CENTURY COMMUNITIES, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS. (Form 10-Q)

Some of the statements included in this Quarterly Report on Form 10-Q (which we
refer to as this "Form 10-Q") constitute forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements relate to
expectations, beliefs, projections, forecasts, future plans and strategies,
anticipated events or trends and similar expressions concerning matters that are
not historical facts. These statements are only predictions. We caution that
forward-looking statements are not guarantees. Actual events and results of
operations could differ materially from those expressed or implied in the
forward-looking statements. Forward-looking statements are typically identified
by the use of terms such as "may," "will," "should," "expect," "could,"
"intend," "plan," "anticipate," "estimate," "believe," "continue," "predict,"
"potential," the negative of such terms and other comparable terminology and the
use of future dates. You can also identify forward-looking statements by
discussions of strategy, plans or intentions. Actual results and the timing of
events may differ materially from those contained in these forward-looking
statements due to a number of factors.

The forward-looking statements included in this Form 10-Q reflect our current
views about future events and are subject to numerous known and unknown risks,
uncertainties, assumptions and changes in circumstances that may cause our
actual results to differ significantly from those expressed in any
forward-looking statement. Statements regarding the following subjects, among
others, may be forward-looking and subject to risks and uncertainties including
among others:

?the impact of the COVID-19 pandemic and measures taken in response to the
COVID-19 pandemic on our business operations, operating results and financial
condition, as well as the general economy and housing market in particular;
?economic changes, either nationally or in the markets in which we operate,
including declines in employment, volatility of mortgage interest rates and
inflation;
?shortages of or increased prices for labor, land or raw materials, including
lumber, used in housing construction and resource shortages;
?a downturn in the homebuilding industry, including a reduction in demand or a
decline in real estate values or market conditions resulting in an adverse
impact on our business, operating results and financial conditions, including an
impairment of our assets;
?changes in assumptions used to make industry forecasts, population growth rates
or trends affecting housing demand or prices;
?continued volatility and uncertainty in the credit markets and broader
financial markets;
?our future operating results and financial condition;
?our business operations;
?changes in our business and investment strategy;
?availability and price of land to acquire, and our ability to acquire such land
on favorable terms or at all;
?availability, terms and deployment of capital;
?availability or cost of mortgage financing or an increase in the number of
foreclosures in the market;
?delays in land development or home construction resulting from adverse weather
conditions or other events outside our control;
?impact of construction defect, product liability, and/or home warranty claims,
including the adequacy of accruals and the applicability and sufficiency of our
insurance coverage;
?changes in, or the failure or inability to comply with, governmental laws and
regulations;
?the timing of receipt of regulatory approvals and the opening of projects;
?the impact and cost of compliance with evolving environmental, health and
safety and other laws and regulations and third-party challenges to required
permits and other approvals and potential legal liability in connection
therewith;
?the degree and nature of our competition;
?our leverage, debt service obligations and exposure to changes in interest
rates and our ability to refinance our debt when needed or on favorable terms;
?our ability to continue to fund and succeed in our mortgage lending business
and the additional risks involved in that business;
?availability of qualified personnel and contractors and our ability to retain
key personnel and contractor relationships;
?our ability to pay dividends in the future;
?taxation and tax policy changes, tax rate changes, new tax laws, new or revised
tax law interpretations or guidance; and
?changes in United States generally accepted accounting principles (which we
refer to as "GAAP").

Forward-looking statements are based on our beliefs, assumptions and
expectations of future events, taking into account all information currently
available to us. Forward-looking statements are not guarantees of future events
or of our performance. These beliefs, assumptions and expectations can change as
a result of many possible events or factors, not all of which are known to us.
Some of these events and factors are described above and in "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" and in "Part I, Item 1A. Risk Factors" in our Annual Report on Form
10-K, and other risks and uncertainties detailed in this report, including "Part
II, Item 1A. Risk Factors", and our other reports and filings with the SEC. If a
change occurs, our business, financial condition, liquidity, cash flows and
results of operations may vary materially from those expressed in or implied by
our forward-looking statements. New risks and uncertainties arise over time, and
it is not possible for us to predict the occurrence of those matters or the
manner in which they may affect us. Except as required by law, we are not
obligated to, and do not intend to, update or
                                       16

————————————————– ——————————

Contents

revise any forward-looking statements, whether as a result of new information,
future events or otherwise. Therefore, you should not rely on these
forward-looking statements as of any date subsequent to the date of this Form
10-Q.
As used in this Form 10-Q, references to "we," "us," "our," "Century" or the
"Company" refer to Century Communities, Inc., a Delaware corporation, and,
unless the context otherwise requires, its subsidiaries and affiliates.
The following discussion and analysis of our financial condition and results of
operations is intended to help the reader understand our Company, business,
operations and present business environment and is provided as a supplement to,
and should be read in conjunction with, our condensed consolidated financial
statements and the related notes to those statements included elsewhere in this
Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December
31, 2021. We use certain non-GAAP financial measures that we believe are
important for purposes of comparison to prior periods. This information is also
used by our management to measure the profitability of our ongoing operations
and analyze our business performance and trends. Some of the numbers included
herein have been rounded for the convenience of presentation.

Insight

Century is engaged in the development, design, construction, marketing and sale
of single-family attached and detached homes in 17 states. In many of our
projects, in addition to building homes, we are responsible for the entitlement
and development of the underlying land. We build and sell homes under our
Century Communities and Century Complete brands.
Our Century Communities brand offers a wide range of buyer profiles including:
entry-level, first and second time move-up, and lifestyle homebuyers, and
provides our homebuyers with the ability to personalize their homes through
certain option and upgrade opportunities. Our Century Complete brand targets
entry-level homebuyers, primarily sells homes through retail studios and the
internet and generally provides no option or upgrade opportunities. We now have
six states where both Century brands have a presence and we believe there are
more opportunities for increased penetration within our over 45 high-growth
markets to enable both brands to benefit from increased scale and enhanced
operational efficiencies.
Our homebuilding operations are organized into the following five reportable
segments: West, Mountain, Texas, Southeast, and Century Complete. Our indirect
wholly-owned subsidiaries, Inspire Home Loans Inc., Parkway Title, LLC, and IHL
Home Insurance Agency, LLC, which provide mortgage, title, and insurance
services, respectively, primarily to our homebuyers have been identified as our
Financial Services segment.

While we offer homes that appeal to a broad range of entry-level, move-up, and
lifestyle homebuyers, our offerings are heavily weighted towards providing
affordable housing options in each of our homebuyer segments. Additionally, we
prefer building move-in-ready homes over built-to-order homes, which we believe
allows for a faster construction process, advantageous pricing with
subcontractors, and shortened time period from home sale to home delivery, thus
allowing us to more appropriately price the homes and deploy our capital. Of the
2,348 homes delivered during the first quarter of 2022, approximately 80% of our
deliveries were made to entry-level homebuyers and approximately 97% of homes
delivered were built as move-in ready homes.
We anticipate the homebuilding markets in each of our operating segments will
continue to be tied to both the local economy and the macro-economic
environment. Despite overall strong demand and sales of our homes during the
first quarter of 2022, continued future demand is uncertain as economic
conditions are uncertain, in particular with respect to inflation; the impact of
raising the federal funds interest rate by the Federal Reserve; the extent to
which and how long COVID-19 and related government directives, actions, and
economic relief efforts will impact the U.S. economy, financial markets, credit
and mortgage markets; consumer confidence; interest rates; availability and cost
of mortgage loans to homebuyers; wage growth; household formations; levels of
new and existing homes for sale; availability and cost of land, labor and
construction materials; demographic trends; housing demand; and other factors,
including those described elsewhere in this Form 10-Q. A decrease in demand for
our homes would adversely affect our operating results in future periods,
including our net sales, home deliveries, and average sales price, as well as
have a direct effect on the origination volume of and revenues from our
Financial Services segment. As a result, our past performance may not be
indicative of future results.
Additionally, our operating results could be impacted by a decrease in home
affordability as a result of price appreciation, mortgage interest rate
increases or tightening of mortgage lending standards. While interest rates on
30-year fixed mortgages have risen in recent months, they still remain near
historic lows and we believe housing demographics and buyer demand will continue
to remain strong at least in the short term and that we are well-positioned to
benefit from the ongoing shortage of both new and resale homes available for
purchase. Subject to deteriorating market conditions, we believe our operations
are well-positioned for future growth as a result of the markets in which we
operate, our product offerings which span the home buying segment, but focus on
affordable price points, and our current and future inventories of attractive
land positions. As we have grown, we have continued to focus on maintaining
prudent leverage, and, as a result, we believe we are well positioned to execute
on our growth strategy in order to optimize stockholder returns.

