What changed in this filing

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Item 1. Financial Statements

2021-07-29 compared with 2021-04-29 · 125 added, 92 removed, 302 unchanged (42% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of March 31, 2021 and December 31, 2020

As of June 30, 2021 and December 31, 2020

(in thousands, except share and per share amounts)

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Preferred stock, $ 0.01 par value, 50,000,000 shares authorized, none outstanding

Common stock, $ 0.01 par value, 100,000,000 shares authorized, 33,708,286 and 33,350,633 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Common stock, $ 0.01 par value, 100,000,000 shares authorized, 33,760,940 and 33,350,633 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

5 unchanged sentences

Unaudited Condensed Consolidated Statements of Operations

For the Three Months Ended March 31, 2021 and 2020

For the Three and Six Months Ended June 30, 2021 and 2020

(in thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Homebuilding revenues

6 unchanged sentences

Cost of home sales revenues

( 1,521,175 )

( 1,091,181 )

Cost of land sales and other revenues

Total homebuilding cost of revenues

( 1,538,195 )

( 1,107,732 )

Financial services costs

9 unchanged sentences

Unaudited Condensed Consolidated Statements of Cash Flows

For the Three Months Ended March 31, 2021 and 2020

For the Six Months Ended June 30, 2021 and 2020

( in thousands )

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

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Accrued expenses and other liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Investing activities

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Withholding of common stock upon vesting of restricted stock units

Net cash provided by financing activities

Dividend payments

Net cash used in financing activities

Cash and cash equivalents and Restricted cash

10 unchanged sentences

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2021 and 2020

For the Three and Six Months Ended June 30, 2021 and 2020

( in thousands )

For the Three Months Ended June 30, 2021 and 2020

Additional Paid-In Capital

1 unchanged sentence

Total Stockholders'

Balance at December 31, 2020

Balance at March 31, 2021

Vesting of restricted stock units

1 unchanged sentence

Stock-based compensation expense

Cash dividends declared

Balance at June 30, 2021

Balance at March 31, 2020

Vesting of restricted stock units

Withholding of common stock upon vesting of restricted stock units

Stock-based compensation expense

Balance at June 30, 2020

For the Six Months Ended June 30, 2021 and 2020

Additional Paid-In Capital

Retained Earnings

Total Stockholders'

Balance at December 31, 2020

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Stock-based compensation expense

Balance at March 31, 2020

Cash dividends declared

Balance at June 30, 2021

Balance at December 31, 2019

Vesting of restricted stock units

Withholding of common stock upon vesting of restricted stock units

Stock-based compensation expense

Balance at June 30, 2020

See Notes to Unaudited Condensed Consolidated Financial Statements

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

March 31, 2021

June 30, 2021

Basis of Presentation

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entry-level, first and second time move-up, and lifestyle homebuyers, and provides our homebuyers with the ability to personalize their homes through certain option and upgrade opportunities.

Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and provides no option or upgrade opportunities.

Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and generally provides no option or upgrade opportunities.

Our homebuilding operations are organized into the following five reportable segments:

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In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations for the periods presented.

Interim results of operations are not necessarily indicative of the results that may be achieved for the full year, particularly in light of the novel coronavirus (COVID-19) pandemic and measures intended to mitigate the spread.

Interim results of operations are not necessarily indicative of the results that may be achieved for the full year.

The financial statements and related notes do not include all information and footnotes required by GAAP and should be read in conjunction with the consolidated financial statements for the year ended December 31, 2020, which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that was filed with the SEC on February 5, 2021.

The COVID-19 pandemic has led to adverse impacts on the U.S.

and global economies and initially created uncertainty regarding potential impacts to our operations and customer demand.

Commencing in March 2020, numerous state and local municipalities issued public health orders with varying expiration dates requiring the closure of nonessential businesses, as well as ordering individuals to stay at home and/or shelter in place whenever possible.

These public health orders generally exempted the sale and construction of new homes, other than a small portion of our operations, which had to cease operations in early April 2020.

During the latter half of the second quarter of 2020, state and local municipalities in the majority of our markets began to lift the most stringent of the public health restrictions and numerous nonessential businesses were allowed to reopen.

As of the date of this filing and throughout the first quarter of 2021, we are and were able to build and sell homes in all of our markets .

Principles of Consolidation

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The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Accordingly, actual results could differ from those estimates, particularly given the uncertainties associated with the ongoing COVID-19 pandemic.

Accordingly, actual results could differ from those estimates.

Recently Adopted Accounting Standards

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Each of our four geographic regions is considered a separate operating segment.

Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the internet, and provides no option or upgrade selections.

Our Century Complete brand targets entry-level homebuyers, primarily sells homes through retail studios and the

internet, and generally provides no option or upgrade selections.

Our Century Complete brand currently has operations in 11 states and is managed separately from our four geographic regions.

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 Mountain (Arizona, Colorado, Nevada, and Utah)

 Southeast (Georgia, North Carolina, South Carolina and Tennessee)

 Century Complete (Alabama, Arizona, Florida, Georgia, Indiana, Iowa, Michigan, North Carolina, Ohio, South Carolina, and Texas)

 Southeast (Georgia, North Carolina, South Carolina, Tennessee, and Florida)

 Century Complete (Alabama, Arizona, Florida, Georgia, Indiana, Kentucky, Michigan, North Carolina, Ohio, South Carolina, and Texas)

We have also identified our Financial Services operations, which provide mortgage, title, and insurance services to our homebuyers, as a sixth reportable segment.

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The following table summarizes total revenue and income before income tax expense by segment (in thousands ):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Century Complete

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Inspire is a full-service mortgage lender and primarily originates mortgage loans for our homebuyers.

Inspire sells substantially all of the loans it originates either as whole loans, or with servicing rights retained, in the secondary mortgage market within a short period of time after origination, generally within 30 days.

Inspire sells

substantially all of the loans it originates either as loans with servicing rights released, or with servicing rights retained, in the secondary mortgage market within a short period of time after origination, generally within 30 days.

Inspire primarily finances these loans using its mortgage repurchase facilities.

Mortgage loans in process for which interest rates were committed to borrowers totaled approximately $ 219.6 million and $ 172.3 million at March 31, 2021 and December 31, 2020, respectively, and carried a weighted average interest rate of approximately 3.2 % and 2.8 %, respectively .

As of March 31, 2021 and December 31, 2020, Inspire had mortgage loans held for sale

with an aggregate fair value of $ 303.4 million and $ 282.6 million, respectively, and an aggregate outstanding principal balance of $ 295.2 million and $ 269.6 million, respectively.

Our net gains on the sale of mortgage loans were $ 22.9 million and $ 11.6 million for the three months ended March 31, 2021 and 2020, respectively, and are included in the financial services revenue on the condensed consolidated statements of operations.

Interest rate risks related to these obligations are typically mitigated by the preselling of loans to investors or through our interest rate hedging program.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $ 148.7 million and $ 172.3 million at June 30, 2021 and December 31, 2020, respectively, and carried a weighted average interest rate of approximately 3.2 % and 2.8 %, respectively .

As of June 30, 2021 and December 31, 2020, Inspire had mortgage loans held for sale with an aggregate fair value of $ 235.7 million and $ 282.6 million, respectively, and an aggregate outstanding principal balance of $ 226.9 million and $ 269.6 million, respectively.

Our net gains on the sale of mortgage loans were $ 23.9 million and $ 16.1 million for the three months ended June 30, 2021 and 2020, respectively, and were $ 46.8 million and $ 27.6 million for the six months ended June 30, 2021 and 2020, respectively, and are included in the financial services revenue on the condensed consolidated statements of operations.

Interest rate risks related to these obligations are typically mitigated by the preselling of loans to investors or through our program to economically hedge interest rates.

Mortgage loans in process for which interest rates were committed to borrowers, mortgage loans held-for-sale, including the rights to service the mortgage loans, as well as the derivative instrument used to economically hedge our interest rate risk, which are typically forward commitments on mortgage backed securities, are carried at fair value and changes in fair value are reflected in financial services revenue on the condensed consolidated statements of operations.

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Income taxes payable

Derivative liability

Derivative liabilities

Other accrued liabilities

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We subsequently assess the adequacy of our warranty accrual on a quarterly basis through a model that incorporates historical payment trends and adjust the amounts recorded, if necessary.

Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $ 1.8 million and $ 1.1 million

during the three months ended March 31, 2021 and 2020, respectively.

Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $ 0.4 million and $ 0.2 million during the three months ended June 30, 2021 and 2020, respectively, and we reduced our warranty reserve by $ 2.2 million and $ 1.3 million during the six months ended June 30, 2021 and 2020, respectively.

These adjustments are included in cost of home sales revenues on our condensed consolidated statements of operations.

Changes in our warranty accrual for the three months ended March 31, 2021 and 2020 are detailed in the table below (in thousands) :

Three Months Ended March 31,

Changes in our warranty accrual for the three and six months ended June 30, 2021 and 2020 are detailed in the table below (in thousands) :

Three Months Ended June 30,

Six Months Ended June 30,

Beginning balance

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Ending balance

Our outstanding debt obligations included the following as of March 31, 2021 and December 31, 2020 (in thousands):

Our outstanding debt obligations included the following as of June 30, 2021 and December 31, 2020 (in thousands):

6.750 % senior notes, due May 2027 (1)

2 unchanged sentences

Notes payable

Revolving line of credit, due April 2023

Revolving line of credit

Mortgage repurchase facilities

1 unchanged sentence

Revolving Line of Credit

We are party to an Amended and Restated Credit Agreement with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, the lenders party thereto and certain of our subsidiaries (which we refer to as the “Amended and Restated Credit Agreement”), which, as amended most recently on December 13, 2019, provides us with a revolving line of credit of up to $ 640.0 million, and unless terminated earlier, will mature on April 30, 2023 .

Our obligations under the Amended and Restated Credit Agreement are guaranteed by certain of our subsidiaries.

The Amended and Restated 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 and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default.

These covenants are measured as defined in the Amended and Restated Credit Agreement and are reported to the lenders quarterly.

Borrowings under the Amended and Restated Credit Agreement bear interest at a floating rate equal to the adjusted Eurodollar Rate plus an applicable margin between 2.60 % and 3.10 % per annum, or, in the Administrative Agent’s discretion, a base rate plus an applicable margin between 1.60 % and 2.10 % per annum.

As of March 31, 2021 and December 31, 2020, no amounts were outstanding under the credit facility and we were in compliance with all covenants.

On June 5, 2018, we entered into an Amended and Restated Credit Agreement with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, the lenders party thereto and certain of our subsidiaries (which we refer to as the “Amended and Restated Credit Agreement”), which provided us with a revolving line of credit of up to $ 640.0 million, and unless terminated earlier, was scheduled to mature on April 30, 2023 .

On May 21, 2021, we entered into a Second Amended and Restated Credit Agreement (the “Second A&R Credit Agreement”) with Texas Capital Bank, National Association, as Administrative Agent and L/C Issuer, and the lenders party thereto.

The Second A&R Credit Agreement, which amended and restated the Amended and Restated Credit Agreement , provides us with a senior unsecured revolving line of credit (the “Credit Facility”) of up to $ 800 million, and unless terminated earlier, will mature on April 30, 2026 .

The Credit Facility includes a $ 250.0 million sublimit for standby letters of credit.

Under the terms of the Second A&R Credit Agreement, the Company is entitled to request an increase in the size of the Credit Facility by an amount not exceeding $ 200 million.

Our obligations under the Second A&R Credit Agreement are guaranteed by certain of our subsidiaries.

The Second A&R 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 and engage in certain merger, consolidation or asset sale transactions), as well as customary events of default.

Borrowings under the Second A&R Credit Agreement bear interest at a floating rate equal to the adjusted Eurodollar Rate plus an applicable margin between 2.05 % and 2.65 % per annum, and if made available in the Administrative Agent’s discretion, a base rate plus an applicable margin between 1.05 % and 1.65 % per annum.

As of June 30, 2021 and December 31, 2020, no amounts were outstanding under the Credit Facility, and we were in compliance with all covenants.

Mortgage Repurchase Facilities – Financial Services

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Morgan, and Wells Fargo, respectively.

The mortgage warehouse lines of credit (which we refer to as the “repurchase facilities”), which were increased in 2020, provide Inspire with uncommitted repurchase facilities of up to $ 350 million as of March 31, 2021, secured by the mortgage loans financed thereunder.

The repurchase facilities have varying short term maturity dates through December 31, 2021 and bear a weighted average interest rate of 2.68 %.

The mortgage warehouse lines of credit (which we refer to as the “repurchase facilities”), which were increased in 2020, provide Inspire with uncommitted repurchase facilities of up to $ 350 million as of June 30, 2021, secured by the mortgage loans financed thereunder.

The repurchase facilities have varying short term maturity dates through June 21, 2022 and bear a weighted average interest rate of 2.38 %.

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 March 31, 2021 and December 31, 2020, we had $ 285.1 million and $ 259.1 million outstanding under these repurchase facilities, respectively, and were in compliance with all covenants thereunder.

During the three months ended March 31, 2021 and 2020, we incurred interest expense on the repurchase facilities of $ 0.8 million and $ 0.7 million, respectively, which are included in financial services costs on our condensed consolidated statements of operations.

As of June 30, 2021 and December 31, 2020, we had $ 159.8 million and $ 259.1 million outstanding under these repurchase facilities, respectively, and were in compliance with all covenants thereunder.

During the three months ended June 30, 2021 and 2020, we incurred interest expense on the repurchase facilities of $ 0.6 million and $ 0.5 million, respectively, which are included in financial services costs on our condensed consolidated statements of operations.

During the six months ended June 30, 2021 and 2020, we incurred interest expense on the repurchase facilities of $ 1.4 million and $ 1.3 million, respectively.

Interest is capitalized to inventories while the related communities are being actively developed and until homes are completed.

As our qualifying assets exceeded our outstanding debt during the three months ended March 31, 2021 and 2020, we capitalized all interest costs incurred during these periods, except for interest incurred on our mortgage repurchase facilities.

As our qualifying assets exceeded our outstanding debt during the three and six months ended June 30, 2021 and 2020, we capitalized all interest costs incurred during these periods, except for interest incurred on our mortgage repurchase facilities.

Our interest costs are as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Interest capitalized beginning of period

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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 2021 estimated annual effective tax rate of 23.6 % is driven by our blended federal and state statutory rate of 24.7 %, and certain other permanent differences between GAAP and tax which decreased our rate by 1.1 %.

For the three months ended March 31, 2021, our estimated annual rate of 23.6 % was impacted by discrete items which had a net impact of decreasing our rate by 1.2 %, including excess tax benefits for vested stock-based compensation.

For the three months ended March 31, 2021 and 2020, we recorded income tax expense of $ 29.4 million and $ 8.0 million, respectively.

Our 2021 estimated annual effective tax rate, before discrete items, of 23.5 % is driven by our blended federal and state statutory rate of 24.7 %, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation and estimated federal energy credits for current year home deliveries, which decreased our rate by 1.2 %.

For the six months ended June 30, 2021, our estimated annual rate of 23.5 % was impacted by discrete items which had a net impact of decreasing our rate by 1.0 %, including federal energy tax credits claimed on prior year home deliveries in excess of previous estimates and excess tax benefits for vested stock-based compensation.

For the three months ended June 30, 2021 and 2020, we recorded income tax expense of $ 34.2 million and $ 11.7 million, respectively.

For the six months ended June 30, 2021 and 2020, we recorded income tax expense of $ 63.6 million and $ 19.6 million, respectively.

Fair Value Disclosures

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quoted prices for identical or similar instruments in markets that are inactive;

and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at measurement date.

and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets at the measurement date.

 Mortgage loans held for sale – Fair value is based on quoted market prices for committed mortgage loans.

 Derivative assets and liabilities – Derivative assets and liabilities are related to our financial services segment and f air value is based on market prices for similar instruments.

Level 3 – Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at measurement date.

Level 3 – Valuations derived from techniques where one or more significant inputs or significant value drivers are unobservable in active markets at the measurement date.

 Mortgage servicing rights - The fair value of the mortgage servicing rights is calculated using third-party valuations.

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 Mortgage loans held for investment – The fair value of mortgage loans held for investment is calculated based on Level 3 analysis which incorporates information including the value of underlying collateral, from markets where there is little observable trading activity.

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2021 and December 31, 2020, and the changes in the fair value of the Level 3 assets during the three months ended March 31, 2021 and 2020, respectively:

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020, respectively:

Balance Sheet Classification

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Accrued expenses and other liabilities

(1) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates, which were 8.0 %, 9.8 %, and 0.4 %, respectively.

(1) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and delinquency rates, which were 9.0 %, 9.8 %, and 0.3 %, respectively as of June 30, 2021, and 10.4 %, 9.8 %, and 0.6 %, respectively, as of December 31, 2020.

The high and low end of the range of unobservable inputs used in the valuation did not result in a significant change to the fair value measurement.

The following table represents the reconciliation of the beginning and ending balance for the Level 3 recurring fair value measurements:

Three Months Ended March, 31

Three Months Ended June 30,

Six Months Ended June 30,

Mortgage servicing rights:

Beginning of year

Beginning of period

Disposals/settlements

Changes in fair value

Three Months Ended March, 31

End of period

Three Months Ended June 30,

Six Months Ended June 30,

Mortgage loans held-for-investment

Beginning of year

Beginning of period

Disposals/settlements

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Changes in fair value

For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying value and fair value at March 31, 2021 and December 31, 2020, respectively.

March 31, 2021

End of period

For the financial assets and liabilities that the Company does not reflect at fair value, the following present both their respective carrying value and fair value at June 30, 2021 and December 31, 2020, respectively.

June 30, 2021

December 31, 2020

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Mortgage repurchase facilities (4)

(1) Estimated fair value of the secured notes receivable was based on cash flow models discounted at market interest rates which considered the underlying risks of the note.

In May 2020, the maturity of the secured note receivable was extended by one year to May of 2021.

(1) During the second quarter of 2021, the maturity of the secured note receivable was extended by two months to July of 2021, and the secured note receivable was paid in full in July 2021.

Carrying amount approximates fair value due to short-term nature.

(2) Estimated fair value of the senior notes is based on recent trading activity in inactive markets.

(3) Carrying amounts include any associated unamortized deferred financing costs, premiums and discounts.

As of March 31, 2021, these amounts totaled $ 5.0 million and $ 3.0 million for the 6.750 % senior notes and 5.875 % senior notes, respectively.

As of June 30, 2021, these amounts totaled $ 4.8 million and $ 2.8 million for the 6.750 % senior notes and 5.875 % senior notes, respectively.

As of December 31, 2020, these amounts totaled $ 5.2 million and $ 3.2 million for the 6.750 % senior notes and 5.875 % senior notes, respectively.

(4) Carrying amount approximates fair value due to short-term nature and interest rate terms.

(5) Insurance premium notes included in other financing obligations bore interest rates ranging from 3.200 % to 3.240 % during the period ended March 31, 2021 and during the period ended December 31, 2020.

(5) Insurance premium notes included in other financing obligations bore interest rates ranging from 3.200 % 3.240 % during the periods ended June 30, 2021 and December 31, 2020.

Non-financial assets and liabilities include items such as inventory and property and equipment that are measured at fair value when acquired and as a result of impairments, if deemed necessary.

