Dale Francescon - Chairman & Co-Chief Executive Officer Rob Francescon - Co-Chief Executive Officer David Messenger - Chief Financial Officer Scott Dixon - Chief Accounting Officer.

Jay McCanless - Wedbush Michael Rehaut - JP Morgan Alex Rygiel - Housing Research Center.

Greetings. And welcome to Century Communities First Quarter 2017 Earnings 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 Mr.

Scott Dixon, Chief Accounting Officer. Thank you, sir. You may now begin..

Good afternoon. We would like to thank you for joining us today for Century Communities First Quarter 2017 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 as a substitute for the financial information presented in accordance with GAAP. Management will be available after the call should you have any questions that did not get answered.

Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer; and David Messenger, Chief Financial Officer. With that, I will turn the call over to Dale..

Thank you, Scott. Today on the call, I will review our operating highlights. Rob will then discuss our homebuilding markets. Afterwards, Dave will follow-up with further details on our financial results, balance sheet and 2017 outlook. Following our prepared remarks, we will open the lines for questions.

This is an exciting time for Century, since our IPO in 2014 we have been on a rapid growth trajectory both organically and through acquisitions. We are focused on our goal of expanding Century into one of the largest and most profitable U.S. home builders.

During the first quarter we continue our organic step in this direction by generating considerable growth in net new contracts, deliveries and revenues. This healthy pace of activity was a direct result of our ability to capitalized on favorable demand trends in our chosen markets which allowed us to produce another quarter of strong earnings.

This steady and consistent improve is due to our efforts to enhance operations in each of our markets through a cycle tested approach with a focus on growing returns on equity. Our recently announced merger agreement with UCP is directly aligned with our strategy and provides us immediate entry into additional markets which sound fundamentals.

UCP is a home builder and land developer focused on high growth markets in California, the Pacific North-West and the South-East, that was most recently named the four fastest growing public home builder in the U.S.

The combination of Century and UCP builds on our track record of successful transactions since 2013, and transforms the two regional builders into one with significant national scale. Our two businesses have minimal overlap and will increase our footprint to 17 homebuilding markets and 10 states.

We anticipate that this combination was pro forma 2016 revenues of over $1.3 billion and over 3,600 closings will further augment the trajectory of our multimarket strategy while fueling even greater returns on equity as we combined our two business.

We expect to drive significant operating efficiencies and economies of scale in excess of what either company could achieve on a standalone basis and generate an accretive benefit to 2018 earnings per share.

The geographical footprint and lot holdings of the combine operations provide a significant boost to our growth opportunities in 2018 and beyond. Looking at our first quarter 2017 results, we grew our home sale revenue by 25% to $226.4 million and home deliveries by 13% to 608 homes.

We achieved this higher activity while recording higher prices in each market to produce an average selling price up 11%, reflecting favorable product mix and core price momentum and demonstrating stability in our adjusted gross margin percentage which approximated 22% for the ninth straight quarter.

Adjusted gross margin increased 23% to $49.1 million which represented an adjusted gross margin percentage of 21.7% versus 22.1% in the prior year quarter. This 40 basis point difference was a function of product and geographical mix along with higher cost across U.S. home building markets.

With recent announcements such as the propose tariff on lumber imports from Canada, we expect inflationary and cost headwinds to persist. However, we have demonstrated the ability to raise prices of our homes as evidence by the 11% year-over-year increase in ASP.

We are always looking to control cost while pushing our pricing objectives in order to maximize profits and shareholder returns. Our SG&A as a percent of home sales revenue was in line with our expectations as we support the ramp up of our homebuilding divisions in North Carolina and Utah which are all progressing according the plan.

Our Wade Jurney joint venture targeting entry level buyers in the Southeast, experienced great success in the first quarter and continued contributing income which we expect to build as we move throughout the year. Our partner Wade Journey was recently named the fastest growing private homebuilder in the US for the second year in a row.