                                       17

————————————————– ——————————

Contents

Operating results

During the three months ended March 31, 2022, we generated total revenues of
$1.0 billion, with home sales revenues of $988.4 million, an increase of 3.0%
over the prior year period, and financial services revenue of $26.3 million, a
decrease of 21.8% over the prior year period.  The increase in home sales
revenue was fueled by a 22.7% increase in the average sales price per home to
$421,000, partially offset by a 16.1% decrease in the number of homes delivered
to 2,348 due to ongoing supply chain and labor challenges.  This increase in
home sales revenue combined with a 720 basis point increase in homebuilding
gross margin percent resulted in a $188.8 million in income before income tax
expense, net income of $142.5 million, or $4.20 per diluted share, compared to
$101.7 million, or $3.00 per diluted share in the prior year period, and driving
our return on equity to 33.7% on an annualized basis for the first quarter of
2022. During the first quarter of 2022, we paid cash dividends to our
stockholders of $0.20 per share, an increase of 33.0% over previously paid
quarterly dividends. We also returned capital to our stockholders via share
repurchases of 1.0 million shares for $62.4 million or a weighted average price
of $61.52 per share.

From March 31, 2022we had an order book of 5,247 homes, an increase of 28.1% compared to March 31, 2021representing approximately $2.2 billion in value of sales, an increase of 37.4% compared to March 31, 2021.

Driven by the continued strong demand for our homes through the first quarter of
2022, we ended the first quarter of 2022 with no amounts outstanding under our
revolving line of credit, $209.0 million of cash and cash equivalents, $45.2
million of cash held in escrow, and a net homebuilding debt to net capital ratio
of 29.3%. Additionally, we increased our land acquisition and development
activities during the first quarter of 2022 to bolster our lot pipeline and
support future community growth, which resulted in 85,577 lots owned and
controlled at March 31, 2022, a 48.7% increase as compared to March 31, 2021 and
a 7.2% increase as compared to December 31, 2021. Although the trajectory and
strength of our markets have continued to remain strong and allowed us to pass
on higher costs through selling price increases and thereby positively affecting
our margins during the first quarter of 2022, we continued to experience labor,
land and raw material shortages and delays, and material and labor supply cost
pressures, and elongated construction cycle times to build homes in many of our
markets, caused in part by increased demand, global supply chain disruptions,
inflation, and municipal and utility delays, that could negatively impact our
sales and margins in future periods.


?
                                       18

————————————————– ——————————

Contents

The following table summarizes our results of operations for the three months
ended March 31, 2022 and 2021.
(in thousands, except per share
amounts)                               Three Months Ended March 31,              Increase (Decrease)
                                         2022                   2021             Amount            %
Consolidated Statements of
Operations:
Revenue
Home sales revenues               $       988,415           $   959,279       $     29,136        3.0 %
Land sales and other revenues               1,630                15,670           (14,040)     (89.6) %
Total homebuilding revenues               990,045               974,949             15,096        1.5 %
Financial services revenues                26,305                33,620            (7,315)     (21.8) %
Total revenues                          1,016,350             1,008,569              7,781        0.8 %
Homebuilding cost of revenues
Cost of home sales revenues             (709,073)             (756,507)             47,434      (6.3) %
Cost of land sales and other
revenues                                    (846)              (10,020)     

9174 (91.6)%

                                        (709,919)             (766,527)             56,608      (7.4) %
Financial services costs                 (15,154)              (18,301)              3,147     (17.2) %
Selling, general, and
administrative                          (101,639)              (92,151)            (9,488)       10.3 %
Other income (expense)                      (862)                 (541)              (321)       59.3 %
Income before income tax
expense                                   188,776               131,049             57,727       44.0 %
Income tax expense                       (46,280)              (29,397)           (16,883)       57.4 %
Net income                        $       142,496           $   101,652       $     40,844       40.2 %
Earnings per share:
Basic                             $          4.25           $      3.03       $       1.22       40.3 %
Diluted                           $          4.20           $      3.00       $       1.20       40.0 %
Adjusted diluted earnings per
share(1)                          $          4.20           $      3.00       $       1.20       40.0 %
Other Operating Information
(dollars in thousands):
Number of homes delivered                   2,348                 2,797              (449)     (16.1) %
Average sales price of homes
delivered                         $         421.0           $     343.0       $         78       22.7 %
Homebuilding gross margin
percentage(2)                                28.3 %                21.1 %              7.2 %     34.1 %
Adjusted homebuilding gross
margin excluding interest and
inventory impairment and other
(1)                                          29.5 %                23.1 %              6.4 %     27.7 %
Backlog at end of period,
number of homes                             5,247                 4,097              1,150       28.1 %
Backlog at end of period,
aggregate sales value             $     2,170,865           $ 1,579,599       $    591,266       37.4 %
Average sales price of homes in
backlog                           $         413.7           $     385.6       $       28.1        7.3 %
Net new home contracts                      2,944                 3,455              (511)     (14.8) %
Selling communities at period
end                                           197                   188                  9        4.8 %
Average selling communities                   198                   194                  4        2.1 %
Total owned and controlled lot
inventory                                  85,577                57,536             28,041       48.7 %
Adjusted EBITDA(1)                $       203,663           $   152,121       $     51,542       33.9 %
Adjusted income before income
tax expense(1)                    $       188,776           $   131,049       $     57,727       44.0 %
Adjusted net income(1)            $       142,496           $   101,652       $     40,844       40.2 %
Net homebuilding debt to net
capital (1)                                  29.3 %                19.9 %              9.4 %     47.2 %


(1) This is a non-GAAP financial measure and should not be used as a substitute
for the Company's operating results prepared in accordance with GAAP. See the
reconciliations to the most comparable GAAP measure and other information under
"Non-GAAP Financial Measures." An analysis of any non-GAAP financial measure
should be used in conjunction with results presented in accordance with GAAP.

(2) Homebuilding gross margin percentage includes inventory impairment, which is
included within inventory impairment and other on our condensed consolidated
financial statements. No inventory impairments were recognized for the three
months ended March 31, 2022 and 2021.


?
                                       19

————————————————– ——————————

Contents

Results of Operations by Segment
(dollars in thousands)
                                     Average Sales Price of                             Income before Income Tax
             New Homes Delivered        Homes Delivered         Home Sales Revenues             Expense
              Three Months Ended       Three Months Ended       Three

Months Ended Three Months Ended March

                  March 31,                March 31,                 March 31,                    31,
               2022        2021         2022         2021        2022         2021         2022          2021
West               396         319   $     663.5   $  582.4   $   262,732   $ 185,790   $    71,242   $   27,461
Mountain           514         685         546.0      423.5       280,655     290,065        56,999       51,980
Texas              366         328         339.5      267.5       124,256      87,739        20,570        8,531
Southeast          366         568         408.4      387.5       149,477     220,081        30,865       23,440
Century
Complete           706         897         242.6      195.8       171,295     175,604        24,692       21,730
Financial
Services             -           -             -          -             -           -        11,151       15,319
Corporate            -           -             -          -             -           -      (26,743)     (17,412)
Total            2,348       2,797   $     421.0   $  343.0   $   988,415   $ 959,279   $   188,776   $  131,049


West
During the three months ended March 31, 2022, our West segment generated income
before income tax expense of $71.2 million, a 159.4% increase over the prior
year period. This increase was driven by an increase in home sales revenue of
$76.9 million and an increase of 1,234 basis points in the percentage of income
before income tax expense to home sales revenues, as a result of (1) increased
revenue on a partially fixed cost base and (2) increased gross margins on home
sales. The revenue increase during the three months ended March 31, 2022 was
primarily generated by a 24.1% increase in the number of homes delivered, as
well as a 13.9% increase in the average sales price per home.  During the three
months ended March 31, 2022, the increase in the number of homes delivered was
driven by favorable market dynamics across our markets, in the midst of ongoing
supply chain and labor challenges. The average sales price increase was driven
by the mix of deliveries within individual communities, as well as increased
pricing power as a result of strong market dynamics.
Mountain
During the three months ended March 31, 2022, our Mountain segment generated
income before income tax expense of $57.0 million, a 9.7% increase over the
prior year period. This increase was driven by an increase of 239 basis points
in the percentage of income before income tax expense to home sales revenues as
a result of increased gross margins on home sales, partially offset by a
decrease in home sales revenue of $9.4 million. The revenue decrease during the
three months ended March 31, 2022 was primarily generated by a 25.0% decrease in
the number of homes delivered, partially offset by a 28.9% increase in the
average sales price per home.  During the three months ended March 31, 2022, the
decrease in the number of homes delivered was driven by ongoing supply chain and
labor challenges, and the average sales price increase was driven by the mix of
deliveries within individual communities, as well as increased pricing power as
a result of strong market dynamics.
Texas
During the three months ended March 31, 2022, our Texas segment generated income
before income tax expense of $20.6 million, a 141.1% increase over the prior
year period. This increase was driven by an increase in home sales revenue of
$36.5 million and an increase of 683 basis points in the percentage of income
before income tax expense to home sales revenues, as a result of (1) increased
revenue on a partially fixed cost base and (2) increased gross margins on home
sales. The revenue increase during the three months ended March 31, 2022 was
primarily generated by a 11.6% increase in the number of homes delivered, as
well as a 26.9% increase in the average sales price per home.  During the three
months ended March 31, 2022, the increase in the number of homes delivered was
driven by favorable market dynamics across our markets, in the midst of ongoing
supply chain and labor challenges. The average sales price increase was driven
by the mix of deliveries within individual communities, as well as increased
pricing power as a result of strong market dynamics
Southeast
During the three months ended March 31, 2022, our Southeast segment generated
income before income tax expense of $30.9 million, a 31.7% increase over the
prior year period. This increase was driven by an increase of 1,000 basis points
in the percentage of income before income tax expense to home sales revenues as
a result of increased gross margins on home sales, partially offset by a
decrease in home sales revenue of $70.6 million. The revenue decrease during the
three months ended March 31, 2022 was primarily generated by a 35.6% decrease in
the number of homes delivered, partially offset by a 5.4% increase in the
average sales price per home.  During the
                                       20

————————————————– ——————————

Contents

three months ended March 31, 2022, the decrease in the number of homes delivered
was driven ongoing supply chain and labor challenges, and the average sales
price increase was driven by the mix of deliveries within individual
communities, as well as increased pricing power as a result of strong market
dynamics.
Century Complete
During the three months ended March 31, 2022, our Century Complete segment
generated income before income tax expense of $24.7 million, a 13.6% increase
over the prior year period. This increase was driven by an increase of 204 basis
points in the percentage of income before income tax expense to home sales
revenues as a result of increased gross margins on home sales, partially offset
by a decrease in home sales revenue of $4.3 million. The revenue decrease during
the three months ended March 31, 2022 was primarily generated by a 21.3%
decrease in the number of homes delivered, partially offset by a 23.9% increase
in the average sales price per home.  During the three months ended March 31,
2022, the decrease in the number of homes delivered was driven ongoing supply
chain and labor challenges, and the average sales price increase was driven by
the mix of deliveries within individual communities, as well as increased
pricing power as a result of strong market dynamics.
Financial Services
Our Financial Services segment originates mortgages for primarily our
homebuyers, and as such, performance typically correlates to the number of homes
delivered. Our Financial Services segment generated income before income tax of
$11.2 million for the three months ended March 31, 2022, a 27.2% decrease over
the prior year period. This decrease was primarily the result of a $7.3 million
decrease in financial services revenue during the three months ended March 31,
2022 compared to the prior year period, due to (1) a 33.9% decrease to 1,520 in
the number of mortgages originated during the three months ended March 31, 2022,
due to the decrease in the number of homes delivered by our Century Communities
and Century Complete brands over the prior year period, and (2) reduced gain on
sale margins on loans sold to third parties period over period due to market
conditions driving increased interest rates.
The following table presents selected operational data for our Financial
Services segment in relation to our loan origination activities (dollars in
thousands):
                                          Three Months Ended March 31,
                                          2022                      2021
Total originations:
Number of loans                              1,520                   2,301
Principal                           $      552,056               $ 709,291
Capture rate of Century homebuyers              77 %                    76 %
Century Communities                             81 %                    84 %
Century Complete                                64 %                    58 %
Average FICO score                             732                     737
Century Communities                            739                     744
Century Complete                               708                     710

Loans sold to third parties:
Number of loans sold                         1,959                   2,279
Principal                           $      692,064               $ 681,157


Corporate
During the three months ended March 31, 2022, our Corporate segment generated a
loss of $26.7 million as compared to a loss of $17.4 million for the same period
in 2021. This increase in loss is primarily attributed to higher compensation
costs, including estimated bonuses.

Residential Construction Gross Margin

(dollars in thousands)
Homebuilding gross margin represents home sales revenues less cost of home sales
revenues and inventory impairment and other. Our homebuilding gross margin
percentage, which represents homebuilding gross margin divided by home sales
revenues, increased during the three months ended March 31, 2022 to 28.3% as
compared to 21.1% for the same period in 2021. This increase was driven by (1)
the positive homebuilding sales environment across our markets, which resulted
in increased demand, (2) our ability to increase sales

                                       21

————————————————– ——————————

Contents

price in excess of an increase in our labor and direct costs period over period,
(3) benefits from our increased scale driving building efficiencies and
streamlined production processes, and (4) the realization of less interest in
cost of home sales revenue over the prior period.

In the following table, we calculate our homebuilding gross margin, as adjusted
to exclude inventory impairment and other and interest in cost of home sales
revenues.

                                                     Three Months Ended March 31,

                                              2022           %          2021          %

Home sales revenues                        $   988,415     100.0 %   $   959,279    100.0 %
Cost of home sales revenues                  (709,073)    (71.7) %     (756,507)   (78.9) %
Inventory impairment and other                       -         - %             -        - %
Gross margin from home sales                   279,342      28.3 %       202,772     21.1 %
Add: Inventory impairment and other                  -         - %             -        - %
Add: Interest in cost of home sales
revenues                                        12,146       1.2 %        18,377      1.9 %
Adjusted homebuilding gross margin
excluding interest and inventory
impairment and other (1)                   $   291,488      29.5 %   $   

221,149 23.1%

(1)This non-GAAP financial measure should not be used as a substitute for the
Company's operating results in accordance with GAAP. See the reconciliations to
the most comparable GAAP measure and other information under "-Non-GAAP
Financial Measures." An analysis of any non-GAAP financial measure should be
used in conjunction with results presented in accordance with GAAP.


For the three months ended March 31, 2022, excluding inventory impairment and
other, and interest in cost of home sales revenues, our adjusted homebuilding
gross margin percentage was 29.5% as compared to 23.1% for the same period in
2021. We believe the above information is meaningful as it isolates the impact
that inventory impairment, indebtedness and acquisitions (if applicable) have on
our homebuilding gross margin and allows for comparability of our homebuilding
gross margins to previous periods and our competitors.

?

                                       22

————————————————– ——————————

Contents

Selling, General and Administrative Expense
(dollars in thousands)
                                          Three Months Ended March 31,              Increase
                                               2022              2021         Amount          %
Selling, general and administrative     $       101,639      $   92,151     $   9,488         10.3 %
As a percentage of home sales revenue              10.3  %          9.6 %


Our selling, general and administrative expense increased $9.5 million for the
three months ended March 31, 2022 as compared to the prior year period. This
increase was primarily attributable to an increase of $9.0 million in salaries
and wages expense as compared to the same period in 2021 due to increased
headcount, increased base pay due to market conditions, and increased incentive
based compensation accruals, as well as increases in expenses in numerous areas
to support our growth. The increase for the three months ended March 31, 2022
was partially offset by a decrease in internal and external commission expense
of $5.7 million. During the three months ended March 31, 2022, our selling,
general, and administrative expense increased 70 basis points as a percentage of
home sales revenue as compared to the prior year period, that was partially
mitigated as a result of increased revenues on a partially fixed cost base.

income tax expense

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 2022 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 which increased our rate by 0.8%.
For the three months ended March 31, 2022, our estimated annual rate of 25.5%
was impacted by discrete items which had a net impact of decreasing our rate by
1.0%, including excess tax benefits for vested stock-based compensation and
federal energy tax credits claimed on prior year home deliveries in excess of
previous estimates.
Our estimated annual rate for the three months ended March 31, 2022 of 25.5%
increased by 330 basis points as compared to our effective tax rate for the year
ended December 31, 2021 of 22.2%.  The increase in our estimated rate is driven
by the expiration of the Energy Efficient Home Credit on December 31, 2021. 

the

The Energy Efficient Home Credit provided a $2,000 tax credit for each dwelling delivered that meets the energy saving and certification requirements provided for by law.

For the three months ended March 31, 2022 and 2021, we recorded an income tax expense of $46.3 million and $29.4 million, respectively. Segment assets (in thousands of dollars)

                     March 31,   December 31       Increase (Decrease)
                       2022          2021          Amount         Change
West                $   724,968  $    668,830  $      56,138        8.4 %
Mountain              1,016,202     1,008,481          7,721        0.8 %
Texas                   365,114       322,302         42,812       13.3 %
Southeast               401,522       360,644         40,878       11.3 %
Century Complete        424,854       371,096         53,758       14.5 %
Financial Services      396,178       533,159      (136,981)     (25.7) %
Corporate               166,663       232,364       (65,701)     (28.3) %
Total assets        $ 3,495,501  $  3,496,876  $     (1,375)        0.0 %


                                       23

————————————————– ——————————

Contents

Total assets remained relatively consistent at $3.5 billion as of March 31, 2022
as compared to December 31, 2021, primarily as a result of a decrease in
mortgage loans held for sale period over period, partially offset by overall
growth of the Company and the increase in the number of lots owned period over
period.
Lots owned and controlled

                             March 31, 2022               December 31, 2021                   % Change
                      Owned    Controlled   Total    Owned    Controlled   Total     Owned    Controlled     Total

West                   4,835        3,789    8,624    4,440        4,877    9,317     8.9 %      (22.3) %   (7.4) %
Mountain              11,752        7,980   19,732   11,860        8,039   19,899   (0.9) %       (0.7) %   (0.8) %
Texas                  6,518        9,099   15,617    5,340        8,159   13,499    22.1 %        11.5 %    15.7 %
Southeast              6,185       16,677   22,862    5,928       14,195   20,123     4.3 %        17.5 %    13.6 %
Century Complete       5,521       13,221   18,742    5,287       11,734   17,021     4.4 %        12.7 %    10.1 %
Total                 34,811       50,766   85,577   32,855       47,004   79,859     6.0 %         8.0 %     7.2 %


Of our total lots owned and controlled as of March 31, 2022, 40.7% were owned
and 59.3% were controlled, as compared to 41.1% owned and 58.9% controlled as of
December 31, 2021.

Other residential construction operating data

                           Three Months Ended
Net new home contracts         March 31,             Increase (Decrease)
                          2022             2021    Amount          % Change
West                          417            394         23            5.8 %
Mountain                      586            947      (361)         (38.1) %
Texas                         412            518      (106)         (20.5) %
Southeast                     409            476       (67)         (14.1) %
Century Complete            1,120          1,120          -              - %
Total                       2,944          3,455      (511)         (14.8) %


Net new home contracts (new home contracts net of cancellations) for the three
months ended March 31, 2022 decreased by 511 homes, or 14.8%, to 2,944, as
compared to 3,455 for the three months ended March 31, 2021.  The decrease was
primarily driven by having fewer homes available to sell compared to the prior
year period.
Monthly Absorption Rate

Our overall monthly “burn rate” (the rate at which stay-at-home orders are contracted, net of cancellations) for the three months ended March 31, 2022 and 2021 by segment are shown in the tables below:

                        Three Months Ended March 31,           Increase (Decrease)
                       2022                           2021   Amount          % Change
West                         6.3                       6.9      (0.6)          (8.7) %
Mountain                     5.6                       8.1      (2.5)         (30.9) %
Texas                        7.6                      13.3      (5.7)         (42.9) %
Southeast                    6.2                       7.9      (1.7)         (21.5) %
Century Complete             3.7                       3.8      (0.1)          (2.6) %
Total                        5.0                       6.1      (1.1)         (18.0) %


                                       24

————————————————– ——————————

Contents

During the three months ended March 31, 2022, our absorption rates decreased by
18.0% to 5.0 per month as compared to the same period in 2021.  The decrease was
primarily driven by the decrease in net new home contracts primarily as a result
of having fewer homes available to sell compared to the prior year period.
Absorption rates, however, continued to be strong across all of our markets
driven by favorable market dynamics across our markets.

Selling communities at period end     As of March 31,         Increase/(Decrease)
                                     2022           2021    Amount          % Change

West                                     22           19           3           15.8 %
Mountain                                 35           39         (4)         (10.3) %
Texas                                    18           13           5           38.5 %
Southeast                                22           20           2           10.0 %
Century Complete                        100           97           3            3.1 %
Total                                   197          188           9            4.8 %

Our sales communities have grown to 197 communities at March 31, 2022 against 188 to March 31, 2021. This increase is the result of new community openings.

Backlog
(dollars in thousands)

                                           As of March 31,
                             2022                                  2021                               % Change

                                        Average                               Average
                                         Sales                                 Sales                                   Average
              Homes    Dollar Value      Price      Homes    Dollar Value      Price       Homes     Dollar Value    Sales Price

West            545   $      412,519   $    756.9     561   $      342,688   $    610.9    (2.9) %          20.4 %     23.9    %
Mountain      1,117          641,820        574.6   1,051          520,004        494.8      6.3 %          23.4 %     16.1    %
Texas           432          156,391        362.0     575          187,594        326.3   (24.9) %        (16.6) %     10.9    %
Southeast       756          356,413        471.4     709          279,904        394.8      6.6 %          27.3 %     19.4    %
Century
Complete      2,397          603,722        251.9   1,201          249,409        207.7     99.6 %         142.1 %     21.3    %
Total /
Weighted
Average       5,247   $    2,170,865   $    413.7   4,097   $    1,579,599   $    385.6     28.1 %          37.4 %      7.3    %



?

