Greetings and welcome to the Century Communities Fourth Quarter and Full Year 2014 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. John Kolstoe, Vice President of Finance. Thank you Mr. Kolstoe, you may now begin.

Good afternoon. We would like to thank you for joining us today for Century Communities fourth quarter and full year 2014 earnings conference call. After the market closed today, we distributed a press release detailing our fourth quarter and yearend financial results, which can be found in the Investor Relations section of our website at www.centurycommunities.com. Before the call begins, I would like to remind everyone that certain statements made in the course of this call are not based on historical information and may constitute forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those described or implied in the forward-looking statements. The company undertakes no duty to update any forward-looking statements that are made during the course of this call. Additionally, certain non-GAAP financial measures will be discussed on this conference call. The company's presentation of this information is not intended to be considered in isolation or is a substitute for the financial information presented in accordance with GAAP. Management will be available after the call should you have any questions that did not get answered. Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer and David Messenger, Chief Financial Officer. With that, I'll turn the call over to Dale.

Thank you, John. Today on the call I'll review our operating highlights. Rob will then discuss our homebuilding markets and recent acquisition activity. Afterwards, Dave will follow up with further details on our financial results, balance sheet and 2015 outlook. After our prepared remarks, we will open the lines for questions. 2014 was truly a milestone year for Century Communities. Not only did we successfully accomplish our initial public offering and access to long-term bond market, but we were able to increase our net income to $20 million, grow our closing more than threefold to 1,046 homes and expand into three very attractive new markets through acquisitions. We went from building in two markets to five and ended the year with our business firmly positioned for continued expansion as we increased our inventory of owned and controlled lots by 37% year-over-year and our backlog of sold homes by 248% to 772 homes in our key regional markets. We believe our success reflects the benefits of our experienced management team, attractive geographical footprint and accretive acquisitions. For the full year 2014, our total revenues increased 112% to $362 million and we achieved our 12 consecutive year of profitability as our net income increased 61% to $20 million or $1.03 per share. Our business momentum picked up in the fourth quarter following some softening of home buyer activity in the third quarter and we have seen a continuation of this trend into 2015. We expect some housing work at volatility to persist from quarter-to-quarter, but the longer term outlook for our business is highly favorable as we can combine the benefits of our expanding footprint with the continued growth and improvement in the overall housing market. In the fourth quarter, we increased our total revenues 121% to $141 million and recorded net…

Thank you, Dale. And good afternoon, everyone. We continue to build our company into a premier homebuilder in new existing markets. During 2014, we significantly expanded and diversified our geographical footprint across attractive markets within Las Vegas, Nevada, Houston, Texas and Atlanta, Georgia. We achieved this through three successful homebuilder acquisitions which added combined 54 communities and 4480 owned and controlled lots to our inventory. In November 2014, we acquired Peachtree Communities in Atlanta, Georgia for approximately $57 million, including the true-up amount under the asset purchase agreement. This strategic acquisition of the number two homebuilder in Atlanta expanded our footprint beyond our core Southwest routes into the growing Southeast market and added a proven operating platform with a seasoned management team to allow us to hit the ground running. Peachtree added 36 communities and 2120 lots for buying as a sizeable operation to initiate our Southeast expansion within the robust [ph] Atlanta market, an area that remains in the midst of a solid economic and housing market expansion. Our expansion in the Southeast highlights the scalability of our platform from a corporate level. Our acquisition call is to expand the company's operations into attractive markets, with strong economic fundamentals and generate additional operating leverage on our platform. We have proven track record of accretive acquisitions as a result of our disciplined underwriting standards and strict controls to maximize our returns and we expect M&A activity to continue to drive a portion of our accretive growth moving forward, as we look to expand within and beyond our current markets. We continue to review select homebuilders in our target markets which share a number of favorable attributes, including job growth, increasing household formations, limited housing supply, and favorable home price outlooks. In addition to homebuilder acquisitions, we continue to source attractive…

Thank you, Rob. Before I make my comments regarding our successful 2014, I'd like to point out our enhanced disclosures. As we grown significantly and transformed the company into a regional homebuilder, we thought it was important to provide additional details for our individual markets and have provided them overall detail for the net home contracts, homes delivered and ASP, selling communities, backlogs and our lot inventory. In addition to the detailed financials and operating metrics at the end of our press release, we have also provided a supplemental schedule on our website that details similar information for each of the previous five quarters. We believe that investors and analysts will find this information useful. In our first release, we have also provided a series of reconciliations to further clarify our gross margin, EBITDA and EPS calculations. Now let's discuss our 2014 results. In the fourth quarter, we continue to improve our revenues and profitability compared to a year ago. Our fourth quarter 2014 results, include the impact of acquired operations in Las Vegas, Houston and Atlanta with no year-over-year comparison available for the prior year quarter. Our full year 2014 comparisons are also impacted by our Central Texas operations which we acquired in September of 2013. We are focused on improving our bottom-lines and for the fourth quarter, our net income improved to $7.2 million, an increase of 136% from $3 million in the same quarter of last year, reflecting higher gross margin dollars and favorable SG&A leverage. On a full year basis, our net income improved to $20 million in 2014, up 61% from $12.4 million in the prior year. This net income improvement has led to a 163% increase in our adjusted EBITDA for the fourth quarter, and 100% increase for the full year. Home sales revenue…