We have good momentum in our legacy businesses and many exciting new developments which we believe will dramatically advance our longer-term growth objectives. We remain committed to invest in time, energy and capital to continue growing Century into the most profitable builder amongst its peers.

We are positive on the homebuilding environment and are energized to deliver on a 2017 goals. 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. I echo Dale's comments that we feel good about the homebuilding environment as our housing markets are performing well. Our entrenched positions in attractive regions of the country are driving meaningful organic growth and new contracts home deliveries and earnings.

We are poised for additional success with our expanding presence in existing markets and entry into additional markets in the west and south east through UCP. First quarter net new contracts grew 21% to a record 957 homes with all regions contributing to this growth led by Nevada Colorado and Nevada on a unit basis.

We ended the quarter with homes and backlog of 13% to 1098 homes represented backlog dollar value of 21% to $436 million from the prior year. This was made possible by the abortion pace improving by 23%.

We increased or held firm on price in key markets with the average selling price in backlog rising 7% year-over-year helped by the success of new communities and product offerings. Interest rates remain low and the potential for rate hikes has not had a noticeable effect on our selling efforts in any markets.

We ended the quarter with land inventory up 43% year-over-year to 18,854 owned and control lots, which consist of a 50/50 split between owned and controlled compared to a 70/30 split in the prior year. Looking at our market portfolio, we're encouraged by continuing good momentum.

In Colorado, we had a very strong quarter with new home deliveries rising 19% and contracts at 23% year-over-year.

ASPM backlog was essentially flat primarily as a result of our efforts to introduce more affordable product including our new Century Complete line which is solely focused on entry level buyers with smaller sized homes at price points in the 200,000.

In the overall market labor constraints are limited supply well traffic is improved throughout the spring creating healthy selling conditions. In Utah where we started operations in mid-2016, we continue to scale up in a disciplined manner with one additional community open during the quarter and four more scheduled to open in the second quarter.

The Salt Lake City market remains strong with positive activity year-over-year driving prices higher. In Las Vegas we had double digit growth in new contracts and backlog on a stable community count along with a more than doubling of home deliveries. Homes at our price points are experiencing good demand in part helped by very low resale supply.

In Texas our collective operations had a very positive first quarter. In the first quarter new contracts improve mainly attributable to better absorption paces. Our Austin and San Antonio market delivered an increase of 77% in new contracts while Huston experienced 11% growth.

Our combined Texas portfolio saw increases in ASP on homes deliver while growing the number of homes and backlog during the quarter. pricing in the Huston market is trending positive for home sales at entry level and first move up price points.

With less incentives compared to a year ago which has let us to increase our investment in entry level box in Huston.

Moving to the South East, the combination of our significant position is the second largest builder at Atlanta, the recent startup of operations in Charlotte, the joint venture with Wade Journey and the planed addition of UCP assets gives us a balanced exposure to one of the most economically sound regions of the country.

In Atlanta, new contracts and deliveries were stable, while ongoing efforts to upgrade our mix pushed prices up nearly 19% on both deliveries and 14% on homes and backlog. Employment growth of 4% year-over-year and a steady stream of new residents continues to fuel demand for housing.

We have experienced increased competition in this market and as a result are continuing to target incremental demand at multiple price points. In Charlotte where we began operations in December 2016, we more than doubled our land inventories to over 1,300 lots in the first quarter and expect to begin delivering homes in the second half of 2017.

This is the only market where we have any overlap with UCP. The planned third quarter closing of the merger will allow us to gain some local efficiencies as we ramp up operations in Charlotte. For UCP, we will also gain immediate entry in the Nashville, Tennessee and Myrtle Beach, South Carolina.

These two South-East markets along with Charlotte features some of the highest affordability levels in the country and continue to benefit from job gains and population growth, driving strong traffic in sales across buyer segments.

Looking at UCP's markets in the West, California and Washington are expected to represent approximately 20% of our pro forma revenues upon deal close. We are very excited to enter these states which feature many attractive markets.

With operations in Northern, Central and Southern California along with Seattle, the UCP transaction perfectly fits our strategy of offering a variety of product choices within market areas that we believe will generate robust economic job and population growth.

We are pleased with the performance of our expansive pro forma geographic footprint and our ability to further improve returns on equity through the positioning of our communities and broad product offerings.

Our markets are expected to continue to experience favorable homebuilding conditions which gives us confidence that we are on track for another year of record earnings. I’ll now turn the call over to Dave, who will provide greater detail on our financial results for the first quarter..

Thank you, Rob. During the first quarter of 2017, we had solid results and invested significantly in our business to the series of previously announced initiatives. Net income increased by 10% to 8.8 million or $0.40 per share compared to 8 million or $0.38 per share in the prior year quarter.

Adjusted EBITDA grew 13% to 19.2 million compared to 17 million in the prior year quarter attributable to revenue growth. Home sales revenues for the first quarter were $226.4 million, an increase of 25% compared to 181.1 million in the prior year quarter.

This improvement in revenues was mainly driven by 13% increase in home deliveries to 608 and higher average selling prices which increased to 372,400 in the first quarter of 2017 compared to 335,900 in the prior year quarter due to a shift in regional and product mix as well as core price gains.

Gross margin percentage on homes closed in the first quarter was 19.5% compared to 20.3% in the prior year quarter. Excluding capitalized interest and purchase accounting impacts from cost of sales our adjusted gross margin percentage in the quarter was 21.7% versus 22.1% in the same period last year.

We anticipate being able to maintain relatively stable gross margin performance from quarter-to-quarter throughout the year.

SG&A as a percentage of homebuilding revenues was 14.7% for this quarter compared to 13.9% for the first quarter of 2016, which is the result of home deliveries increasing 13% over the prior year and the related commissions and increase in employee headcount that will support our organic growth goals.

Our 2016 investments in Utah and Charlotte and certain IT initiatives that weren't present in early 2016. Without the negative impact of Utah and Charlotte and the additional cost and personnel NIT our SG&A as a percent of homebuilding revenue would have been 13.7%.

We expect SG&A as a percent of homebuilding revenues to improve as the year progresses given that Q1 was budgeted to be our lowest closing quarter of the year and a scale up of operations in our newest markets of Utah of Charlotte. Now, turning to our balance sheet and liquidity.

As of March 31, 2017, we had total long-term debt of $448 million and total liquidity of $375 million including $335 million of availability on our $400 million revolver. Our net debt-to-capital ratio improved to 45.1%. During the quarter, we were able to issue approximately 638,000 under our ATM for $15.5 million or $24.23 per share.

These proceeds were used to match fund our land acquisitions. We have ample capacity to fund the plan merger with UCP which provides for a combination of stock and cash consideration.

The cash portion of the deal which totals approximately $98 million plus the assumption or half [ph] of their debt will be funded through availability on our credit facility or through a longer-term debt range.

We are also issuing 4.2 million of Century stock to UCP shareholders resulting in Century shareholders owning roughly 84% of the combine company. In closing, we are excited with the direction of our business across our diverse footprint.

Looking at the full year 2017, the stability provided by our expanded scale gives us confident and visibility as we look forward. For the full year, we reiterate our prior 2017 outlook which does not include any impact from our plan merger with UCP.

We expect deliveries to be in the range of 3,000 to 3,300 homes and homes sales revenues to be in the range of $1 billion to $1.2 billion. We expect to open approximately 35 to 40 new communities throughout the year and close out approximately equivalent number ending the year between 90 and 100 selling communities.

While we do not provide guidance on a quarterly basis, we expect net income trends to be seasonally similar to 2016 and an anticipate earnings to grow as the year progresses. Operator, can you please open the lines up of the Q&A..

Thank you. We will start the question-and-answer session [Operator Instructions] Our first question comes from Jay McCanless with Wedbush. Please proceed with your question..

The first question I had is, what you guys maintained in the guidance, it looks like there may be some volatility in the average closing prices as we move through the year and especially with what you guys were saying about, I believe it’s the Century, the interim -- I'm bonking on the brand name, but the entry level one that you guys were coming out within Denver.

Could you talk about that’s one to influence to ASP progression and should we expect it maybe to roll down a little bit because to the year?.

Jay this is Dave. I think regarding the guidance on the $1 billion to $1.2 billion, were we sit today, what we’re seeing in backlog, we're confident that that’s the range, that's achievable for us.

In terms of Century Complete, as that comes online, those assets obviously do have a lower price point, but shouldn’t negatively bring down the entire portfolio, because it's only a few communities this year in Colorado..

The second question I had is on Inspire. I saw the expenses starting to hit this quarter are you guys still thinking back half for this year for some offsetting revenues from that operation..

This is Dave again, yes, we are. You see it in the first quarter, well over $700,000 in losses related to the financial services division, but as we began taking loan applications here in the second quarter, we funded and sold our first loan, we expect the second half of the year to really ramp up and start achieving profitability..

Got it and then the last question I had, the tax rate was a little bit lower this quarter than what we expected, what should we expect for the full year?.

As per typical years, somewhere between 34.5% to 35%, the onetime benefit we achieved in the first quarter was due to change in the rules for the way restricted stock met [ph]. So that your price in the other periods having the same thing happen, but as one time first quarter event for the full year plan on 34.5% to 35%..

Our next question comes from Michael Rehaut with JP Morgan. Please proceed with your question. .

Congrats on the UCP transaction. I guess just first one on that deal, obviously that kind of is another of several that you've done over the past few years and staying true to that approach of, as you said, organic and inorganic growth. I would assume this being one of the -- you have some, little bit of overlap also as from new markets.

I was wondering if you could walk us through, like a timeline around integration, I guess in particular being one of the larger ones and in across multiple markets.

When do you think that that might be fully wrapped into your infrastructure and your systems and capacity for -- and following that capacity for continuing acquisition opportunities and may be geographically how you're thinking about that following this one?.

Hi Michael its Dale, it's an opportunity that we're very excited about, we recognized that it's a large transaction. We've already started the transition and the integration process or at least the planning of it.

And so we have learned a lot on the other ones that we have previously done and -- so we are starting ahead on this one, we are -- we feel that by the time we close this transaction in the third quarter of this year that we'll have everything in place to start the integration immediately.

And we anticipate that within about a year, we will fully integrated with all their operations onto system..

And then just kind of looking forward, does that -- during that year does that kind of keep you guys maybe a little bit less active at least from a transactional nature? I mean obviously I presume you guys continue to look as opportunities come up in terms of pulling the trigger on something additional, would your kind of more, want to get this one under your belt and pass that how do you look at things in terms of geographic focus for additional opportunities?.

Well, in terms of a timing of another transaction, obviously our first priority is the successful integration of UCP. In 2014, we did three separate transactions that the integration of which went pretty smoothly.

And so when we look at that, we think we primarily -- we probably have the capacity to do other transactions during that timeframe, but we will just see it. It depends on what opportunities come around and how the integration actually goes.

In terms of geography, that was the big appeal of UCP, I mean we truly have a coast-to-coast footprint at this point. So there is certain areas that we could fill in, but there is a lot of opportunity within our markets and UCP's markets to grow those as well.

So we really look at it that we have a great opportunity both now to grow organically with the UCP markets as well as the opportunity to bolt-on additional ones..

And then just lastly from a market perspective, across the different markets and regions that you are in, I was wondering if you could give us a sense of perhaps what's doing a little better than your -- you expected at this point? And what I mean by that is as the spring selling season now is maybe past the halfway mark over the last two or three months, which markets maybe a little better or above your expectations versus maybe meeting or if there is slight lead below..

Michael, we are seeing really all of our markets performing very well right now. And as we look through Q1 doing 957 net new contracts which was a record for us. We felt really good about that and the percentage increase on a year-over-year basis. As we look in April, we are closing April at 17% above year-over-year, this April versus last.

And if you look at John Burns just this afternoon, they put out a report for April, on a national basis they think new home sales are going to be up 8% year-over-year. So, we’re more than double what we experienced over the national average and its basically the selection of our markets and they all are really performing well.

When you look at Colorado, where our corporate office is located and our home market it's, got very well inventory continuing to see home price depreciation large demand and its performing really well right now. And is it above our expectations, maybe slightly because its performing so well, but we expected it to run like that.

Candidly, we’re seeing that in most of our markets. .

Okay. Thanks for that. And just to clarify in that comment and I'll get off to Q&A here.

But, April you're saying 17% growth, that’s obviously order growth and I presume similar to the first quarter predominantly driven by an improving in sales phase year-over-year?.

That’s correct. .

Great. Thank you. .

Thank you. Our next question comes from Nishu Sood from Deutsche Bank. Please proceed with your question. .

Hi. This is [indiscernible] on for Nishu. So my first question is regarding the full year for 2017. So you reiterated what was given in February, the deal was announced in April.

I'm just curious as to what stage of talks was the acquisition in when that guidance is first given? And with the merger of this size if there any risk maybe the growth expectations may drift a bit lower due to all that activities around the deals this year?.

Hi, Tim its Dave. There is going to be a proxy and an [indiscernible] here in the very near future that will detail lot of the conversations that went on between the two company. But in terms of our guidance, about the back half of the year and going to 3,300 homes, that is Century specific those are include UCP in that number.

So, we’re confident that there our core markets today and are organic growth will take us into that range..

All right. Thank you. And then I guess the second question is regarding that SG&A commentary. So, excluding the charges in the quarter you mentioned the 13.7% is that including -- you mentioned commissions were a bit up, is that including commissions being higher year-over-year.

And can you confirm what commission did compared to 1Q, 2016?.

So, commissions are out year-over-year, but when I was making adjustments in the prepared remarks for our startup losses and Charlotte and Utah or additional personnel, IT initiatives those do not include commissions..

Thank you. [Operator Instructions] The next question comes from Alex Rygiel with the Housing Research Center. Please proceed with your question..

I wanted to ask, I guess if you guys could rank your markets which one were to say is the strongest at this point time?.

Yeah. I would say Colorado is probably our strongest right now. Las Vegas, is doing extremely well also, as I mentioned when Michael asked the question a second ago, all our markets are performing well. But if we have to pick one, I would say Colorado, Las Vegas is right there as well.

Central Texas for our operation there on year-over-year basis is doing very, very well also..

Okay thanks and as regarded to the deal, have you guys put any thoughts or are you going to provide at some points some idea of what kind of synergies you expect on the SG&A, once this deal is completed?.

Alex it’s Dave. Once the deal is approved by shareholders for UCP, sometime in the third quarter, we will provide more clarity around synergies and future guidance in time..

For teams to Wade Journey, can you guys comment a bit more on how that operation is doing and your future plans for it.

Are you going to take it to other markets?.

Hi Alex its Dale, the venture continues to perform very well, when we look at -- even though we don’t provide those or consolidate it, but when we look at Q1 of 2017 that venture had approximately 588 net sales closed, about 320 homes and we look at that those are significant increases year-over-year in sales its an 80% and in closing it’s a 39% increase.

Which is consistent with the fact that Wade Journey homes was just rated as the again for 2016 as the fastest growing private home builder here in the country. And we think there is tremendous opportunity with that venture.

We're expanding into additional markets and we think that its business model is very portable from market to market and so as we go forward, you can fully expect it will be in additional markets..

Thank you. At this time I would like to turn the call back over to Mr. Dale Francescon. Please proceed. .

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

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. And thank you for your participation..