Backlog reflects the number of homes, net of cancellations, for which we have
entered into a sales contract with a customer but for which we have not yet
delivered the home. At March 31, 2022, we had 5,247 homes in backlog with a
total value of $2.2 billion, which represents increases of 28.1% and 37.4%,
respectively, as compared to 4,097 homes in backlog with a total value of $1.6
billion at March 31, 2021.  The increase in backlog dollar value is primarily
attributable to the increase in backlog units and a 7.3% increase in the average
sales price of homes in backlog, partially offset by a decreases in backlog
units for our Texas and West segments.

Supplemental Guarantor Information
Our 6.750% senior notes due 2027 (which we collectively refer to as our "2027
Notes") and our 3.875% senior notes due 2029 (which we collectively refer to as
our "2029 Notes" and together with the 2027 Notes, the "Senior Notes") are our
unsecured senior obligations and are fully and unconditionally guaranteed on an
unsecured basis, jointly and severally, by substantially all of our direct and
indirect wholly-owned operating subsidiaries (which we refer to collectively as
"Guarantors"). In addition, our former 5.875% senior notes due 2025 (which we
collectively refer to as our "2025 Notes"), which were extinguished during the
year ended December 31, 2021, were our unsecured senior obligations and were
fully and unconditionally guaranteed on an unsecured basis, jointly and
severally, by the Guarantors. Our subsidiaries associated with our Financial
Services operations (referred to as "Non-Guarantors") do not guarantee the
Senior Notes. The guarantees are senior unsecured obligations of the Guarantors
that rank equal with all existing and future senior debt of the Guarantors and
senior to all subordinated debt of the Guarantors. The guarantees are
effectively subordinated to any secured debt of the Guarantors. As of March 31,
2022, Century Communities, Inc. had outstanding $1.0 billion in total principal
amount of Senior Notes.
Each of the indentures governing our Senior Notes provides that the guarantees
of a Guarantor will be automatically and unconditionally released and
discharged: (1) upon any sale, transfer, exchange or other disposition (by
merger, consolidation or otherwise) of all of the equity interests of such
Guarantor after which the applicable Guarantor is no longer a "Restricted
Subsidiary" (as defined in the respective indentures), which sale, transfer,
exchange or other disposition does not constitute an "Asset Sale" (as defined in
the respective
                                       25

————————————————– ——————————

Contents

indentures) or is made in compliance with applicable provisions of the
applicable indenture; (2) upon any sale, transfer, exchange or other disposition
(by merger, consolidation or otherwise) of all of the assets of such Guarantor,
which sale, transfer, exchange or other disposition does not constitute an Asset
Sale or is made in compliance with applicable provisions of the applicable
indenture; provided, that after such sale, transfer, exchange or other
disposition, such Guarantor is an "Immaterial Subsidiary" (as defined in the
respective indentures); (3) unless a default has occurred and is continuing,
upon the release or discharge of such Guarantor from its guarantee of any
indebtedness for borrowed money of the Company and the Guarantors so long as
such Guarantor would not then otherwise be required to provide a guarantee
pursuant to the applicable indenture; provided that if such Guarantor has
incurred any indebtedness in reliance on its status as a Guarantor in compliance
with applicable provisions of the applicable Indenture, such Guarantor's
obligations under such indebtedness, as the case may be, so incurred are
satisfied in full and discharged or are otherwise permitted to be incurred by a
Restricted Subsidiary (other than a Guarantor) in compliance with applicable
provisions of the applicable Indenture; (4) upon the designation of such
Guarantor as an "Unrestricted Subsidiary" (as defined in the respective
Indentures), in accordance with the applicable indenture; (5) if the Company
exercises its legal defeasance option or covenant defeasance option under the
applicable indenture or if the obligations of the Company and the Guarantors are
discharged in compliance with applicable provisions of the applicable indenture,
upon such exercise or discharge; or (6) in connection with the dissolution of
such Guarantor under applicable law in accordance with the applicable indenture.
The indenture governing our former 2025 Notes contained a similar provision.
If a guarantor were to become a debtor in a case under the US Bankruptcy Code, a
court may decline to enforce its guarantee of the Senior Notes. This may occur
when, among other factors, it is found that the guarantor originally received
less than fair consideration for the guarantee and the guarantor would be
rendered insolvent by enforcement of the guarantee. On the basis of historical
financial information, operating history and other factors, we believe that each
of the guarantors, after giving effect to the issuance of its guarantee of the
Senior Notes when the guarantee was issued, was not insolvent and did not and
has not incurred debts beyond its ability to pay such debts as they mature. The
Company cannot predict, however, what standard a court would apply in making
these determinations or that a court would agree with our conclusions in this
regard.
Only the 2027 Notes and the related guarantees are, and the former 2025 Notes
and the related guarantees were, registered securities under the Securities Act
of 1933, as amended (the "Securities Act"). The offer and sale of the 2029 Notes
and the related guarantees were not and will not be registered under the
Securities Act or the securities laws of any other jurisdiction and instead were
issued in reliance upon an exemption from such registration. Unless they are
subsequently registered under the Securities Act, neither the 2029 Notes nor the
related guarantees may be offered and sold only in transactions that are exempt
from the registration requirements under the Securities Act and the applicable
securities laws of any other jurisdiction.
As the guarantees for the 2027 Notes and the guarantees for the former 2025
Notes were made in connection with the issuance of the 2027 Notes and former
2025 Notes and exchange offers effected under the Securities Act in February
2015, October 2015 and April 2017, the Guarantors' condensed supplemental
financial information is presented in this report as if the guarantees existed
during the periods presented pursuant to applicable SEC rules and guidance. If
any Guarantors are released from the guarantees in future periods, the changes
are reflected prospectively. We have determined that separate, full financial
statements of the Guarantors would not be material to investors, and
accordingly, supplemental financial information is presented below.
                                       26

————————————————– ——————————

Contents

The following summarized financial information is presented for Century
Communities, Inc. and the Guarantor Subsidiaries on a combined basis after
eliminating intercompany transactions and balances among Century Communities,
Inc. and the Guarantor Subsidiaries, as well as their investment in, and equity
in earnings from Non-Guarantor Subsidiaries.

              Century Communities, Inc. and Guarantor Subsidiaries

Summarized Balance Sheet Data (in thousands)      March 31, 2022        December 31, 2021

Assets
Cash and cash equivalents                      $             67,618    $           180,843
Cash held in escrow                                          45,212                 52,297
Accounts receivable                                          43,189                 39,492
Inventories                                               2,680,195              2,456,614
Prepaid expenses and other assets                           186,556                160,999
Property and equipment, net                                  27,171                 24,220
Deferred tax assets, net                                     21,272                 21,239
Goodwill                                                     30,395                 30,395
Total assets                                   $          3,101,608    $         2,966,099
Liabilities and stockholders' equity
Liabilities:
Accounts payable                               $             89,815    $    

82,734

Accrued expenses and other liabilities                      349,702                288,229
Notes payable                                             1,010,961                998,936
Revolving line of credit                                          -                      -
Total liabilities                                         1,450,478              1,369,899
Stockholders' equity:                                     1,651,130              1,596,200

Total liabilities and equity $3,101,608

2,966,099

Summarized Statements of Operations Data (in
thousands)                                      Three Months Ended         Year Ended
                                                  March 31, 2022        December 31, 2021

Total homebuilding revenues                    $            990,045    $         4,092,576
Total homebuilding cost of revenues                       (709,919)         

(3,095,363)

Selling, general and administrative                       (101,639)         

(389,610)

Loss on debt extinguishment                                       -         

(14,458)

Inventory impairment and other                                    -         

(41)

Other income (expense)                                      (1,099)         

(3,307)

Income before income tax expense                            177,388                589,797
Income tax expense                                         (43,488)              (131,201)
Net income                                     $            133,900    $           458,596



?

                                       27

————————————————– ——————————

Contents

Critical accounting policies

Critical accounting estimates are those that we believe are both significant and
require us to make difficult, subjective or complex judgments, often because we
need to estimate the effect of inherently uncertain matters. We base our
estimates and judgments on historical experiences and various other factors that
we believe to be appropriate under the circumstances. Actual results may differ
from these estimates, and the estimates included in our financial statements
might be impacted if we used different assumptions or conditions. A summary of
our critical accounting policies is included in our Annual Report on Form 10-K
for the fiscal year ended December 31, 2021, filed with the SEC on February 3,
2022, in the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations-Critical Accounting Policies."
Liquidity and Capital Resources
Overview
Our liquidity, consisting of our cash and cash equivalents and cash held in
escrow and Credit Facility availability, was $1.1 billion as of March 31, 2022,
compared to $1.2 billion as of December 31, 2021.

Our principal uses of capital for the three months ended March 31, 2022 were our
land purchases, land development, home construction, share repurchases, and the
payment of routine liabilities. We increased our land acquisition and
development activities during 2022, which resulted in 34,811 lots owned at March
31, 2022, a 6.0% increase as compared to December 31, 2021.

Cash flows for each of our communities depend on the stage in the development
cycle and can differ substantially from reported earnings. Early stages of
development or expansion require significant cash outlays for land acquisitions,
entitlements and other approvals, and construction of model homes, roads,
utilities, general landscaping and other amenities. Because these costs are a
component of our inventory and not recognized in our consolidated statements of
operations until a home closes, we incur significant cash outlays prior to our
recognition of earnings. In the later stages of community development, cash
inflows may significantly exceed earnings reported for financial statement
purposes, as the cash outflow associated with home and land construction was
previously incurred. From a liquidity standpoint, we are actively acquiring and
developing lots in our markets to maintain and grow our lot supply and active
selling communities. As we continue to expand our business, our cash outlays for
land purchases and land development to grow our lot inventory may exceed our
cash generated by operations.

Under our shelf registration statement, which we filed with the SEC on July 1,
2021 and was automatically effective upon filing, we have the ability to access
the debt and equity capital markets in registered transactions from time to time
and as needed as part of our ongoing financing strategy and subject to market
conditions. In August 2021, we filed a prospectus supplement to offer up to
$100.0 million under the shelf registration statement under our at-the-market
facility described below.

Short-term liquidity and capital resources

We use funds generated by operations, available borrowings under our Credit
Facility, and proceeds from issuances of debt or equity, including our current
at-the-market facility, to fund our short term working capital obligations and
fund our purchases of land, as well as land development, home construction
activities, and other cash needs.

Our Financial Services operations use funds generated from operations, and
availability under our mortgage repurchase facilities to finance its operations
including originations of mortgage loans to our homebuyers.
We believe that we will be able to fund our current liquidity needs for at least
the next twelve months with our cash on hand, cash generated from operations,
and cash expected to be available from our revolving line of credit or through
accessing debt or equity capital, as needed or appropriate, although no
assurance can be provided that such additional debt or equity capital will be
available or on acceptable terms, especially in light of the current COVID-19
pandemic, its impact on the macro-economy, and market conditions at the time.
While the impact of the COVID-19 pandemic will continue to evolve, we believe we
are well positioned from a cash and liquidity standpoint to not only operate in
an uncertain environment, but also continue to grow with the market and pursue
other ways to properly deploy capital to enhance returns, which may include
taking advantage of strategic opportunities as they arise.
Long-term Liquidity and Capital Resources
Beyond the next twelve months, we believe that our principal uses of capital
will be land and inventory purchases and other expenditures to invest in our
future growth, as well as principal and interest payments on our long-term debt
obligations. We believe that we will be able to fund our long-term liquidity
needs with cash generated from operations and cash expected to be available from
our revolving line of credit or through accessing debt or equity capital, as
needed or appropriate, although no assurance can be provided that such
additional debt or equity capital will be available. To the extent these sources
of capital are insufficient to meet our needs, we may also
                                       28

————————————————– ——————————

Contents

make additional public or private offerings of our securities, refinance debt or divest certain assets to fund our operations and capital requirements.

Material Cash Requirements

In the normal course of business, we enter into contracts and commitments that
obligate us to make payments in the future. These obligations impact our
short-term and long-term liquidity and capital resource needs. For the three
months ended March 31, 2022, there were no material changes to the contractual
obligations we previously disclosed in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2021 that was filed with the SEC on February 3,
2022.

In the ordinary course of business, we enter into land purchase contracts in
order to procure lots for the construction of our homes. We are subject to
customary obligations associated with entering into contracts for the purchase
of land and improved lots. Purchase and option contracts for the purchase of
land enable us to defer acquiring portions of properties owned by third parties
until we have determined whether to exercise our option, which may serve to
reduce our financial risks associated with long-term land holdings. These
purchase contracts typically require a cash deposit, and the purchase of
properties under these contracts is generally contingent upon satisfaction of
certain requirements, including obtaining applicable property and development
entitlements. We also utilize option contracts with land sellers and others as a
method of acquiring land in staged takedowns, to help us manage the financial
and market risk associated with land holdings, and to reduce the use of funds
from our corporate financing sources. Option contracts generally require payment
by us of a non-refundable deposit for the right to acquire lots over a specified
period of time at pre-determined prices. Our obligations with respect to
purchase contracts and option contracts are generally limited to the forfeiture
of the related non-refundable cash deposits.
As of March 31, 2022, we had outstanding purchase contracts and option contracts
for 50,766 lots totaling approximately $2.2 billion and we had $67.1 million of
deposits for land contracts, of which $38.4 million were non-refundable cash
deposits pertaining to land contracts. While our performance, including the
timing and amount of purchase, if any, under these outstanding purchase and
option contracts is subject to change, we currently anticipate performing on the
majority of the purchase and option contracts during the next twelve to eighteen
months, with performance on the remaining purchase and option contacts occurring
in future periods.
Our utilization of land option contracts is dependent on, among other things,
the availability of land sellers willing to enter into option takedown
arrangements, the availability of capital to financial intermediaries to finance
the development of optioned lots, general housing market conditions, and local
market dynamics. Options may be more difficult to procure from land sellers in
strong housing markets and are more prevalent in certain geographic regions.
Outstanding Debt Obligations and Debt Service Requirements
Our outstanding debt obligations included the following as of March 31, 2022 and
December 31, 2021 (in thousands):
                                          March 31,    December 31,
                                            2022           2021

3.875% Senior Notes, due August 2029(1) $494,310 $494,117
6.750% Senior Notes, due May 2027(1) 495,785 495,581 Other financing obligations

                   20,866           9,238
Notes payable                              1,010,961         998,936
Revolving line of credit                           -               -
Mortgage repurchase facilities               193,028         331,876
Total debt                               $ 1,203,989  $    1,330,812


(1)The carrying value of the senior notes reflects the impact of premiums,
discounts, and issuance costs that are amortized to interest cost over the
respective terms of the senior notes.
A summary of our debt obligations is included in Note 9 to our consolidated
financial statements in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021, filed with the SEC on February 3, 2022 and in Note 8 to our
condensed consolidated financial statements in this Form 10-Q.
We may from time to time seek to refinance or increase our outstanding debt or
retire or purchase our outstanding debt through cash purchases and/or exchanges
for equity securities, in open market purchases, privately negotiated
transactions or otherwise. Such repurchases or exchanges, if any, will depend on
prevailing market conditions, our liquidity requirements, contractual
restrictions and other factors. The amounts involved may or may not be material
during any particular reporting period.
                                       29

————————————————– ——————————

Contents

Letters of Credit and Performance Bonds
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 March 31, 2022 and December 31, 2021, we had
$528.9 million and $492.5 million, respectively, in letters of credit and
performance and other bonds issued and outstanding. Although significant
development and construction activities have been completed related to the
improvements at these sites, the letters of credit and performance and other
bonds are not generally released until all development and construction
activities are completed.
Revolving Line of Credit
On June 5, 2018, we entered into an Amended and Restated Credit Agreement with
Texas Capital Bank, National Association, as Administrative Agent and L/C
Issuer, the lenders party thereto and certain of our subsidiaries (which we
refer to as the "Amended and Restated Credit Agreement"), which provided us with
a revolving line of credit of up to $640.0 million, and unless terminated
earlier, was scheduled to mature on April 30, 2023.

On May 21, 2021, we entered into a Second Amended and Restated Credit Agreement
(the "Second A&R Credit Agreement") with, Texas Capital Bank, National
Association, as Administrative Agent and L/C Issuer, and the lenders party
thereto. The Second A&R Credit Agreement, which amended and restated the Amended
and Restated Credit Agreement, provides us with a senior unsecured revolving
line of credit (the "Credit Facility") of up to $800 million, and unless
terminated earlier, will mature on April 30, 2026. The Credit Facility includes
a $250.0 million sublimit for standby letters of credit. Under the terms of the
Second A&R Credit Agreement, the Company is entitled to request an increase in
the size of the Credit Facility by an amount not exceeding $200 million. Our
obligations under the Second A&R Credit Agreement are guaranteed by certain of
our subsidiaries. The Second A&R Credit Agreement contains customary affirmative
and negative covenants (including limitations on our ability to grant liens,
incur additional debt, pay dividends, redeem our common stock, make certain
investments and engage in certain merger, consolidation or asset sale
transactions), as well as customary events of default. Borrowings under the
Second A&R Credit Agreement bear interest at a floating rate equal to the
adjusted Eurodollar Rate plus an applicable margin between 2.05% and 2.65% per
annum, and if made available in the Administrative Agent's discretion, a base
rate plus an applicable margin between 1.05% and 1.65% per annum.
As of March 31, 2022, we had no amounts outstanding under the Credit Facility
and were in compliance with all covenants under the Second A&R Credit Agreement.
Mortgage Repurchase Facilities - Financial Services
On May 4, 2018, September 14, 2018, and August 1, 2019, Inspire entered into
mortgage warehouse facilities, with Comerica Bank, J.P. Morgan, and Wells Fargo,
respectively. The mortgage warehouse lines of credit (which we refer to as the
"Repurchase Facilities"), which were increased during 2020, provide Inspire with
uncommitted repurchase facilities of up to an aggregate of $325 million as of
March 31, 2022, secured by the mortgage loans financed thereunder. The
Repurchase Facilities have varying short term maturity dates through August 23,
2022 and bear a weighted average interest rate of 2.172%.
Amounts outstanding under the Repurchase Facilities are not guaranteed by us or
any of our subsidiaries and the agreements contain various affirmative and
negative covenants applicable to Inspire that are customary for arrangements of
this type. As of March 31, 2022, we had $193.0 million outstanding under these
Repurchase Facilities and were in compliance with all covenants thereunder.
During the three months ended March 31, 2022 and 2021, we incurred interest
expense on the Repurchase Facilities of $0.4 million and $0.8 million,
respectively. Interest expense on the Repurchase Facilities is included in
financial services costs on our condensed consolidated statements of operations.

At-the-Market Offerings
On November 27, 2019, we entered into a Distribution Agreement with J.P. Morgan
Securities LLC, BofA Securities, Inc., Citigroup Global Markets Inc., and Fifth
Third Securities, Inc. (which we refer to as the "Distribution Agreement"), as
sales agents pursuant to which we may offer and sell shares of our common stock
having an aggregate offering price of up to $100.0 million from time to time
through any of the sales agents party thereto in "at-the-market" offerings, in
accordance with the terms and conditions set forth in the Distribution
Agreement. This Distribution Agreement, which superseded and replaced a prior
similar distribution agreement, and was amended in July 2021 to acknowledge our
filing of a new registration statement on Form S-3 registering the issuance and
sale of shares of our common stock under the Distribution Agreement and replace
Citigroup Global Markets Inc. with Wells Fargo Securities, LLC as a sales agent,
had all $100 million available for sale as of March 31, 2022.  We did not sell
or issue any shares of our common stock during the three months ended March 31,
2022 and 2021, respectively. The Distribution Agreement will remain in full
force and effect until terminated by either party pursuant to the terms of the
agreement or such date that the maximum offering amount has been sold in
accordance with the terms of the agreement.

                                       30

————————————————– ——————————

Contents

Stock Repurchase Program
On November 6, 2018, our Board of Directors authorized a stock repurchase
program, under which we may repurchase up to 4,500,000 shares of our outstanding
common stock. The shares may be repurchased from time to time in open market
transactions at prevailing market prices, in privately negotiated transactions
or by other means in accordance with federal securities laws. The actual manner,
timing, amount and value of repurchases under the stock repurchase program will
be determined by management at its discretion and will depend on a number of
factors, including the market price of our common stock, trading volume, other
capital management objectives and opportunities, applicable legal requirements,
and general market and economic conditions.
We intend to finance any stock repurchases through available cash and our Credit
Facility. Repurchases also may be made under a trading plan under Rule 10b5-1
under the Securities Exchange Act of 1934, which would permit shares to be
repurchased when we otherwise may be precluded from doing so because of
self-imposed trading blackout periods or other regulatory restrictions. The
stock repurchase program has no expiration date and may be extended, suspended
or discontinued by our Board of Directors at any time without notice at our
discretion. All shares of common stock repurchased under the program will be
cancelled and returned to the status of authorized but unissued shares of common
stock.
During the three months ended March 31, 2022, an aggregate of 1.0 million shares
of our common stock were repurchased for a total purchase price of approximately
$62.4 million and a weighted average price of $61.52 per share. During the three
months ended March 31, 2021, we did not repurchase any shares of our common
stock. The maximum number of shares available to be purchased under the stock
repurchase program as of March 31, 2022 was 2,799,552 shares.
Dividends
On May 19, 2021, our Board of Directors announced the approval of the initiation
of a quarterly cash dividend. The following table sets forth cash dividends
declared by our Board of Directors to holders of record of our common stock
during the three months ended March 31, 2022, an increase of 33.0% over
previously paid quarterly dividends (in thousands, except per share
information):
                                                       Cash Dividends Declared
Declaration Date    Record Date    Payable Date     Per Share                Amount
February 16, 2022  March 2, 2022  March 16, 2022  $        0.20              $ 6,657


The declaration and payment of future cash dividends on our common stock,
whether at current levels or at all, are at the discretion of our Board of
Directors and depend upon, among other things, our expected future earnings,
cash flows, capital requirements, access to external financing, debt structure
and any adjustments thereto, operational and financial investment strategy and
general financial condition, as well as general business conditions.
                                       31

————————————————– ——————————

Contents

Cash Flows- Three Months Ended March 31, 2022 Compared to the Three Months Ended
March 31, 2021
For the three months ended March 31, 2022 and 2021, the comparison of cash flows
is as follows:
?Our primary sources of cash flows from operations are from the sale of
single-family attached and detached homes and mortgages. Our primary uses of
cash flows from operations are the acquisition of land and expenditures
associated with the construction of our single-family attached and detached
homes and the origination of mortgages held for sale. Net cash provided by
operating activities was $109.4 million during the three months ended March 31,
2022 as compared to net cash provided by operating activities of $96.1 million
during 2021. The increase in cash provided by operations is primarily a result
of increased investment in our homebuilding inventories for the three months
ended March 31, 2022 as compared to the three months ended March 31, 2021,
partially offset by a decrease in mortgage loans held for sale and a $40.8
million increase in net income during three months ended March 31, 2022 as
compared to the three months ended March 31, 2021.
?Net cash used in investing activities increased to $5.1 million during the
three months ended March 31, 2022, compared to $2.9 million used during the same
period in 2021. The increase was primarily related to more purchases of property
and equipment during the current year period.

?Net cash used in financing activities increased to $208.4 million during the
three months ended March 31, 2022, compared to net cash provided by financing
activities of $16.3 million during the same period in 2021. The increase in cash
used in financing activities was primarily attributable to (1) a $164.8 million
increase in net payments on the Repurchase Facilities (2) a $62.4 million
increase in repurchases of our common stock and (3) $6.7 million in dividend
payments during the three months ended March 31, 2022 compared to no dividend
payments during the prior year period.
As of March 31, 2022, our cash and cash equivalents and restricted cash balance
was $218.2 million.

?

                                       32

————————————————– ——————————

Contents

Non-GAAP Financial Measures

In this Form 10-Q, we use certain non-GAAP financial measures, including EBITDA,
Adjusted EBITDA, net homebuilding debt to net capital, and adjusted net earnings
per diluted common shares. These non-GAAP financial measures are presented to
provide investors additional information to facilitate the comparison of our
past and present operations. We believe these non-GAAP financial measures
provide useful information to investors because they are used to evaluate our
performance on a comparable year-over-year basis. These non-GAAP financial
measures are not in accordance with, or an alternative for, GAAP measures and
may be different from non-GAAP financial measures used by other companies. In
addition, these non-GAAP financial measures are not based on any comprehensive
or standard set of accounting rules or principles. Accordingly, the calculation
of our non-GAAP financial measures may differ from the definitions of other
companies using the same or similar names limiting, to some extent, the
usefulness of such measures for comparison purposes. Non-GAAP financial measures
have limitations in that they do not reflect all of the amounts associated with
our financial results as determined in accordance with GAAP. These measures
should only be used to evaluate our financial results in conjunction with the
corresponding GAAP measures. Accordingly, we qualify our use of non-GAAP
financial information in a statement when non-GAAP financial information is
presented.

EBITDA and Adjusted EBITDA
The following table presents EBITDA and Adjusted EBITDA for the three months
ended March 31, 2022 and 2021. Adjusted EBITDA is a non-GAAP financial measure
we use as a supplemental measure in evaluating operating performance. We define
Adjusted EBITDA as consolidated net income before (i) income tax expense,
(ii) interest in cost of home sales revenues, (iii) other interest expense, (iv)
depreciation and amortization expense, (v) loss on debt extinguishment, and (vi)
inventory impairment and other. We believe Adjusted EBITDA provides an indicator
of general economic performance that is not affected by fluctuations in interest
rates or effective tax rates, levels of depreciation or amortization, and items
considered to be non-recurring. Accordingly, our management believes that this
measurement is useful for comparing general operating performance from period to
period. Adjusted EBITDA should be considered in addition to, and not as a
substitute for, consolidated net income in accordance with GAAP as a measure of
performance. Our presentation of Adjusted EBITDA should not be construed as an
indication that our future results will be unaffected by unusual or
non-recurring items. Our Adjusted EBITDA is limited as an analytical tool, and
should not be considered in isolation or as a substitute for analysis of our
results as reported under GAAP.
(dollars in thousands)
                                              Three Months Ended March 31,
                                             2022            2021      % Change
Net income                               $    142,496      $ 101,652      40.2 %
Income tax expense                             46,280         29,397      57.4 %
Interest in cost of home sales revenues        12,146         18,377    (33.9) %
Interest expense (income)                         135          (111)   (221.6) %
Depreciation and amortization expense           2,606          2,806     (7.1) %
EBITDA                                        203,663        152,121      33.9 %
Inventory impairment and other                      -              -        NM
Adjusted EBITDA                          $    203,663      $ 152,121      33.9 %


NM - Not Meaningful


?

                                       33

————————————————– ——————————

Contents

Net residential construction debt at net equity

The following table presents our ratio of net homebuilding debt to net capital,
which is a non-GAAP financial measure. We calculate this by dividing net
homebuilding debt (notes payable and borrowings under our revolving line of
credit less cash and cash equivalents, and cash held in escrow) by net capital
(net homebuilding debt plus total stockholders' equity). Homebuilding debt is
our total debt minus outstanding borrowings under our mortgage repurchase
facilities. The most directly comparable GAAP measure is the ratio of debt to
total capital. We believe the ratio of net homebuilding debt to net capital is a
relevant and useful financial measure to investors in understanding the leverage
employed in our operations and as an indicator of our ability to obtain external
financing.

(dollars in thousands)

                                       March 31,    December 31,
                                         2022           2021
Notes payable                         $ 1,010,961  $      998,936
Revolving line of credit                        -               -
Total homebuilding debt                 1,010,961         998,936

Total equity 1,829,862 1,764,508 Total capital

                         $ 2,840,823  $    2,763,444
Homebuilding debt to capital                35.6%           36.1%

Total homebuilding debt               $ 1,010,961  $      998,936
Cash and cash equivalents               (209,046)       (316,310)
Cash held in escrow                      (45,212)        (52,297)
Net homebuilding debt                     756,703         630,329
Total stockholders' equity         1,829,862       1,764,508
Net capital                           $ 2,586,565  $    2,394,837

Net homebuilding debt to net capital        29.3%           26.3%



?

                                       34

————————————————– ——————————

Contents

Adjusted net earnings and adjusted diluted earnings per share

Adjusted Net Income and Adjusted Diluted Earnings per Share (which we refer to
as "Adjusted EPS") are non-GAAP financial measures that we believe are useful to
management, investors and other users of our financial information in evaluating
our operating results and understanding our operating trends without the effect
of certain non-recurring items. We believe excluding certain non-recurring items
provides more comparable assessment of our financial results from period to
period. We define Adjusted Net Income as consolidated net income before (i)
income tax expense, (ii) inventory impairment and other (iii) restructuring
costs, and (iv) loss on debt extinguishment, less adjusted income tax expense,
calculated using the Company's estimated annual effective tax rate after
discrete items for the applicable period. Adjusted Diluted EPS is calculated by
excluding the effect of loss on inventory impairment and other, restructuring
costs and loss on debt extinguishment from the calculation of reported EPS.

(in thousands, except per share amounts)

                                                           Three Months Ended March 31,
                                                             2022                 2021
Numerator
Net income                                             $       142,496       $     101,652
Denominator
Weighted average common shares outstanding - basic          33,530,610      

33,563,903

Dilutive effect of restricted stock units                      411,624      

320 372

Weighted average number of ordinary shares outstanding – diluted 33,942,234

    33,884,275
Earnings per share:
Basic                                                  $          4.25       $        3.03
Diluted                                                $          4.20       $        3.00

Adjusted earnings per share
Numerator
Net income                                             $       142,496       $     101,652
Income tax expense                                              46,280              29,397
Income before income tax expense                               188,776      

131,049

Inventory impairment and other                                        -                   -
Adjusted income before income tax expense                      188,776      

131,049

Adjusted income tax expense(1)                                 (46,280)            (29,397)
Adjusted net income                                    $       142,496             101,652

Denominator - Diluted                                       33,942,234          33,884,275

Adjusted diluted earnings per share                    $          4.20      

$3.00

(1)The tax rate used in calculating adjusted net income for the three months
ended March 31, 2022 and March 31, 2021 was 24.5% and 22.4%, respectively, which
is reflective of the Company's estimated annual effective tax rate after
discrete items for the applicable period.


?

                                       35

————————————————– ——————————

Contents

© Edgar Online, source Previews