What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-10-26 compared with 2023-07-27 · 114 added, 102 removed, 384 unchanged (36% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

As of June 30, 2023 and December 31, 2022

As of September 30, 2023 and December 31, 2022

(in thousands, except share and per share amounts)

September 30,

Cash and cash equivalents

14 unchanged sentences

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

Common stock, $ 0.01 par value, 100,000,000 shares authorized, 32,020,378 and 31,772,791 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.01 par value, 100,000,000 shares authorized, 31,773,033 and 31,772,791 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

5 unchanged sentences

Unaudited Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2023 and 2022

For the Three and Nine Months Ended September 30, 2023 and 2022

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Homebuilding revenues

22 unchanged sentences

Unaudited Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2023 and 2022

For the Nine Months Ended September 30, 2023 and 2022

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

31 unchanged sentences

Net cash used in financing activities

Net increase (decrease)

Cash and cash equivalents and Restricted cash

10 unchanged sentences

Unaudited Condensed Consolidated Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30, 2023 and 2022

For the Three and Nine Months Ended September 30, 2023 and 2022

(in thousands)

For the Three Months Ended June 30, 2023 and 2022

For the Three Months Ended September 30, 2023 and 2022

Additional Paid-In Capital

1 unchanged sentence

Total Stockholders'

Balance at March 31, 2023

Balance at June 30, 2023

Vesting of stock-based compensation awards

3 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at September 30, 2023

Balance at June 30, 2022

Balance at March 31, 2022

Vesting of stock-based compensation awards

3 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at June 30, 2022

For the Six Months Ended June 30, 2023 and 2022

Balance at September 30, 2022

For the Nine Months Ended September 30, 2023 and 2022

Additional Paid-In Capital

7 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at June 30, 2023

Balance at September 30, 2023

Balance at December 31, 2021

4 unchanged sentences

Cash dividends declared and dividend equivalents

Balance at June 30, 2022

Balance at September 30, 2022

See Notes to Unaudited Condensed Consolidated Financial Statements

1 unchanged sentence

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2023

September 30, 2023

Basis of Presentation

44 unchanged sentences

Commencing in the first quarter of 2023, our Century Complete operations in Texas were realigned and are now managed under our Texas segment.

Accordingly, we have presented segment information under this new basis as of and for the three and six months ended June 30, 2023, and we have restated the corresponding segment information for those segments as of December 31, 2022 and for the three and six months ended June 30, 2022 .

Accordingly, we have presented segment information under this new basis as of and for the three and nine months ended September 30, 2023, and we have restated the corresponding segment information for those segments as of December 31, 2022 and for the three and nine months ended September 30, 2022 .

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

3 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Century Complete

6 unchanged sentences

The following table summarizes total assets by segment (in thousands):

September 30,

Century Complete

Financial Services

Corporate assets primarily include certain cash and cash equivalents, certain property and equipment, costs associated with development of multi-family rental properties, prepaid insurance, and deferred financing costs on our revolving line of credit.

Corporate assets primarily include certain cash and cash equivalents, capitalized interest, costs associated with development of multi-family rental properties, certain property and equipment, prepaid insurance, and deferred financing costs on our revolving line of credit.

Inventories included the following (in thousands):

September 30,

Homes under construction

6 unchanged sentences

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

A pproximately all of the mortgage loans closed by Inspire are made to buyers of homes we build and Inspire receives an allocation of intersegment revenue from our homebuilding segments related to financing incentives given to our homebuyers.

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.

As of June 30, 2023 and December 31, 2022, Inspire had mortgage loans held for sale with an aggregate fair value of $ 195.6 million and $ 203.6 million, respectively, and an aggregate outstanding principal balance of $ 195.6 million and $ 202.0 million, respectively.

Net gains on the sale of mortgage loans were $ 1.7 million and $ 3.5 million for the three and six months ended June 30, 2023, respectively, and were $ 0.4 million and $ 10.8 million for the three and six months ended June 30, 2022, respectively.

Losses from the change in fair value for mortgage loans held for sale were $ 2.0 million and $ 2.0 million for the three and six months ended June 30, 2023, respectively.

Gains from the change in fair value for mortgage loans held for sale was $ 1.1 million for the three months ended June 30, 2022, and losses from the change in fair value for mortgage loans held for sale was $ 8.6 million for the six months ended June 30, 2022.

Mortgage loans held for sale and mortgage servicing rights are carried at fair value , with gains and losses from the changes in fair value reflected in financial services revenue on our condensed consolidated statements of operations.

Mortgage loans held for sale and mortgage servicing rights are carried at fair value, with gains and losses from the changes in fair value reflected in financial services revenue on the consolidated statements of operations.

Management believes carrying mortgage loans held for sale at fair value improves financial reporting by mitigating volatility in reported earnings caused by measuring the fair value of the loans and the derivative instruments used to economically hedge them.

Net gains and losses from the sale of mortgage loans held for sale, which are recognized based upon the difference between the sales proceeds and carrying value of the related loans upon sale, are also included in financial services revenue on our condensed consolidated statements of operations.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $ 115.5 million and $ 68.1 million at June 30, 2023 and December 31, 2022, respectively, and carried a weighted average interest rate of approximately 5.7 % and 6.1 %, respectively .

Financial services revenue also includes fees earned from originating mortgage loans which are recognized at the time the mortgage loans are funded, including origination fees, discount points to reduce interest rates and fees earned from forward commitment agreements entered into between our homebuilding segments and Financial Services.

As of September 30, 2023 and December 31, 2022, Inspire had mortgage loans held for sale with an aggregate fair value of $ 162.7 million and $ 203.6 million, respectively, and an aggregate outstanding principal balance of $ 165.7 million and $ 202.0 million, respectively.

Net losses on the sale of mortgage loans were $ 6.9 million and $ 3.4 million for the three and nine months ended September 30, 2023, respectively, and net gains on the sale of mortgage loans were $ 4.5 million and $ 15.3 million for the three and nine months ended September 30, 2022, respectively.

Losses from the change in fair value for mortgage loans held for sale were $ 2.9 million and $ 4.9 million for the three and nine months ended September 30, 2023, respectively, and were $ 8.1 million and $ 16.7 million for the three and nine months ended September 30, 2022, respectively.

Mortgage loans in process for which interest rates were locked by borrowers, or interest rate lock commitments, totaled approximately $ 138.9 million and $ 68.1 million at September 30, 2023 and December 31, 2022, respectively, and carried a weighted average interest rate of approximately 6.0 % and 6.1 %, respectively .

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

1 unchanged sentence

Derivative instruments typically include interest rate lock commitments and forward commitments on mortgage-backed securities.

Changes in fair value of these derivatives as well as any gains or losses upon settlement are reflected in financial services revenue on our condensed consolidated statements of operations.

Changes in fair value of these derivatives as well as any gains or losses upon settlement

are reflected in financial services revenue on our condensed consolidated statements of operations.

Refer to Note 12 – Fair Value Disclosures for further information regarding our derivative instruments.

1 unchanged sentence

Prepaid expenses and other assets included the following (in thousands):

September 30,

Prepaid insurance

12 unchanged sentences

Accrued expenses and other liabilities included the following (in thousands):

September 30,

Earnest money deposits

10 unchanged sentences

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 decreased our warranty reserve by $ 0.2 million during the three months ended June 30, 2023 and increased our warranty reserve by $ 0.1 million during the three months ended June 30, 2022, respectively, and we reduced our warranty reserve by $ 0.7 million and $ 0.5 million during the six months ended June 30, 2023 and 2022, respectively.

Based on warranty payment trends relative to our estimates at the time of home closing, we reduced our warranty reserve by $ 0.5 million and $ 0.1 million during the three months ended September 30, 2023 and 2022, respectively, and we reduced our warranty reserve by $ 1.2 million and $ 0.6 million during the nine months ended September 30, 2023 and 2022, 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 and six months ended June 30, 2023 and 2022 are detailed in the table below (in thousands) :

Three Months Ended June 30,

Six Months Ended June 30,

Changes in our warranty accrual for the three and nine months ended September 30, 2023 and 2022 are detailed in the table below (in thousands) :

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning balance

3 unchanged sentences

Self-Insurance Reserve

We maintain general liability insurance coverage, including coverage for certain construction defects.

We maintain general liability insurance coverage, including coverage for certain construction defects after homes have closed and premise operations during construction.

These insurance policies protect us against a portion of the risk of loss from claims, subject to certain self-insured per occurrence and aggregate retentions, deductibles, and available policy limits.

In circumstances where we have elected to retain a higher portion of the overall risk for construction defect claims in return for a lower initial premium, we reserve for the estimated costs that we will incur that are above our coverage limits or that are not covered by our insurance policies.

In circumstances where we have elected to retain a higher portion of the overall risk for construction defect claims in return for a lower initial premium, we reserve for the estimated self-insured retention costs that we will incur that are above our coverage limits or that are not covered by our insurance policies.

The reserve is recorded on an undiscounted basis at the time revenue is recognized for each home closing.

3 unchanged sentences

Estimates of insurance recoveries and amounts we have paid on behalf of and expect to recover from other parties, if any, are recorded as receivables when such recoveries are considered probable.

During the three and six months ended June 30, 2023 and 2022, we recorded no adjustment to our self-insurance reserve.

Based on our third-party actuarial analysis, we reduced our self-insurance reserve by $ 3.4 million during the three and nine months ended September 30, 2023, and we increased our self-insurance reserve by $ 0.9 million during the three and nine months ended September 30, 2022.

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

Changes in our self-insurance reserve for incurred but not reported construction defect claims for the three and six months ended June 30, 2023 and 2022 are detailed in the table below (in thousands) :

Three Months Ended June 30,

Six Months Ended June 30,

Changes in our self-insurance reserve for incurred but not reported construction defect claims for the three and nine months ended September 30, 2023 and 2022 are detailed in the table below (in thousands) :

Three Months Ended September 30,

Nine Months Ended September 30,

Beginning balance

2 unchanged sentences

Ending balance

Our outstanding debt obligations included the following as of June 30, 2023 and December 31, 2022 (in thousands):

Our outstanding debt obligations included the following as of September 30, 2023 and December 31, 2022 (in thousands):

September 30,

3.875 % senior notes, due August 2029 (1)

5 unchanged sentences

(1) The carrying value of senior notes reflects the impact of premiums, discounts, and issuance costs that are amortized to interest expense over the respective terms of the senior notes.

(2) As of June 30, 2023, other financing obligations included $ 17.6 million related to insurance premium notes and certain secured borrowings, as well as $ 21.1 million outstanding under construction loan agreements.

(2) As of September 30, 2023, other financing obligations included $ 30.0 million related to insurance premium notes and certain secured borrowings, as well as $ 28.8 million outstanding under construction loan agreements.

As of December 31, 2022, other financing obligations included $ 20.7 million related to insurance premium notes and certain secured borrowings, as well as $ 7.4 million outstanding under construction loan agreements.

Construction Loan Agreements

On March 17, 2023, a wholly owned subsidiary of Century Living, LLC entered into a construction loan agreement with UMB Bank, N.A., and certain wholly owned subsidiaries of Century Living, LLC, are party to construction loan agreements entered into during 2022 with PNC Bank, National Association and U.S.

Bank National Association, a national banking association, d/b/a Housing Capital Company (which along with UMB Bank, N.A., we collectively refer to as “the lenders”), respectively.

Certain wholly owned subsidiaries of Century Living, LLC, are parties to construction loan agreements entered into during 2022 and the first quarter of 2023 with various banks, (which we collectively refer to as “the lenders”).

The three construction loan agreements collectively provide that we may borrow up to an aggregate of $ 187.6 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.

Borrowings under the construction loan agreements bear interest at various rates, including a fixed rate, and floating interest rates per annum equal to the Secured Overnight Financing Rate (which we refer to as “SOFR”) and the Bloomberg Short-term Bank Yield Index, plus an applicable margin.

The outstanding principal balances and all accrued and unpaid interest is due on varying maturity dates through March 17, 2028 ,

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 outstanding principal balances and all accrued and unpaid interest is due on varying maturity dates through March 17, 2028 , 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 and until the projects are completed.

As of June 30, 2023, $ 21.1 million was outstanding under the construction loan agreements, with borrowings that bore a weighted average interest rate of 7.1 % during the six months ended June 30, 2023, and we were in compliance with all covenants thereunder.

As of September 30, 2023, $ 28.8 million was outstanding under the construction loan agreements, with borrowings that bore a weighted average interest rate of 7.2 % during the nine months ended September 30, 2023, and we were in compliance with all covenants thereunder.

Revolving Line of Credit

6 unchanged sentences

On December 21, 2022, we entered into a First Modification Agreement with Texas Capital Bank (formerly known as Texas Capital Bank, National Association), as Administrative Agent, amending the Second A&R Credit Agreement pursuant to which, effective January 3, 2023, all existing borrowings using an interest rate based on a LIBOR reference rate had the interest rate replaced with one based on an adjusted term SOFR reference rate, which equals the greater of (i) 0.50 % or (ii) the one-month quotation of the secured overnight financing rate administered by the Federal Reserve Bank of New York, plus 0.10 %.

As of June 30, 2023 and December 31, 2022, no amounts were outstanding under the revolving line of credit, respectively, and we were in compliance with all covenants under the Second A&R Credit Agreement.

As of September 30, 2023 and December 31, 2022, no amounts were outstanding under the revolving line of credit, respectively, and we were in compliance with all covenants under the Second A&R Credit Agreement.

Mortgage Repurchase Facilities – Financial Services

Inspire is a party to mortgage warehouse facilities with Comerica Bank and J.P.

Morgan, (which facilities we refer to as the “repurchase facilities”), which provide Inspire with uncommitted repurchase facilities of up to an aggregate of $ 275.0 million as of June 30, 2023, secured by the mortgage loans financed thereunder.

The repurchase facilities have varying short term maturity dates through June 21, 2024 and bore a weighted average interest rate of 6.67 % during the six months ended June 30, 2023.

Inspire is a party to a mortgage warehouse facility with J.P.

Morgan, which provides Inspire with uncommitted repurchase facilities of up to an aggregate of $ 200.0 million as of September 30, 2023, secured by the mortgage loans financed thereunder, and a maturity date through January 19, 2024 .

During the three months ended September 30, 2023, we terminated our mortgage warehouse facility agreement with Comerica, which provided uncommitted repurchase facilities of up to an aggregate of $ 75.0 million , with outstanding principal and interest due on December 29, 2023.

The repurchase facilities bore a weighted average interest rate of 6.80 % during the nine months ended September 30, 2023.

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 June 30, 2023 and December 31, 2022, we had $ 191.0 million and $ 197.6 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

As of September 30, 2023 and December 31, 2022, we had $ 162.1 million and $ 197.6 million outstanding under the repurchase facilities, respectively, and were in compliance with all covenants thereunder.

Interest on Senior Notes and Revolving Line of Credit

Interest on our senior notes and revolving line of credit, if applicable, 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 and six months ended June 30, 2023 and 2022, we capitalized all interest costs incurred on these facilities during these periods.

As our qualifying assets exceeded our outstanding debt during the three and nine months ended September 30, 2023 and 2022, we capitalized all interest costs incurred on these facilities during these periods.

Our interest costs were as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Interest capitalized beginning of period

3 unchanged sentences

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 2023 estimated annual effective tax rate, before discrete items, of 25.5 % 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 home credits for the current year home deliveries, which combined resulted in a net increase of 0.8 %.

For the six months ended June 30, 2023, our estimated annual rate of 25.5 % was benefitted by discrete items which had a net impact of decreasing our rate by 0.7 %, including excess tax benefits for vested stock-based compensation.

Our estimated annual rate for the six months ended June 30, 2023 of 25.5 % increased by 310 basis points as compared to our effective tax rate for the year ended December 31, 2022 of 22.4 %.

The increase in our estimated rate is primarily a result of the enactment of the Inflation Reduction Act of 2022 during the third quarter of 2022, which modified the energy efficient home credit beginning with homes closed on or after January 1, 2023 and provided for more stringent energy standards than previous periods, resulting in fewer closings qualifying for energy efficient home credits.

For the three months ended June 30, 2023 and 2022, we recorded income tax expense of $ 17.3 million and $ 55.0 million, respectively .

For the six months ended June 30, 2023 and 2022, we recorded income tax expense of $ 28.0 million and $ 101.3 million, respectively.

Our 2023 estimated annual effective tax rate, before discrete items of 26.4 %, is driven by our blended federal and state statutory rate of 24.8 %, and certain permanent differences between GAAP and tax, including disallowed deductions for executive compensation offset by estimated federal energy home credits for current year home deliveries, which combined resulted in a net increase of 1.6 %.

For the nine months ended September 30, 2023, our estimated annual rate of 26.4 % was benefitted by discrete items which had a net impact of decreasing our rate by 1.1 %, including federal energy home tax credits claimed for prior year home deliveries in excess of previous estimates and the impact of excess tax benefits for vested stock-based compensation.

For the three months ended September 30, 2023 and 2022, we recorded income tax expense of $ 28.8 million and $ 27.6 million, respectively .

For the nine months ended September 30, 2023 and 2022, we recorded income tax expense of $ 56.9 million and $ 128.9 million, respectively.

Fair Value Disclosures

7 unchanged sentences

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

 Derivative assets and liabilities – Derivative assets are associated with interest rate lock commitments and investor commitments on loans and derivative liabilities are associated with forward mortgage-backed securities contracts.

 Derivative assets and liabilities – Derivative assets are associated with interest rate lock commitments and investor commitments on loans and may also be associated with forward mortgage-backed securities contracts.

Derivative liabilities are associated with forward mortgage-backed securities contracts.

Fair value is based on market prices for similar instruments.

3 unchanged sentences

 Mortgage loans held for investment at fair value – The fair value of mortgage loans held for investment at fair value 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 June 30, 2023 and December 31, 2022, respectively (in thousands):

The following outlines the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2023 and December 31, 2022, respectively (in thousands):

September 30,

Balance Sheet Classification

10 unchanged sentences

(1) The unobservable inputs used in the valuation of the mortgage loans held for investment at fair value include, among other items, the value of underlying collateral, from markets where there is little observable trading activity.

(2) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were 9.0 %, 9.6 %, and $ 0.071 per year per loan, respectively, as of June 30, 2023, and 7.6 %, 9.0 %, and $ 0.072 per year per loan, respectively, as of December 31, 2022.

(2) The unobservable inputs used in the valuation of the mortgage servicing rights include mortgage prepayment rates, discount rates and cost to service, which were 9.0 %, 10.2 %, and $ 0.071 per year per loan, respectively, as of September 30, 2023, and 7.6 %, 9.0 %, and $ 0.072 per year per loan, respectively, as of December 31, 2022.

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, with gains and losses from the changes in fair value reflected in financial services revenue on our condensed consolidated statements of operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage servicing rights

2 unchanged sentences

End of period

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Mortgage loans held-for-investment at fair value

4 unchanged sentences

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, 2023 and December 31, 2022, respectively (in thousands).

June 30, 2023

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 September 30, 2023 and December 31, 2022, respectively (in thousands).

September 30, 2023

December 31, 2022

7 unchanged sentences

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

As of June 30, 2023, these amounts totaled $ 4.7 million and $ 3.2 million for the 3.875 % senior notes and 6.750 % senior notes, respectively.

As of September 30, 2023, these amounts totaled $ 4.5 million and $ 3.0 million for the 3.875 % senior notes and 6.750 % senior notes, respectively.

As of December 31, 2022, these amounts totaled $ 5.1 million and $ 3.6 million for the 3.875 % senior notes and 6.750 % senior notes, respectively.

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

(4) Other financing obligations included $ 17.6 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 2.40 % to 6.40 %, and $ 21.1 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.1 % during the period ended June 30, 2023.

Other financing obligations included $ 20.7 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 2.40 % to 5.84 %, and $ 7.4 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 5.6 % during the period ended December 31, 2022.

(4) During the period ended September 30, 2023, other financing obligations included $ 30.0 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 2.40 % to 7.70 %, and $ 28.8 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 7.2 %.

During the period ended December 31, 2022, other financing obligations included $ 20.7 million related to insurance premium notes and certain secured borrowings that generally bore interest rates ranging from 2.40 % to 5.84 %, and $ 7.4 million related to outstanding borrowings on the construction loan agreements that bore a weighted average interest rate of 5.6 %.

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 and six months ended June 30, 2023 and 2022.

No impairment charges were recorded in the three and nine months ended September 30, 2023 and 2022.

When impairment charges are recognized, the estimated fair value of communities are determined through a discounted cash flow approach utilizing Level 3 inputs.

1 unchanged sentence

Stock-Based Compensation

During the six months ended June 30, 2023 and 2022, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million and 0.2 million shares of common stock, respectively, with a grant date fair value of $ 62.61 and $ 63.77 per share, respectively, that primarily vest over a three year period.

During the six months ended June 30, 2023 and 2022, we granted 11.0 thousand and 11.0 thousand shares of common stock, respectively, on an unrestricted basis (which we refer to as “stock awards”) with a grant date fair value of $ 65.77 and $ 54.46 per share, respectively, to our non-employee directors.

During the six months ended June 30, 2023 and 2022, we granted performance share units (which we refer to as “PSUs”) covering up to 0.5 million and 0.5 million shares of common stock, respectively, assuming maximum level of performance, with a grant date fair value of $ 60.05 and $ 55.93 per share, respectively, that are subject to both service and performance vesting conditions.

The quantity of shares that will ultimately vest for the PSUs ranges from 0 % to up to 250 % of a targeted number of shares for each participant and will be determined based on an achievement of a three year adjusted pre-tax income performance goal.

During the six months ended June 30, 2023 and 2022, we issued 0.3 million and 0.3 million shares of common stock, respectively, upon the vesting and settlement of PSUs that were granted in previous periods.

During the nine months ended September 30, 2023 and 2022, we granted restricted stock units (which we refer to as “RSUs”) covering 0.2 million and 0.2 million shares of common stock, respectively, with a grant date fair value of $ 62.68 and $ 63.26 per share, respectively, that primarily vest over a three year period.

During the nine months ended September 30, 2023 and 2022, we granted 11.0 thousand and 11.0 thousand shares of common stock, respectively, on an unrestricted basis (which we refer to as “stock awards”) with a grant date fair value of $ 65.77 and $ 54.46 per share, respectively, to our non-employee directors.

During the nine months ended September 30, 2023 and 2022, we granted performance share units (which we refer to as “PSUs”) covering up to 0.5 million and 0.5 million shares of common stock, respectively, assuming maximum level of performance, with a grant date fair value of $ 60.05 and $ 55.93 per share, respectively, that are subject to both service and performance vesting conditions.

The quantity of shares that will ultimately vest and be issued for the PSUs ranges from 0 % to up to 250 % of a targeted number of shares dependent upon the participant and will be determined based on an achievement of a three year adjusted pre-tax income performance goal.

During the nine months ended September 30, 2023 and 2022, we issued 0.3 million and 0.3 million shares of common stock, respectively, upon the vesting and settlement of PSUs that were granted in previous periods.

Approximately 1.1 million shares will vest from 2024 to 2026 if the defined maximum performance targets are met, and no shares will vest if the defined minimum performance targets are not met.

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

As of June 30, 2023

As of September 30, 2023

Unvested units

1 unchanged sentence

Weighted-average years to recognize compensation cost

During the three months ended June 30, 2023 and 2022, we recognized stock-based compensation expense of $ 8.9 million and $ 5.7 million, respectively.

During the six months ended June 30, 2023 and 2022, we recognized stock-based compensation expense of $ 14.3 million and $ 9.8 million, respectively.

During the three months ended September 30, 2023 and 2022, we recognized stock-based compensation expense of $ 12.2 million and $ 5.2 million, respectively.

During the nine months ended September 30, 2023 and 2022, we recognized stock-based compensation expense of $ 26.5 million and $ 15.0 million, respectively.

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

D uring the three months ended June 30, 2023, in accordance with ASC 718, Compensation—Stock Compensation 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 90.0 thousand, and we recorded a cumulative catch-up adjustment to increase stock-based compensation expense of $ 3.4 million ($ 2.5 million net of tax), or $ 0.08 per share (basic and diluted), for the three and six months ended June 30, 2023.

D uring the three and nine months ended September 30, 2023, in accordance with ASC 718, Compensation—Stock Compensation 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 0.4 million shares during the three months ended September 30, 2023 and 0.4 million shares during the nine months ended September 30, 2023.

We recorded a cumulative catch-up adjustment to increase stock-based compensation expense of $ 7.4 million ($ 5.5 million net of tax), or $ 0.17 per share (basic and diluted), for the three months ended September 30, 2023, and $ 10.8 million ($ 8.0 million net of tax), or $ 0.25 per share (basic and diluted), for the nine months ended September 30, 2023.

Stockholders’ Equity

The Company’s 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 June 30, 2023 and December 31, 2022, there were 32.0 million and 31.8 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

As of September 30, 2023 and December 31, 2022, there were 31.8 million and 31.8 million shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

On May 4, 2022, the stockholders approved the adoption of the Century Communities, Inc.

2 unchanged sentences

Under the 2022 Incentive Plan, 3.1 million shares of common stock are available for issuance to eligible participants, plus 51.2 thousand shares of our common stock that remained available for issuance under the 2017 Incentive Plan and any shares subject to awards outstanding under the 2017 Incentive Plan that are subsequently forfeited, cancelled, expire or otherwise terminate without the issuance of such shares.

During the six months ended June 30, 2023 and 2022, we issued 0.4 million and 0.5 million shares of common stock, respectively, related to the vesting and settlement of RSUs and PSUs.

As of June 30, 2023, approximately 2.5 million shares of common stock remained available for issuance under the 2022 Incentive Plan.

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the six months ended June 30, 2023 and 2022, respectively (in thousands, except per share information):

Six Months ended June 30, 2023

During the nine months ended September 30, 2023 and 2022, we issued 0.4 million and 0.5 million shares of common stock, respectively, related to the vesting and settlement of RSUs and PSUs.

As of September 30, 2023, approximately 2.5 million shares of common stock remained available for issuance under the 2022 Incentive Plan.

The following table sets forth cash dividends declared by our Board of Directors to holders of record of our common stock during the nine months ended September 30, 2023 and 2022, respectively (in thousands, except per share information):

Nine Months Ended September 30, 2023

Cash Dividends Declared and Paid

4 unchanged sentences

June 14, 2023

Six Months ended June 30, 2022

August 16, 2023

August 30, 2023

September 13, 2023

Nine Months Ended September 30, 2022

Cash Dividends Declared and Paid

4 unchanged sentences

June 15, 2022

August 17, 2022

August 31, 2022

September 14, 2022

Under the 2022 Incentive Plan and the previous 2017 Incentive Plan, at the discretion of the Compensation Committee of the Board of Directors, RSUs and PSUs granted under the plan have the right to earn dividend equivalents, which entitles the holders of such RSUs and PSUs to additional RSUs and PSUs equal to the same dividend value per share as holders of common stock.

4 unchanged sentences

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.

We did no t sell or issue any shares of our common stock during the three and six months ended June 30, 2023 and 2022, and as of June 30, 2023, all $ 100.0 million remained available for sale.

We did no t sell or issue any shares of our common stock during the three and nine months ended September 30, 2023 and 2022, and as of September 30, 2023, all $ 100.0 million remained available for sale.

We authorized a stock repurchase program in 2018, under which we may repurchase up to 4.5 million shares of our outstanding common stock.

During the three and six months ended June 30, 2023, an aggregate of 30.4 thousand shares were repurchased for a total purchase price of approximately $ 2.0 million and a weighted average price of $ 64.84 per share.

During the three and six months ended June 30, 2022, an aggregate of 0.8 million and 1.8 million shares, respectively, were repurchased for a total purchase price of approximately $ 35.9 million and $ 98.3 million, respectively, and a weighted average price of $ 45.42 and $ 54.46 per share, respectively.

The maximum number of shares available to be repurchased under the stock repurchase program as of June 30, 2023 was 1,477,817 shares.

During the six months ended June 30, 2023 and 2022, shares of common stock at a total cost of $ 10.6 million and $ 12.7 million, respectively, were netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock-based compensation awards.

During the three and nine months ended September 30, 2023, an aggregate of 247.8 thousand and 278.2 thousand shares,

respectively, were repurchased for a total purchase price of approximately $ 17.3 million and $ 19.2 million, respectively, and a weighted average price of $ 69.61 and $ 69.09 per share, respectively.

During the three and nine months ended September 30, 2022, an aggregate of 0.5 million and 2.3 million shares, respectively, were repurchased for a total purchase price of approximately $ 22.3 million and $ 120.6 million, respectively, and a weighted average price of $ 44.58 and $ 52.32 per share, respectively.

The maximum number of shares available to be repurchased under the stock repurchase program as of September 30, 2023 was 1,230,010 shares.

During the nine months ended September 30, 2023 and 2022, shares of common stock at a total cost of $ 10.7 million and $ 12.7 million, respectively, were netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock-based compensation awards.

Shares surrendered by the participants in accordance with the applicable award agreements and plan are deemed repurchased and retired by us but are not part of our publicly announced share repurchase programs.

1 unchanged sentence

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 and six months ended June 30, 2023 and 2022 (in thousands, except share and per share information):

Three Months Ended June 30,

Six Months Ended June 30,

The following table sets forth the computation of basic and diluted EPS for the three and nine months ended September 30, 2023 and 2022 (in thousands, except share and per share information):

Three Months Ended September 30,

Nine Months Ended September 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 0.9 million and 0.5 million common stock unit equivalents from diluted earnings per share during each of the three months ended June 30, 2023 and 2022, respectively, and we excluded 0.7 million and 0.5 million common stock unit equivalents from diluted earnings per share during the six months ended June 30, 2023 and 2022, respectively, related to the PSUs for which performance conditions remained unsatisfied .

We excluded 0.9 million and 0.5 million common stock unit equivalents from diluted earnings per share during the three months ended September 30, 2023 and 2022, respectively, and we excluded 0.8 million and 0.5 million common stock unit equivalents from diluted earnings per share during the nine months ended September 30, 2023 and 2022, respectively, related to the PSUs for which performance conditions remained unsatisfied .

Commitments and Contingencies

1 unchanged sentence

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, 2023 and December 31, 2022, we had $ 546.1 million and $ 574.8 million, respectively, in letters of credit and performance and other bonds issued and outstanding.

As of September 30, 2023 and December 31, 2022, we had $ 513.9 million and $ 574.8 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