Century Communities, Inc.

Greetings. Welcome to Century Community's second quarter 2022 earnings conference call. All lines will be on listen only mode throughout the presentation. We will have a question and answer session at the end of the presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tyler Langton, Senior Vice President. Thank you, sir. You may begin.

Good afternoon. Thank you for joining us today for Century Community's earnings conference call for the second quarter 2022. Before the call begins, I would like to remind everyone that certain statements made during this call are not based on historical information and may constitute forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements. Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's 2021 Annual Report on Form 10-K, as supplemented by our other SEC filings. Our SEC filings are available at www.sec.gov and on our website at www.centurycommunities.com. The company undertakes no duty to update any forward-looking statements that are made during this call. Additionally, certain non-GAAP financial measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Management will be available after the call should you have any questions that did not get answered. Hosting the call today are Dale Francescan, Chairman and Co-Chief Executive Officer, Rob Francescan, Co-Chief Executive Officer and President, and David Messinger, Chief Financial Officer. Following today's prepared remarks, we'll open the line up for questions. With that, I will turn the call over to Dale.

Thank you, Tyler, and good afternoon, everyone. We're very pleased with our record setting performance this quarter, including $214 million in pre-tax income, the highest in our history, net income of $159 million, a second quarter record, and diluted earnings per share of $4.78, equaling the company record we established in the fourth quarter of 2021. The achieved levels of pre-tax income net income and earnings per share represented increases of 40%, 35% and 38% respectively from the prior year quarter. Our focus on operational fundamentals enabled us to produce another quarter of strong gross margins of 28.2% and adjusted gross margins of 29.4%, which were only 10 basis points below the highest in our history. Second quarter EBITDA increased 33% year-over-year to a second quarter record of $230 million. During the quarter, we delivered 2,713 homes for $1.1 billion in revenues at an average sales price of $418,000 with deliveries generally flat year-over-year while our average sales price was up 15%. Total revenues were $1.2 billion, a second quarter record. Backlog at quarter end consisted of 4,767 sold homes valued at $2 billion, year-over-year increases of 7% and 12%, respectively. Net new contracts declined to 2,233 homes as the sharp increase in mortgage rates and overall uncertainty caused some homebuyers to pause their plans to acquire a home as the quarter progressed. We have seen this understandable and predictable pattern many times before, with the most recent being in the latter part of 2018. Given the strong underlying demographics that still exist, we expect buyers will return to the market as they adjust to these changes and continue to make decisions around their careers, marriage, and children that so often lead to the purchase of a new home. The summer season for home buying is typically the slowest period of the year, and we expect that to be especially true this year. We are also seeing potential home buyers looking for homes that are closer to completion in order to lock in their financing options. We do not have a significant number of available homes with near-term completions, and coupled with the summer months, we expect our third quarter sales to be consistent with the second quarter. While we still have the ability to raise prices in certain communities, most of our subdivisions have begun utilizing incentives more than they have over the past two years. Year-to-date, our incentives have averaged 80 basis points of average sales price versus 380 basis points in 2018, and we expect incentives to return to those levels. The type and amount of incentive differs by community and by market. We have seen mortgage rate buy downs, forward rate commitments, and rate locks to be effective in getting buyers in the door and signing contracts. We are not typically reducing base prices in existing communities, but are carefully reviewing them prior to opening a new community. While inventory levels have started to increase for the industry as a whole, these increases are off very low levels, and absolute inventory is still quite low. Months of supply for both new and resale homes in most of our markets remain well below the national average of 2.6, and rental rates are continuing to increase which we believe will be positive for home purchases. We are also encouraged to see that on a year-over-year basis, community counts in most of our markets are down significantly, including Atlanta down 11%, Charlotte down 13%, and Houston down 10%, according to John Burns Real Estate Consulting, further limiting supply and providing pricing stability. We are well positioned to navigate the current headwinds given our focus on delivering affordable homes and the flexibility inherent in our model. By offering homes at the lower end of the pricing spectrum, we can appeal to the largest number of potential homebuyers and to the homebuyers that are buying more out of need as compared to a move-up buyer making a discretionary purchase. Our spec-based model allows us to increase or reduce starts and react quickly to changes in market conditions. With the exception of new communities, we are generally matching our starts pace with the sales cadence in a subdivision. In the second quarter, we continued our goal of returning profits to our shareholders by maintaining our quarterly cash dividend of 20 cents per share and repurchasing approximately 791,000 shares of our common stock at an average price of $45.42 per share. The share repurchases were at a cost equal to 75% of ending book value as of June 30, 2022. Our record second quarter results are due to the innovation, commitment, and resilience of our talented teams across the country. They continue to support our mission of providing our customers a home for every dream, and we thank them for their contributions. I'll now turn the call over to Rob to discuss our operating results and plans going forward in more detail.