No impairment charges were recorded in the three months ended March 31, 2021.

During the three months ended March 31, 2020, we determined that inventory with a carrying value before impairment of $ 2.3 million within one community was not recoverable.

Accordingly, we recognized an impairment charge of $ 0.8 million to reflect the estimated fair value of the community of $ 1.5 million.

The estimated fair value of the community was determined through a discounted cash flow approach utilizing Level 3 inputs.

This inventory impairment was incurred in the Century Complete segment.

The estimated fair value of communities are determined through a discounted cash flow approach utilizing Level 3 inputs.

Nominal impairment charges were recorded in the three and six months ended June 30, 2021.

During the three and six months ended June 30, 2020, we recognized impairment charges of $ 0.9 million and $ 1.7 million, respectively.

The estimated fair value of the communities were determined through a discounted cash flow approach utilizing Level 3 inputs.

Changes in our cash flow projections in future periods related to these communities may change our conclusions on the recoverability of inventory in the future.

Stock-Based Compensation

During the three months ended March 31, 2021 and 2020, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million and 0.3 million shares of common stock, respectively, with a grant date fair value of $ 52.74 per share and $ 31.19 per share, respectively, that vest over a three year period.

During the three months ended March 31, 2021 we also granted performance share units (which we refer to as “PSUs”) covering up to 0.2 million shares of common stock, assuming maximum level of performance, with a grant date fair value of $ 58.28 per share.

We did not grant any PSUs during the three months ended March 31, 2020.

During the six months ended June 30, 2021, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million shares of common stock, respectively, with a grant date fair value of $ 53.43 , that primarily vest over a three year period.

During the six months ended June 30, 2021, we also granted performance share units (which we refer to as “PSUs”) covering up to 0.2 million shares of common stock, assuming maximum level of performance, with a grant date fair value of $ 58.28 per share.

Granted PSUs are subject to both service and performance vesting conditions.

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A summary of our outstanding RSUs and PSUs, assuming current estimated level of performance achievement, are as follows (in thousands, except years):

As of March 31, 2021

As of June 30, 2021

Unvested units

Unrecognized compensation cost

Remaining period to recognize compensation cost

During the three months ended March 31, 2021 and 2020, we recognized stock-based compensation expense of $ 3.0 million and $ 1.7 million, respectively.

Weighted-average period to recognize compensation cost

During the three months ended June 30, 2021 and 2020, we recognized stock-based compensation expense of $ 4.2 million and $ 6.9 million, respectively.

During the six months ended June 30, 2021 and 2020, we recognized stock-based compensation expense of $ 7.2 million and $ 8.6 million, respectively.

Stock-based compensation expense is included in selling, general, and administrative expense on our condensed consolidated statements of operations.

During the three months ended June 30, 2020, we updated our recognition of stock-based compensation expense associated with previously granted PSU awards to reflect probable financial results as they relate to the performance goals of the awards.

Accordingly, our estimate of the number of shares which will ultimately vest under our PSU awards increased by 0.2 million, and we recorded a cumulative catch-up adjustment to increase stock-based compensation expense of $ 2.9 million ($ 2.2 million net of tax), or $ 0.07 per share (basic and diluted) for the three months ended June 30, 2020.

Stockholders’ Equity

Our authorized capital stock consists of 100.0 million shares of common stock, par value $ 0.01 per share, and 50.0 million shares of preferred stock, par value $ 0.01 per share.

As of March 31, 2021, and December 31, 2020 there were 33.7 million and 33.4 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

As of June 30, 2021, and December 31, 2020 there were 33.8 million and 33.4 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

On May 10, 2017, our stockholders approved the adoption of the Century Communities, Inc.

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Amended and Restated 2017 Omnibus Incentive Plan (which we refer to as our “Amended 2017 Incentive Plan”), which increased the number of shares of our common stock authorized for issuance under the 2017 Incentive Plan by an additional 1.631 million shares.

We issued 0.6 million and 0.4 million shares of common stock related to the vesting of RSUs during the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, approximately 0.7 million shares of common stock remained available for issuance under the Amended 2017 Incentive Plan.

We issued 0.7 million and 0.5 million shares of common stock related to the vesting of RSUs during the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, approximately 0.7 million shares of common stock remained available for issuance under the Amended 2017 Incentive Plan.

On November 27, 2019, we entered into a Distribution Agreement with J.P.

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(which we refer to as the “Distribution Agreement”), as sales agents pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $ 100.0 million from time to time through any of the sales agents party thereto in “at-the-market” offerings, in accordance with the terms and conditions set forth in the Distribution Agreement.

This Distribution Agreement, which superseded and replaced a prior similar distribution agreement, had all $ 100.0 million available for sale as of March 31, 2021.

We did no t sell or issue any shares of our common stock during the three months ended March 31, 2021 and 2020, respectively.

This Distribution Agreement, which superseded and replaced a prior similar distribution agreement, had all $ 100.0 million available for sale as of June 30, 2021.

We did no t sell or issue any shares of our common stock during the three and six months ended June 30, 2021 and 2020, respectively.

The Distribution Agreement will remain in full force and effect until terminated by either party pursuant to the terms of the agreement or such date that the maximum offering amount has been sold in accordance with the terms of the agreement .

Sales cannot be made under the Distribution Agreement unless and until we file a prospectus supplement to our recently filed shelf registration statement that was filed on July 1, 2021, which prospectus supplement we intend to file in the near future.

On November 6, 2018, we authorized a stock repurchase program, under which we may repurchase up to 4,500,000 shares of our outstanding common stock.

During the three months ended March 31, 2021 and 2020, we did not repurchase any shares of common stock.

The maximum number of shares available to be purchased under the stock repurchase program as of March 31, 2021 was 3,812,939 shares.

During the three and six months ended June 30, 2021 and 2020, we did not repurchase any shares of common stock.

The maximum number of shares available to be purchased under the stock repurchase program as of June 30, 2021 was 3,812,939 shares.

On May 19, 2021, our Board of Directors announced the approval of the initiation of a quarterly cash dividend.

Additionally, on May 19, 2021 , our Board of Directors declared our first quarterly cash dividend of $ 0.15 per share and totaling $ 5.1 million, which was paid on June 16, 2021 to stockholders of record of our common stock as of June 2, 2021 .

Earnings Per Share

We use the treasury stock method to calculate earnings per share as our currently issued non-vested RSUs and PSUs do not have participating rights.

The following table sets forth the computation of basic and diluted EPS for the three months ended March 31, 2021 and 2020 (in thousands, except share and per share information):

Three Months Ended

The following table sets forth the computation of basic and diluted EPS for the three and six months ended June 30, 2021 and 2020 (in thousands, except share and per share information):

Three Months Ended June 30,

Six Months Ended June 30,

Weighted average common shares outstanding - basic

3 unchanged sentences

Stock-based awards are excluded from the calculation of diluted EPS in the event they are subject to unsatisfied performance conditions or are antidilutive.

We excluded 0.8 million and 0.6 million common stock unit equivalents from diluted earnings per share during the three months ended March 31, 2021 and 2020, respectively, related to the PSUs for which performance conditions remained unsatisfied.

We excluded 0.8 million common stock unit equivalents from diluted earnings per share during each of the three and six months ended June 30, 2021 and 2020 related to the PSUs for which performance conditions remained unsatisfied.

Commitments and Contingencies

Letters of Credit and Performance Bonds

In the normal course of business, we post letters of credit and performance bonds related to our land development performance obligations with local municipalities.

As of March 31, 2021, and December 31, 2020, we had $ 441.2 million and $ 402.7 million, respectively, in letters of credit and performance bonds issued and outstanding.

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 June 30, 2021, and December 31, 2020, we had $ 464.6 million and $ 402.7 million, respectively, in letters of credit and performance and other bonds issued and outstanding.

Legal Proceedings

6 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements