollars in thousands)
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||
|
2026 |
2025 |
% Change |
2026 |
2025 |
% Change |
|||||||||||||||
|
Net income |
$ |
12,617 |
$ |
37,403 |
(66.3) |
% |
$ |
73,174 |
$ |
111,641 |
(34.5) |
% |
||||||||
|
Income tax expense |
3,218 |
10,435 |
(69.2) |
% |
25,060 |
35,798 |
(30.0) |
% |
||||||||||||
|
Interest in cost of home sales revenues |
15,873 |
15,005 |
5.8 |
% |
45,385 |
41,994 |
8.1 |
% |
||||||||||||
|
Interest expense (income) |
54 |
876 |
(93.8) |
% |
442 |
445 |
(0.7) |
% |
||||||||||||
|
Depreciation and amortization expense |
5,365 |
6,005 |
(10.7) |
% |
16,107 |
18,868 |
(14.6) |
% |
||||||||||||
|
EBITDA |
$ |
37,127 |
$ |
69,724 |
(46.8) |
% |
$ |
160,168 |
$ |
208,746 |
(23.3) |
% |
||||||||
|
Inventory impairment |
19,605 |
3,180 |
516.5 |
% |
19,605 |
10,951 |
79.0 |
% |
||||||||||||
|
Abandonment of lot option contracts |
2,320 |
5,159 |
(55.0) |
% |
4,399 |
9,306 |
(52.7) |
% |
||||||||||||
|
Stock-based compensation expense (1) |
3,461 |
5,486 |
(36.9) |
% |
10,641 |
13,720 |
(22.4) |
% |
||||||||||||
|
Restructuring costs |
- |
- |
- |
% |
- |
1,505 |
(100.0) |
% |
||||||||||||
|
Loss on debt extinguishment |
- |
1,361 |
(100.0) |
% |
- |
1,361 |
(100.0) |
% |
||||||||||||
|
Purchase price accounting for acquired work in process inventory |
899 |
2,830 |
(68.2) |
% |
2,200 |
6,763 |
(67.5) |
% |
||||||||||||
|
Adjusted EBITDA |
$ |
63,412 |
$ |
87,740 |
(27.7) |
% |
$ |
197,013 |
$ |
252,352 |
(21.9) |
% |
||||||||
(1)Beginning in the fourth quarter of 2025, we added "Stock-based compensation expense" as an adjustment in our non-GAAP adjusted EBITDA calculation. Accordingly, we have recast the corresponding prior period information to conform to the current presentation and calculation.
Net Homebuilding Debt to Net Capital
The following table presents our ratio of net homebuilding debt to net capital, which is a non-GAAP financial measure. We calculate this by dividing net homebuilding debt (homebuilding debt less cash and cash equivalents, and cash held in escrow) by net capital (net homebuilding debt plus total stockholders' equity). Homebuilding debt is our total debt minus our outstanding borrowings under our construction loan agreements and our repurchase facilities. The most directly comparable GAAP measure is the ratio of homebuilding debt to total capital. We believe the ratio of net homebuilding debt to net capital is a relevant and useful financial measure to investors in understanding the leverage employed in our operations and as an indicator of our ability to obtain external financing.
(dollars in thousands)
|
September 30, |
December 31, |
|||||
|
2026 |
2025 |
|||||
|
Notes payable |
$ |
1,165,321 |
$ |
1,102,376 |
||
|
Revolving line of credit |
456,000 |
51,500 |
||||
|
Construction loan agreements |
(129,450) |
(90,269) |
||||
|
Total homebuilding debt |
1,491,871 |
1,063,607 |
||||
|
Total stockholders' equity |
2,560,998 |
2,591,732 |
||||
|
Total capital |
$ |
4,052,869 |
$ |
3,655,339 |
||
|
Homebuilding debt to capital |
36.8% |
29.1% |
||||
|
Total homebuilding debt |
$ |
1,491,871 |
$ |
1,063,607 |
||
|
Cash and cash equivalents |
(86,086) |
(109,443) |
||||
|
Cash held in escrow |
(33,740) |
(48,571) |
||||
|
Net homebuilding debt |
1,372,045 |
905,593 |
||||
|
Total stockholders' equity |
2,560,998 |
2,591,732 |
||||
|
Net capital |
$ |
3,933,043 |
$ |
3,497,325 |
||
|
Net homebuilding debt to net capital |
34.9% |
25.9% |
||||
Adjusted Net Income and Adjusted Diluted Earnings per Share
Adjusted net income and adjusted diluted earnings per share (which we refer to as "Adjusted EPS") are non-GAAP financial measures that we believe are useful to management, investors and other users of our financial information in evaluating our operating results and understanding our operating trends without the effect of specified factors that management believes affect comparability. We believe excluding specified items that management believes affect comparability provides more comparable assessment of our financial results from period to period. We define adjusted net income as consolidated net income before (i) income tax expense; (ii) inventory impairment; (iii) abandonment of lot option contracts; (iv) restructuring costs; (v) loss on debt extinguishment; (vi) impairment on other investment; and (vii) purchase price accounting for acquired work in process inventory; in each case, as applicable during a period, less adjusted income tax expense, calculated using our estimated annual effective tax rate after discrete items for the applicable period. Adjusted EPS is calculated by dividing adjusted net income by weighted average common shares - diluted.
(in thousands, except share and per share information)
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||
|
Numerator |
||||||||||||
|
Net income |
$ |
12,617 |
$ |
37,403 |
$ |
73,174 |
$ |
111,641 |
||||
|
Denominator |
||||||||||||
|
Weighted average common shares outstanding - basic |
28,363,406 |
29,645,795 |
28,722,425 |
30,266,752 |
||||||||
|
Dilutive effect of stock-based compensation awards |
112,862 |
373,358 |
52,089 |
344,259 |
||||||||
|
Weighted average common shares outstanding - diluted |
28,476,268 |
30,019,153 |
28,774,514 |
30,611,011 |
||||||||
|
Earnings per share: |
||||||||||||
|
Basic |
$ |
0.44 |
$ |
1.26 |
$ |
2.55 |
$ |
3.69 |
||||
|
Diluted |
$ |
0.44 |
$ |
1.25 |
$ |
2.54 |
$ |
3.65 |
||||
|
Adjusted earnings per share |
||||||||||||
|
Numerator |
||||||||||||
|
Net income |
$ |
12,617 |
$ |
37,403 |
$ |
73,174 |
$ |
111,641 |
||||
|
Income tax expense |
3,218 |
10,435 |
25,060 |
35,798 |
||||||||
|
Income before income tax expense |
15,835 |
47,838 |
98,234 |
147,439 |
||||||||
|
Inventory impairment |
19,605 |
3,180 |
19,605 |
10,951 |
||||||||
|
Abandonment of lot option contracts |
2,320 |
5,159 |
4,399 |
9,306 |
||||||||
|
Restructuring costs |
- |
- |
- |
1,505 |
||||||||
|
Loss on debt extinguishment |
- |
1,361 |
- |
1,361 |
||||||||
|
Purchase price accounting for acquired work in process inventory |
899 |
2,830 |
2,200 |
6,763 |
||||||||
|
Adjusted income before income tax expense |
38,659 |
60,368 |
124,438 |
177,325 |
||||||||
|
Adjusted income tax expense(1) |
(9,862) |
(14,657) |
(31,745) |
(43,054) |
||||||||
|
Adjusted net income |
$ |
28,797 |
$ |
45,711 |
$ |
92,693 |
$ |
134,271 |
||||
|
Denominator - Diluted |
28,476,268 |
30,019,153 |
28,774,514 |
30,611,011 |
||||||||
|
Adjusted diluted earnings per share |
$ |
1.01 |
$ |
1.52 |
$ |
3.22 |
$ |
4.39 |
||||
(1)The tax rates used in calculating adjusted net income for both the three and nine months ended September 30, 2026 were 25.5%, which are reflective of our GAAP tax rate for the nine months ended September 30, 2026. The tax rates used in calculating adjusted net income for both the three and nine months ended September 30, 2025 were 24.3%, which are reflective of our GAAP tax rate for the nine months ended September 30, 2025.
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