[Operator Instructions] Our first question is from Steve Stelmach of FBR. Please go ahead.

Hi good afternoon.

Good afternoon, Steve.

Good afternoon, Steve.

Congrats on the quarter guys. It's nice to see that excess velocity going out of 2014. Could you just talk a little about acquisitions and just sort of the acquisition environment and how that may have changed in the past couple of quarters since the IPOs? Has it changed based on your appetite for different markets? Have sellers got a little more rationale? Just want to get a flavor of what you're seeing out there and sort of appetite as you go into 2015 particularly given guidance doesn’t include any acquisition activity?

Steve, its Dale. It’s nice to talk to you. In terms of our acquisitions, we’re still looking for additional acquisitions. In terms of pricing acquisitions specific ones tend to be all over the Board and we’ve been very diligent and responsible in the acquisitions that we've completed and we intend to continue doing that. The fact that we haven’t modeled any into 2015 is merely a reflection of we’re trying to be as transparent as possible on our current platform. But as we go forward, we would certainly expect that we continue to in the market for new acquisitions and that’s still our preferred way to access new markets.

Okay. Great, that’s helpful. And then on the Texas commentary that you provided, I understand it’s a very single digit, small to single-digit percentage of your overall assets as Houston but does look like lots owned and controlled up a little bit quarter-over-quarter there. What was sort of the acquisition environment like in Houston and then sort of what are you seeing there that bumped that number up granted it's still a very, very small number?

So Steve, this is Rob, as we look in that market, we’re being very cautious on any new dollar spent into that market. As we look at some of the competitive builders that have been buying in that market, a lot of them had slowed down or stopped their purchases to kind of see how things go and most of the increase on our books or on lots that are controlled not owned.

Got it. Okay, great guys. I’ll hop back in the queue.

Thanks Steve.

Thank you. The next question is from Michael Rehaut of JPMorgan. Please go ahead.

Thanks, good morning, everyone.

Good afternoon. How are you?

Hi Michael.

Good thanks. I guess the first question, I just wanted to drill down a little bit on the gross margins. For the quarter and I guess your guidance for 2015 that you expected to be similar to the fourth quarter. And I guess around 18% after interest amortization if I have that right. Just want to get a sense I guess, number one, do have the right in terms of the guidance, but more so when you're thinking about gross margins through your acquisitions or what not, certainly relative to the margins you were generating just in Colorado, there’s been a pretty big shift downwards and how do you guys think about there is a certain level of a gross margin that you prefer to generate for, is it really more just to return on asset type of proposition?

Hey Michael this is Dave, I’ll answer the first half of that question and let I'll Dale, take the second half, but in terms of the guidance numbers in the outlook that we're looking at comparing to Q4 of 2014, we’re looking more at the 21% of gross margin; so absent the cap interest and absent the purchase price adjustment not the 18%.

And then Michael, when we look at the five markets that we’re in, Colorado, Central Texas, and Las Vegas, the margins have been pretty consistent and they also have a consistent business model where we develop a large number of our lots that we build on. When we look at Houston and Atlanta they really run a different land model and that land model is based on primarily buying finished lots on typically rolling option basis. So as we look at continuing to bring those operations into the Century pool, particularly in Atlanta and to a lesser extent in Houston depending on how everything plays out in the market, we intent to bring those land development opportunities into the company. We’ve already started in Atlanta. We’ve started building a land development department. And we intend to develop a portion of our lots going forward and we would anticipate that we would have higher margins on those lots as they continue to roll into our closing or start to roll into our closings.

That’s helpful I appreciate that. And then I guess just secondly with the community count guidance 80 to 90 by the end of '15 similar to where you are today, I think excluding some of these acquisitions we had been expecting I think core growth to occur more organically. Has there been any I guess changed to the cadence or expectations in terms of growth by market and maybe, you can kind of just go into what if there’s any differences there versus the original business plan six, 12 months ago?

Michael, its David. I would say the original plan that we went out with the IPO and the cadence of community openings I think it’s probably still roughly close to the same as we look into '15 with where we are today. As so having 80 to 90 open and also closing -- so we’re going to open 20 to 30 next year and close out roughly 20 to 30. We’re pretty comfortable with those numbers and don’t think we’ve changed our cadence materially or too significantly since we've altered our business plan.

I think long when were on the IPO and I think the other guidance that we had is that from the three markets that we’re in at that point that we would have 48 active communities at the end of the year and we ended up with 46. So we’re pretty close to being on track with what those expectations were.

And excluding Atlanta, can you give us a sense of what the other markets are at the end of this year versus what you expect them to next year in terms of community count?

At the end of this year that’s on the fourth or fifth page of the supplement where you kind of broken it down by markets as we get to the 83. But we aren’t providing a breakdown at this point in time of the 80, 90 that will end the year with for 2015 by market.

Okay, all right. Thanks guys.

Thank you.

Thank you.

Thank you. The next question is from Nishu Sood of Deutsche Bank. Please go ahead.

Thanks hi everyone and appreciate all the new detailed disclosures. I wanted to start off on the balance sheet, obviously quite a bit of action with the acquisition and the substantial pace of share repurchases. So your cash balance down to $33 odd million, we’re heading into the spring inventory build. So let’s say that drilled down much of the bulk of the $100 million of credit facility, I know that is beyond that as well, so the accordion feature. But that would be pushing your debt up to -- your net debt to cap up to kind of 45% range. So I guess the multifaceted question, but where are you comfortable, if you have another acquisition, do you have room to do that? The share repurchases were quite aggressive I think 3ish percent of your outstanding in the fourth quarter. So sorry for the multi-part question, but all those things together where do you stand on those and what capacity do you see on your balance sheet?

Hey Nishu it's Dave. So I guess try and answer couple of parts of your question and let me know what I missed. On the share repurchase, let's say, where are we comfortable on the balance sheet? Today we’re less than 35% on our net debt to net capital basis. We’ve been saying for some time that we’re very comfortable going to a 50% mark. Now there was a point in time and a reason if we drew up the revolver and guidance of the 40s, we still have room up on the balance sheet. And if we were to have a transaction that would warrant additional financing whether it be through the debt or equity markets, we bring that to market and have a plan to keep leverage in check whether it be through an additional offering or through retained earnings because of the operation we're buying and the cash flow it's going to generate. In terms of share repurchases, I apologize what was the question about share repurchases?

Oh! Yes sure, well before moving on to that though, my question was if you with the spring inventory build, I imagine that that could absorb a $100 million maybe that’s an overhead estimate, but that alone…

I think that’s a little high -- that’s a little high for this building.

Got it, got it, but still that would push you probably over 40%, but I guess you’re saying that you would be willing to depending on the opportunity and the amount okay. On the share repurchases side, I was just wondering how investors should think about that going forward? I think you laid it out pretty clearly that you initiated that there was an opportunity in the shares, is this the start of share repurchases as an avenue for cash distribution to shareholders or was it opportunistic? How should we expect or how are you thinking about it going forward?

During the third quarter call we put it out there we see it just as other tools or shareholder value. You look at the price that we bought those shares at though there are significant market dislocation in December and there were opportunities for us to acquire 608,000 shares at a share price of $16. When you look at our balance sheet today and that is below tangible and book value. So we felt that that was an attracted use of capital for us at that time. Where we’re trading today may not be such an attractive use, but it’s definitely -- it’s an opportunistic tool for us as we look to deploy capital.

Got it. Got it. No, that’s very helpful. In the new -- in the disclosures on the lot counts, one of the things that was interesting was that even as you've grown significantly or a lot count and diversified and become more of a regional/national builder, the lot counts in your older locations Denver and Central Texas have fallen. But at the same time, you mentioned that you picked up I think 900 plus lots in the fourth quarter across your operations. So I was just wondering how should we -- how should we think about that? Are you bringing your lot supply post IPO in line in those markets? Obviously you had built up quite a land bank in Denver and the operation that you picked up in Jimmy Jacobs look like it had quite a bit of land as well. So how should we understand the context of you continue to grow -- bought 900 lots, but at the same time, Denver and Central Texas are down quite a bit on a year-over-year basis?

They were continuing to grow in all of our markets Nishu. However, we’re looking at a more diversified platform as we go forward and as we’re in multiple markets now for obvious reasons. So that was one of the original goals of raising outside capital through the original 144A and then into the IPO was to be able to be in a position where we could allocate capital among multiple markets depending on the opportunities that we see at a particular point in time.

Got it. And if I could just ask one other kind of housekeeping one, 129 orders for Peachtree in 4Q, I imagine that was just for the half quarter, what was that number for the full quarter?

I don’t have that in front of me, but I can follow up with you on that.

Okay, that would be great. Thank you.

Thank you. The next question is from Jay McCanless from Sterne Agee. Please go ahead.

Good afternoon, everyone. Thanks for taking my questions.

Hi, Jay.

Hi, first topic I wanted to touch on with speculative homes, could you tell me where you ended the year with specs?

This is Dave. We haven’t provided that level of detail in terms of house count.

Okay. And then on, I know you said in the prepared remarks that probably the purchase accounting marks are going to continue for another couple of quarters, could you just give me on a percentage basis, how many of the acquired specs you got in the Peachtree deal, how many of those you've worked through and is it going to be evenly spread between 1Q and 2Q you think on that purchase accounting hit?

I'll take it up a level in terms of purchase accounting that if you look at that fourth quarter we had roughly $3 million worth of purchase price accounting adjustments. I would expect something similar roll through over the first two quarters and that will really depend on closings. So we’re still in the process of wrapping up those purchase price studies. You have a year from the date of acquisition, but we try to get it knocked down in the first two quarter, three quarters at the most, but I would expect from a modeling perspective, if you use the fourth quarter as a number for the first two quarters of next year that should be pretty good.

Okay. Okay, will do. And then going over to pricing, if I just take the midpoint of the revenues and the closing that you gave in the release got me to I think in ASP somewhere in the 325 range somewhere in there which was a little bit higher than what we had expected for 15. Can you talk -- when you look at the range of revenues you gave and the closings, is there any assumption of pricing power in there for certain markets and could you touch on how many or what percentage of your markets right now you're able to raise price.

Sure. Jay, we don’t -- in terms of our projections, we don’t put in any HPA assumptions. We anticipate and I can talk in a moment about where we’re seeing the most opportunities, but it's not something that we factor in. When you look at our -- the backlog that we had at the end of the year, the ASP in that was right at 319 and a lot of that depends on the mix. But that’s why when we look at it we think 325 is a pretty reasonable number from a modeling standpoint. In terms of pricing power, right now Atlanta has really been a market that we’re continuing to see the ability to raise prices, one of the attractive features in that market is that it's still recovering and so we’re benefiting from that recovery and we’re continually looking at prices and being able to move our prices. With that being said, when we look at it across all of our markets depending on the sub division, we were able to move pricing and we will review it on a continual basis and wherever the market allows it, we will continue to raise prices.

Okay, great. Thank you for taking my questions.

You’re welcome.

[Audio Gap] Brendan Lynch of Sidoti and Company. Please go ahead.

Good afternoon, guys. Thanks for taking my questions.

Hi, Brendan.

I want to talk a little bit about the integration of your acquisitions, what type of changes are you implementing in these new markets? And how autonomously are the acquisitions operating and if you envision any product shifts over the next couple quarters?

It currently depends on the market. When we can look it going back, I guess if we go back to the first acquisition in Central Texas, we have brought more of a production mentality to that operation and so that’s probably been the biggest change. We continue to build the product that was being built, when we acquired the Jimmy Jacobs' operation, but we brought in more of a production home as well. When we look at Las Vegas, but we are nearing opening some new model parts with some new products that we’ve been designing over the past few months but really the positioning in that market has remained the same, but we’re excited to bring on the new product. When we look at Huston, we are continuing to bring on some new product there at a little higher price point, but we're really not changing the focus and then Atlanta is the newest market, but we're really staying with the program that was in place, although we're expanding the offering in that market. So that what was historically an entry level in first move up buyer, we're starting to bring in some higher price point into that market and so that will be the change that occurs in that market. So when we acquire a homebuilder in the market, part of the plan is to look at where we think we can without making wholesale changes, have additive changes and keep in place what was already there but bring something more.

Great, that’s very helpful. And the just looking at your SG&A expense, it was pretty low for the year considering all the integration and acquisition activity, what does the normal rate look like and what can we expect going forward?

This is Dave. I don’t if we've hit a normal rate yet, given that we've done four acquisitions in 15 months and an IPO and become a public company. And so we’re continuing to drive as much leverage out of that SG&A platform as we can and say, running at a 11.8% in the fourth quarter going down quarter-over-quarter and year-over-year. We’re looking to -- we’re always looking to extract more value out of that and I think, once we hit a run rate number it will be a little bit easier to model, but I think right now, we’re always looking to improve that number.

Great, thank you very much.

Yes.

Thank you. [Operator Instructions] And the next question is from Joel Locker of FBN Securities. Please go ahead. Mr. Locker your line is live. Okay, it doesn’t appear that we have any further questions

Okay, well thank you operation and thank you again to everyone for joining us today. We look forward to speaking with you again next quarter.

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation.