John Kolstoe - Vice President Dale Francescon - Chairman and Chief Executive Officer Robert Francescon - Co-Chief Executive Officer David Messenger - Chief Financial Officer.

Michael Rehaut - JPMorgan Patrick Keeley - FBR Capital Markets Jay McCanless - Sterne Agee Nishu Sood - Deutsche Bank AG Alex Barron - Housing Research Institute.

Greetings and welcome to the Century Communities First Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host John Kolstoe, Vice President of Century Communities. Thank you. You may now begin.

Good afternoon. We would like to thank you for joining us today for Century Communities first quarter 2015 earnings conference call. After the market closed today, we distributed a press release detailing our first quarter financial results, which can be found in the Investor Relations section of our website at www.centurycommunities.com.

Before the call begins, I would like to remind everyone that certain statements made in the course of 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.

The company undertakes no duty to update any forward-looking statements that are made during the course of 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 is 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 Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer and David Messenger, Chief Financial Officer. With that, I'll turn the call over to Dale..

Thank you, John. Today on the call I'll review our operating highlights. Rob will then discuss our homebuilding markets. Afterwards, Dave will follow up with further details on our financial results and balance sheet. After our prepared remarks, we will open the lines for questions.

We started 2015 with exceptional momentum across our platform in which we not or exceeded our expectations across nearly all of our key metrics.

In the first quarter of 2015 we increased our home sales revenues by 211% to $154.3 million and recorded another strong quarter of net income improvement to $6.4 million or $0.30 per share compared to $3.4 million or $0.20 per share in the same period a year ago.

This improvement was largely driven by our successful expansion into new markets and also strong demand across our growing number of new and existing communities.

Operationally, we are driving additional benefits as we continue to integrate and expand upon the three homebuilder acquisitions we completed in the past year in Las Vegas, Houston and Atlanta. Looking more closely at our metrics our growth in revenues and net income was driven by a 323% increase in deliveries to 542 homes versus the 128 a year ago.

This significant improvement helped us more than double our gross margin dollars to $29.5 million and produce another quarter a favorable leverage on our SG&A.

Our adjusted homebuilding gross margin percentage was 21.5% compared to 25.5% in the first quarter of 2014 but improved sequentially from 21% in the fourth quarter 2014 which represents a more comparable metric based on our current geographical footprint.

We also continue to make progress on managing SG&A which is a percentage of home sale revenues improved to 13.6% in the first quarter 2015 compared to 14.1% in the prior year quarter. In the first quarter, we executed 706 net new contracts compared to 162 net new contracts in the prior year quarter, which represented an increase of 336%.

This growth was held by an increase in our average open communities to 83 compared to 23 in the prior year quarter. We also experienced a strong increase in net new contracts in most of our markets compared to the fourth quarter 2014.

We ended the quarter with 920 homes in backlog with a dollar value of $308 million representing considerable growth compared to 256 homes with a dollar value of $122 million in the same period a year ago.

In summary, we began 2015 with another quarter of solid execution and performance based on our multi-market strategy expanded inventory and exceptional land positions, we are very optimistic on the long-term prospects for our business.

With our existing platform supported by improving housing markets, our company is well positioned to continue improving its probability growing earnings and investing capital opportunistically to further diversify our footprint and enhance our returns. I’d now like to turn the call over to Rob, to discuss our markets in greater detail..

Thank you, Dale. And good afternoon, everyone. We are continuing to build our company into a premier homebuilder in new and existing markets. We are actively broadening our presence within our markets as we integrate recent acquisitions and bring our platform and capital strength to bear.

As we have said in the past, we continue to review select homebuilders in target markets which share a number of favorable attributes, including job growth, increasing household formations, limited housing supply, and favorable home price outlooks.

In addition to platform and market expansion we continue to broaden our presence within core markets by sourcing additional attractive land parcels. In the first quarter, we acquired 911 lots for $33.7 million to end the quarter with an inventory of 12,449 owned and controlled lots in some of the strongest housing markets in the country.

Looking across all of our markets our strong land positions provide a visible pipeline of potential organic growth through at least 2018.

Our markets continue to exhibit strong fundamentals and we are encouraged by the higher levels of traffic and a notable acceleration in the absorption pace across our communities to end of the quarter with a record backlog of 920 homes.

The integration of our Peachtree Communities acquisition in the Southeast remains on track and we are off to a productive start as we continue to further establish our position as a leading builder in the Atlanta market. Over the past two quarters our investment has continued to meet or exceed our acquisition underwriting.

In Colorado our market dynamics have improved considerably during the past six months and we have capitalized on these improving fundamentals with higher deliveries average selling prices and net new contracts on a year-over-year and quarter-over-quarter basis.

In the first quarter we opened four new communities in Colorado, while improving our absorption pace by approximately 51% on a sequential basis, compared to the fourth quarter of 2014 and favorable increase in demand. In our Las Vegas operations we have made consistent progress to improve our market position.

We are experiencing solid demand within our communities as reflected in the steady improvement of our backlog and net new contracts and a stable pricing environment.

The positive ongoing momentum gives us further confidence in the attractive long-term dynamics of this regional platform, which continues to meet our underwriting standard from the time of the acquisition.

In our Central Texas operations which are centered around the Greater Austin and San Antonio markets the generally diverse local economies in our primary markets continue to exhibit favorable homebuilding environments.

We are experiencing good momentum in our demand and traffic with our net new contracts up a 148% and our absorption pace more than double compared to the prior year quarter In Houston we opened one new community during the first quarter as we have started to see a slight softening of the market in both traffic and sales.

Our investment in Houston is a approximately 3% of our lots owned and 4% of inventory dollars. We will continue to diligently monitor the activity within each of our Texas markets and are prepared to tailor our local strategies accordingly.

Concerning the broader market the supply of well located lots remains below historic averages in all of our markets. Interest rates are near record low levels and there are significant macro factors supporting an improved demand environment, including continued employment growth, rising incomes, higher affordability and improving consumer confidence.

We believe these positive factors are driving increased homebuyer interest across our collective markets including the entry level price points.

With our strong balance sheet attractive land positions and accretive acquisition strategy in place, we look forward to expanding our business in a disciplined manner while actively managing our cost to improve our profitability. I will now turn the call over to Dave, who will provide greater detail on our financial results for the first quarter..

Thank you, Rob. In the first quarter we maintained our strong rate of growth driven by the impact of our recent acquisitions and increased home deliveries. We are focused on improving our bottom line.

And for the first quarter our net income improved to $6.4 million representing an increase of 89% compared to $3.4 million in the same quarter last year largely reflecting higher home deliveries. Adjusted EBITDA for the first quarter was $14.2 million up 138% compared to $5.9 million in the first quarter 2014.

Home sales revenue for the first quarter were $154.3 million, an increase of 211% compared to $49.7 million in the prior year quarter. This improvement in revenues was driven by a 323% increase in home closings to 542%, mainly attributable to the expansion of our platform over the past year.

The growth in the number of closing was partially offset by the average sales price on the homes we delivered in the quarter which was $284,751, compared to $ $388,051 during the prior year quarter and compared to $334,754 in our backlog mainly the result of a change in the mix of closings as a result of our shifting market presence and also product mix in our Central Texas market.

We achieved another quarter of improvement in SG&A as a percentage of revenue to 13.6% compared to 14.1% in the first quarter of 2014. As our higher home sales revenue more than offset higher personnel and other investment costs we incur as a public company.

Gross margin percentage on homes closed in the first quarter was 19.1% compared to 25% in the first quarter of 2014 largely as a result of the shift in regional and product mix as I mentioned earlier.

Excluding capitalized interest, and purchase accounting impacts from cost to sales, our adjusted gross margin percentage in the quarter was 21.5% versus 25.5% in the same period in the prior year quarter and 21% in the first quarter of 2014. Net new contracts in the first quarter totaled 706, an increase of 336% from 162% in the prior year quarter.

At the end of March 2015, we had 920 homes in our backlog, representing $308 million in backlog dollar value. This compares to a backlog of 256 homes, with total backlog dollar value of $122.3 million at the end of the first quarter 2014. Turning now to our balance sheet and liquidity.

We ended the first quarter with $26.6 million in cash and cash equivalents. We had total inventories of $599.7 million and total assets of $718.2 million. Our total liabilities were $345.6 million, including total debt of $262.3 million.

As of March 31, 2015 our total liquidity was $90.8 million, including $64.2 million of availability on our credit facility prior to the exercise of the $80 million accordion feature and the company's ratio of net debt to capital was 38.7%.

Subsequent to the end of the quarter in April, we successfully completed an offering of an additional $60 million of 6.875% senior notes due 2022. Proceeds were used to repay outstanding balances under our line of credit to fund further growth in our business and for general corporate purposes.

As of today the line of credit is undrawn with $120 million of capacity and an unused accordion of $80 million. We believe our balance sheet and capital resources firmly position us to continue investing in attractive land and pursuing targeted acquisitions. Now, I would like to update on our outlook for 2015.

We are very encouraged by our operating momentum so far in 2015, supported by improving fundamentals in our markets and the benefits of our recent acquisitions. Based on these factors we are pleased to reiterate our strong growth expectation for the full year 2015. We continue to expect our home deliveries to be in the range of 2,000 to 2,500 homes.

We continue to expect our home sales revenue to be in a range of $650 million to $800 million. We continue to anticipate opening 20 to 30 new communities, while also closing out roughly the same amount. As a result we expect our active selling community count to be in the range of 80 to 90 communities at the end of 2015.

And for the full year 2015, we continue to expect our operating margin to increase, compared to the full year 2014, largely as a result of top line growth as well as our continued efforts to further drive down our SG&A as a percent of home sales.

On a quarterly basis, we expect our third and fourth quarters to be our best ones which is consistent with our historical trends. In closing, we are positive on our growth outlook for 2015 and are on our way to realizing a solid year of profitability and improving across our business. We look forward to updating you on our second quarter call.

Operator, can you please open the lines to Q&A..

Thank you. At this time we’ll be conducting a question-and-answer session. [Operator Instructions] Our first question is from Michael Rehaut from JPMorgan..

Thanks good afternoon everyone and nice quarter..

Thanks, Michael..

The first question is just to clarify on the guidance appreciate all the detail and obviously very encouraging you’re able to reiterate everything line by line.

And just on the gross margin component of that just wanted to be clear I understood it you know fairly well that I think last quarter it was noted that you expect gross margins for the full year and correct me if I'm wrong here to be similar to Q4 2014’s level and that was kind of excluding purchase accounting.

I just want to make sure is that still the case do I have that right and what kind of expectations do you have for purchase accounting to impact the gross margins for the year. I think in the first quarters is a 130 bps..

Yes, Michael this is Dave. So in the fourth quarter at a conference call I talked about our results our gross margins adds in any CapEx of purchase accounting adjustments was 21% and we’ve said that we expect for the full year of 2015. Our full year gross margin be approximately21% as well.

I would say for the first this year we had about $2 million run through our gross margin line for the first quarter and consisting - still holding with it. In the fourth quarter we had talked about having $3 million run through in the first two quarters.

I would expect that there is another roughly $1 million that runs through over the course of the second quarter. We may have a little bit of the dribble into the third and fourth, by the majority that those dollars should be allocated to homes closing in the second quarter..

Okay, so as you are saying here then about a $1 million left largely to be felt in 2Q? Is that right?.

Correct..

Okay. And that it’s very helpful Dave. And then just also thinking about sales pace, you know I think you referred to this in your comments, it was up solidly year-over-year about 18%. And you also reiterated the community count outlook for the rest of the year.

As you think about sales pace though you had, there is good improvement up 15%, 20% versus a year-ago. As you looked into 2Q and I guess the rest of the year, would you expect to similar type of year-over-year improvement given – driven by perhaps the new mix of your communities.

Again it was up about 15%, 20% year-over-year, is that the right way to think about or where there is some kind of just issues that impacted 1Q that kind of gave it a better lift versus a year-ago..

No, I think this Dave, again. I think there is probably right way to look at it. I don’t think, when I look across our markets I don’t see anomalies that use it one market over another that would have made that non-representative..

So, perhaps, again similar type of year-over-year improvement given that, there wasn’t any anomalies there and you have a different mix of communities perhaps at the same time, would you expect the same type of seasonal year-over-year, that the improvement should stay, but the seasonality should a similar type of dynamic?.

Yes. At this point in the year I would yes..

All right, perfect. Thanks, so much..

Thank you..

You’re welcome..

Our next question is from Patrick Keeley from FBR..

Hey, guys, congrats on the quarter..

Hey, Patrick..

So, first question, you guys kind of touched on the in release, but we like to hear your thoughts following Peachtree on just on the acquisition landscape things really changed since then or you guys looking at any additional markets anything maybe look a little bit frothy. So just any color would be great..

Patrick, this is Dale. We continue to look for acquisition opportunities as we have for the last 18 months - we explored a lot of options you know our standards have been and continue to be high in terms of the markets that we look for the quality of management that's in place.

And so it’s to a certain extent we’re always in the market looking but it’s matter of finding the right fit and beyond that we haven’t really seen any specific changes either in more companies being available less companies being available, it’s just a matter of finding the ones that we think fit into our acquisition criteria..

Great. And then the second one just kind of looking at ASP going forward, with ASP and backlog been above what you guys printed in 1Q, so how should we think about that flowing through in the near-term and maybe even just through the rest of the year..

Hey, Patrick, this is Dave. I would say when you are looking at it for the rest of the year. I would fall back on where we have our guidance two thousand and twenty five hundred homes with a range in revenue of $650 million $800 million which I think equates to approximately $319,000 ASP.

And so I think that you know that’s probably a good number for use for modeling purposes..

Okay, should we think of that is maybe lumpy quarter-to-quarter or maybe kind of [indiscernible]..

I think it will be – it’s a little difficult as always for a homebuilder to predict which homes closed in the mix of those homes each quarter, as we look out for a year, we were comfortable reiterating our guidance today. So we will stick with that..

Great. Thank you, guys..

Thanks, Patrick..

Thanks..

Our next question comes from Jay McCanless from Sterne Agee..

Good afternoon, everyone. First question I want to ask on any commentary on April and May.

In terms of traffic and sales you as we indicated in our remarks we've seen it to be fairly robust in Q1 and April and May continued on the same path. .

And then just wanted to ask the ASP question a different way because it looks like you have a substantial amount of Atlanta homes lower-priced Atlanta homes in the backlog what would be I guess the timing difference between when you expect those Atlanta homes to close versus maybe some of the higher-priced homes and should we expect an ASP in 2Q may be similar a little bit higher than what we saw in 1Q.

This is Dave, Jay.

I'd say that when you look at our backlog numbers for closing roughly 50% the quarter following I think you’re going to see in ASP that it would be higher than where we’re in Q1 and I’d still say you know looking at over the course of the year 319, 320 number should be reasonable for us to achieve and looking at our backlog today, where we think it [indiscernible] during the quarters.

We think that number is still good..

Okay, all right, thanks guys..

Thanks..

Welcome. .

Our next question comes from Nishu Sood of Deutsche Bank..

Thanks, first question I had was on SG&A you mentioned overall your margins you expect improvement and increasing leverage on the SG&A. I was just wondering if you could help us think about that potentially even quantify that a little bit you know what are the puts and takes there clearly you’ve had some pretty significant expansion.

So that would weigh on SG&A but you know you’ve got the much larger revenue base as well. So maybe some efficiencies on the SG&A side as well.

What you know how significant should we expect the improvements to be this year and then what should we expect longer term as a target?.

We haven’t put a target out there what generally you're looking for but I would say that we are continuing focused on increasing the bottom line increasing our earnings per share and whether that comes through top line of revenue or improving our SG&A.

When we look at our SG&A components roughly using round numbers about 65% of its fixed, so as we grow our top line throughout the course of this year we should be able to start exploiting some additional growth and then operating margin line..

Got it, got it. That’s helpful. I guess that asking the question from that perspective. Are there significant integration cost should be factoring in you know a different fixed variable proportion this year because of the growth any major pushes one way the other..

No, I don’t think so. We undertook a lot of our acquisition dollars last year and obviously we have some additional cost this year. But its not going to be so material that it throws that ratio on a black..

Got it. And second question I had was on pricing wanted to get your sense with the demand trends as you described as being good in the first quarter and even into April and May's as you are mentioning. How much pricing power have you seen if any? And if you could maybe characterized it by market that’d great..

Sure. Nishu, its Dale. We have seen pricing power in kind of varies a bit by market, but in general we’ve been able to move prices in most of the markets.

Colorado while we have some softening last year we really seen the market firm up here we been able to both reduce incentives as well as increased pricing, same thing in Atlanta since we acquired that in November of last year we have consistently raised prices as well as reduced incentives.

In the back half we really didn't have that much in the way of incentives we have been able to raise prices, we’ve raised prices in Central Texas, we'd actually even raised prices a bit in Houston, but as we mentioned in the prepared remarks of all of our markets that's really the only one that we’ve seen any softening in terms of sales and traffic..

Got, it. And on Houston the majority of anecdotes about Houston have been there, it has continued to be fairly good and there's been a significant erosion, but the handful of anecdotes that we have gotten maybe to the contrary have reference with the higher price points.

So if you could just maybe put your comment in your perspective on Houston in the context of that broader picture..

I mean we’re seeing in that market and not that we have much in the way of offerings at the higher price points. But as we evaluate that market we are seeing some softening in the higher price points more so than in the lower price points in the Houston market..

Bu you know way I'm not sure that our results are the best judge because we’ve been very cautious about putting in additional dollars into that market as Rob mentioned in his remarks, we’ve only opened one community in the first quarter and so we’re keeping our investment very low until we can really see what the impact of the oil pricing is going to be..

Got it. Thanks for your thoughts.

Our next question comes from Alex Barron of Housing Research Institute..

Yes, thanks and good job guys..

Thank you..

I just wanted to clarify a couple of the guidance you gave, you went a little fast so I’m not sure if I heard it correctly. But community, you said you’re going to have 80 to 90.

Is that correct?.

Yes, at the end of the year, and if I spoke too fast I apologize for that. We reiterated the guidance so the guidance you would have from the fourth quarter will be the same that we would have now.

Closings of two thousand and twenty five hundred homes revenue in the range of $650 million to $800 million, we expect our ending community count to be 80 to 90 communities again in 2015, which is roughly consistent with that we had again in 2014, as we’re going to open up 22 to 30 new ones and close approximately the same number throughout the course of the year..

What would cause the community count to go down because you ended with 87 this quarter? Are you expecting that you would just sell out faster than you can open or what?.

It just the timing of when starting communities that we had before closing out in the quarters versus when we are opening up new ones..

Okay, and then you also mentioned…..

Alex, this is Dale. Just to clarify that you know 80 to 90 is at year end. At certain points in the year, we may have a higher number of that. But we were providing year end guidance..

Okay.

Now, as far as margins you mentioned the 21% is that before interest or after interest?.

That’s after interest and after purchase accounting. So we’re going to add that back in..

Okay, and so that implies and gives a pretty significant pickup in the back half once the purchase accounting goes away?.

I think I mean there is another $1 million is going to roll through in the second half I mean in the second quarter. But we’re already factoring that into that 21% number as an add back..

Okay, [indiscernible] that I saw 21.5% number for this quarter before you expect some – right?.

Right. If you go into the second or last attachment, you can see what we broke out our gross margin. And you know gross margin is 21.5%, now when you deduct purchase accounting and deduct the interest to come with kind of an adjusted cost of goods sold number. Then you are at 19.1%..

Okay, it’s sound good. Thanks..

You’re welcome..

Thank you, Alex..

[Operator Instructions] Our next question is a follow from Michael Rehaut of JPMorgan..

Thanks. So just add a little further clarification there. And just off with the last question I think when you said you expected the 21% for the year that wasn't I guess as we were talking about it earlier in the call that's really pre-interest and pre-purchase accounting.

Correct?.

Correct..

Okay, all right, so that that's just important before those hit the P&L. And then Nishu was asking about SG&A you know I think asking for some level quantification and understanding that there is some puts and takes but in the first quarter you are able to get 50 bps of leverage.

And so obviously you kind of have a sense of what your revenues are going to be. I would assume that you have some idea of what the SG&A leverage could be for the year.

Is a 50 to 100 basis point degree of magnitude the right way to think about things I mean could it really accelerate beyond that obviously you’re still building out your footprint in hiring and growing resources.

So but you still had some leverage in the first quarter, so just from a not necessarily exact quantification but just kind of degree of magnitude is that kind of 50 to 100 type of range reasonable?.

This is Dave. I don’t think it’s unreasonable but at the same time, I am not ready to commit to any kind of number but as we look at each quarter, and the homes that we’re closing and balance our SG&A with our continuing operations as well as improving our footprint and expanding the Century Communities brand we incur additional cost.

And so it’s a very fluid percentage it will move on us from quarter-to-quarter. But in the end we’re confident looking to drive shareholder value through increasing our operating margin..

Right, okay. And then just on the tax rate kind of move through a little bit around last year but you came out at 35%, rounded for 2014.

Is that a good number to use for 2015 we had in our model 36 inching up a little bit but any thoughts around?.

I think rounding the 35 rate is pretty good to use..

Okay. And then just one last one, going back to Houston for moment obviously very small market for you but the big market for the industry and will start through incremental data points.

So on your comments around the fact that maybe in a higher price points were little softer than the lower you kind of looking at your community footprint out in Houston and again granted it's as you said relatively small footprint for you guys but it seems like most of the communities where you have out there are kind of in the high to 200s mid to high 200s you have one in the 160s or that’s what start you have one in the 360s.

But overall, kind of seems preponderance and that let’s say the lower price point in that - in the market. That does seem a little bit in contrast to the broader commentary that the weakness of the higher price point.

So when you talk about softness you also mentioned the fact that maybe you haven’t opened the lot and you are just kind of becoming a little more cautious in general, may be you could just give us a little more color because it does seem like again your footprint is a little bit geared towards the lower price point you know what’s – maybe just give us a little bit more color in terms of what's going on there?.

Michael as I was saying earlier I am not sure we’re the best gauge on the market in general, part of that is when we entered that market it was with a very small investment and as we started gearing up and looking at additional opportunities – then we started seeing some of the concerns about oil and so we put a lot of those plans on hold.

So we as we sit here today we still have a very small presence there until we have some clarity on where the market is going we intend to keep up our small presence. So that's why when you look at the market in general we may not be the bellwether for what's going on.

So in another words, then I appreciate that I mean so in another words then, are you kind of point to perhaps that given that you, yourselves are acting a little more costly in the market.

May be I don’t want to pull in your mouth, maybe not marketing as aggressively you are doing things as aggressively as you normally would that you know some of that softness is. I don’t want to say self inflicted but just as a result of a lower conservative approach in general.

Yes, I would say we are taking a conservative approach that would related to specs starts as well. We would take a very conservative approach on that and variety of things that builders use to increase sales velocity. So, by taking that conservative approach that could create that slight softening, yes..

Okay, fair enough. Appreciate it. Thanks..

Thanks, Michael. End of Q&A.

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I’d like to turn the floor back to Dale Francescon for closing remarks..

Thank you, operator. And thank you again to everyone for joining us today. We look forward to speaking with you again next quarter..

This concludes today’s teleconference. Thank you for your participation. You may disconnect your lines at this time..