Greetings, and welcome to the Century Communities First Quarter 2018 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief 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 Scott Dixon, Vice President of Accounting. Please go ahead.

Good afternoon. We would like to thank you for joining us today for Century Communities first quarter 2018 earnings conference call. 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. Certain of these risks and uncertainties can be found under the heading Risk Factors in the company's most recently filed Annual Report on Form 10-K supplemented by other SEC filings. Our SEC filings are available at www.sec.gov and on our website at centurycommunities.com. The company undertakes no duty to update any forward-looking statements that are made during this call. Additionally, certain non-GAAP financial measures will be discussed on this earnings conference call. The company's presentation of this information is not intended to be considered in isolation, or as a substitute for the forward information presented in accordance with GAAP. Management will be available after the call should you have any questions that did not get answered. Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer; and David Messenger, Chief Financial Officer. With that, I will turn the call over to Dale.

Thank you, Scott. Today on the call, I will review our operating highlights and business updates. Rob will then discuss our homebuilding markets. Afterwards, Dave will follow up with further details on our financial results, balance sheet and increased outlook for the balance of the year. Following our prepared remarks, we will open the lines for questions. Our dynamic growth strategy and focused execution on our strategic plan allowed us to achieve another quarter of double-digit percentage growth on nearly all of our key metrics. We achieved record levels of home sales revenue, net new home contracts and backlog during the quarter while improving our adjusted gross margin performance by a 150 basis points year-over-year to 23.2% within an environment of increasing cost and tightening labor supply. We are very pleased with the performance of both our legacy and acquired operations, especially in the West region where growth has continued to accelerate. Continuous improvements in our operations, along with positive market fundamentals led to a 128% increase in net income to a record $20 million for the first quarter 2018. Excluding the impact of one-time charges related to our homebuilder acquisitions adjusted net income was $22.4 million, an increase of approximately 144% from the prior year's quarter. We grew home sale revenues to $395 million, an improvement of 74% from the prior year quarter, led by a 55% increase in home deliveries and higher average selling prices. This progress is a result of continued multiyear execution on our business strategy which includes creation of a dynamic and scalable national home building platform, a focus on situating operations in attractive markets with sound economic fundamentals, maintaining a strong capital position to support accretive strategic investments, the acquisition of attractive land parcels to capitalize on the robust demand in our markets, and…

Thank you, Dale and good afternoon everyone. We continue to benefit from favorable economic environments in our markets resulting in increased new home sales growth in all of our regions. Economic indicators remain positive as the industry outlook for single family construction growth and home price appreciation, both remained strong while inventory levels remain low. These three factors combined with our record levels of backlog position us to drive additional earnings improvement for the remainder of 2018. Our record first quarter operating performance was driven by significant growth in net new home contracts deliveries, home sales revenues and backlog, all of which grew in excess of 40% year-over-year and excess of 20% excluding acquisitions. Additionally, we continued to strengthen our positions in current markets by sourcing additional attractive land parcels that meet our disciplined underwriting requirements. First quarter net new homes contracts grew 44% to 1,378 homes with organic growth accounting for approximately half of that increase, led by our Texas and Southeast regions. Our stable absorption pace combined with an increase in selling communities allowed us to end the quarter with homes in backlog of 60% to a record 1,757 homes. This represented a record backlog dollar value that was up 69% to $738 million. We ended the quarter with land inventory in excess of 30,000 lots in many of the most robust U.S. homebuilding markets. We have demonstrated our ability to deploy capital at attractive returns and see many opportunities to replicate that success in both new and legacy markets. Consistent with the prior quarters, approximately 50% of our land was controlled rather than owned compared to less than a third as recently as 2015. We expect to continue to sourcing additional land parcels where it makes sense for our business with the similar weighing towards control land…

Thank you, Rob. During the quarter of 2018, we experience strong demand in all of our markets, grew homebuilding revenue and achieved solid improvement in adjusted gross margin. This led to record net income of $20 million or $0.67 per diluted share, a 128% increase compared to the $8.8 million or $0.40 per diluted share in the prior year quarter. Adjusted net income, excluding one-time acquisition charges and purchase price accounting was $22.5 million or $0.75 per diluted share. This compared to $9.2 million or $0.42 per diluted share in the prior year quarter. Adjusted EBITDA more than doubled to $42.3 million compared to $19.8 million in the prior year quarter. Home sales revenue increased 74% to $394.8 million, compared to $226.4 million in the prior year quarter. This improvement in revenues was mainly driven by a 55% increase in home deliveries to 941 compared to 608 homes in the prior year quarter. Our average selling price was up 13% to $491,600, reflecting favorable product mix and core price momentum, along with a positive impact, primarily from the addition of our West region. Net new home contracts increased to record a 1,378 homes, an increase of 44% compared to 957 homes in the prior year quarter, with half of that attributable to stronger demand trends in all legacy regions and the reminder bolstered by the new West region. A combination of higher selling prices, tight cost controls and favorable mix led to a 150 basis points improvement in our adjusted homebuilding gross margin percentage to 23.2% compared to 21.7% in the fourth quarter and 21.7% in the prior year quarter. Adjusted gross margin, excludes capitalized interest and purchase accounting impacts from cost of sales. Our strong performance this quarter was a result of a favorable product mix closing in the…

Thank you. [Operator Instructions] Thank you. First question is from the line of Michael Rehaut with JPMorgan. Please proceed with your question.

Hey, good afternoon. This is Neal BasuMulick on for Mike. So I want to start on the gross margin in the quarter, you touched on a bit. So I guess what were some of the big contributors there for lower basis land versus California, contributing more. What are some of the other puts and takes and how should we think about those going forward?

Hey, Neal, it's Dave. I think that when you look at the gross margin we had a favorable mix roll through in the first quarter. A variety of components went into whether we've been able to push price in the West Coast or other markets and been able to offset some cost increases but overall when we look at our gross margin and the backlog and going forward we're still projecting consistent with prior calls and prior results kind of a gross margin in that 20% to 21% range on an adjusted basis that is.

Okay, I guess going down to SG&A, looking at the leverage you got this quarter on strong closings, maybe what were some big items that outperformed your expectations in terms of cost and I guess maybe have your expectations for SG&A changed at all?

I think on the SG&A side a couple of things to think about. We're down 40 basis points on the year-over-year book when you look at the company. It's quite different from where it was in the first quarter of last year the first quarter of this year. You look at fourth quarter to first quarter on a sequential basis and our fixed G&A is actually down. We are running commissions, now that we've had about eight months of the consolidated company that we've been reporting out with UCP and Sundquist Transactions, commissions have been running about 3.5% of revenue and our fixed G&A is actually down for fourth quarter to first quarter. So we feel that G&A is trending the right direction. We've been same we'd be looking to do for some time. And I think that now the UCP integration was completed earlier in the second quarter. We're going to look to see some of these synergies that we've talked about in the past calls start to see some of those start to roll through here in the second half of the year. And with that we've said that it's about $10 million on synergies, some of them will come through in the margin line, some will come through in the G&A line items.

Okay, that makes sense. Appreciate it.

The next question is from the line of Jay McCanless with Wedbush. Please proceed with your question.

Hey good afternoon everyone. Great looking quarter. the first question I had in terms of - you all talked about pricing power a couple of times on the call how do you guys feel like you're doing versus the input cost inflation we've been seeing in most markets could you maybe comment on how many what percentage of your communities raise prices in this quarter?

Sure Jay, this is Dale. As we've historically done we really look at it on a subdivision by subdivision basis and there are some subdivisions across the country where we have more pricing power than others so as opposed to looking at across the portfolio it's really down to the individual subdivision. In general when we combine the portfolio together we've been able to overcome the cost increases and so we think we can continue on that same path.

Great the second question I had if I just take the new midpoints of the guidance looks like it's an ASP somewhere in the call it 402 range for the full year should we expect a gradual trending down of the ASPs or is there going to be some lumpiness in there from geographic mix?

I think it's going to be both. There's going to be a little bit trendy and a little bit of lumpiness when you look at some of the markets we've been trending down but that's been an intentional rotation of our portfolio going more towards entry level of item towards the lower ASP.

And then the last question I had, I'm excited to hear you guys are still rolling out Century Complete. What percentage of your neighborhoods currently are Century complete and where do you want to take that percentage?

That really depends division by divisions and within that divisions some of the percentages are at this point our new deals trending to almost a 100% and then other divisions it could be 25% in growing but as a nice consolidated number I think we're looking at somewhere around the 50% mark on a go-forward basis.

So 50% is the goal you are trying to get to going forward?

Yes. But as we've always said, I mean we build a wide variety of product and we look at our geographies. We're building a wide variety of price points, and that's not something that we're going away from. And we think that's an important component to keep that balance. But with the demand that we see on the entry level our focus is to push as much of our product in that direction as we can.

That sounds great. Thanks for taking my questions.

Thanks Jay.

Our next question is from the line of Alex Rygiel with FBR. Please proceed with your questions.

Yes, thank you. Nice quarter gentlemen.

Thanks Alex.

Dave, can you give us a little bit of help on backlog conversion over the next quarter or two?

I think that our backlog conversion on an annual basis if you were to take '16 and '17. When you fast forward second quarter and third quarter of 2018 don't think it will be too dissimilar to what we have seen. We've got information on our website with our supplemental schedule that kind of shows what the pro forma combined ECP and Century numbers would be. So that will help you get to a decent backlog conversion rate for second third and fourth quarter.

And then turning over to Wade Jurney, clearly a huge success. Can you talk a little bit about the seasonality of that business now we should expected to ramp in 2Q, 3Q and 4Q?

Like all homebuilders that business is seasonally cyclical as well. But when you look at it we're continuing to grow into additional subdivisions. And so with that growth hopefully we offset some of the seasonality as we continue to grow. But with that being said, I mean obviously the spring selling season is important and that business as it is in all their homebuildings.

And lastly controlled lots hasn't changed too much over the last three or four quarters. Any thought on that, and when should we anticipate that changing?

Right now, we feel good with that percentage of around 50-50 split between owned and controlled. And we're still actively acquiring land in every one of our markets. And we're looking to continue to grow within every one of our markets. And so with that, we like that mix at about 50-50. If we see anything change towards the future that could switch to more of a controlled versus owned but right now we feel good at the 50-50 range give or take.

Thank you.

Thank you.

Thanks Alex.

The next question is from the line of Nishu Sood with Deutsche Bank. Please proceed with your questions.

Thank you. So the synergies that are going to come through in the second half. Dave, so should we expect that $10 million run-rate by the end of the year. And you'd mentioned that will come through I think on the in the SG&A line maybe some in the gross margin line as well. Can you give us the kind of rough breakout of how it might fall?

We haven't provided any disclosures yet on how the synergies of $10 million, how it gets broken out between kind of some of the - wheel achieve. So I think the first thing are rebates on the operations side that hit margin versus SG&A, we're still going through and finalizing contracts and we'll be getting that going forward. But the $10 million run-rate, you probably see a run-rate number in 2019 because we're going to start accumulating those synergies here in the back half of 2018 but we won't get $10 million in the next two quarters.

Got it. And on the legacy UCP Portfolio. How have your efforts been going in terms of accelerating volume growth out of that portfolio particularly the Western Legacy business? And the community account growth as well, there was the potential when you bought it to accelerate the kind of pipeline of communities in the mold of improving returns. So how are both of those efforts going in terms of volumes and the big community pipeline?

Well, Nishu. I think we're making progress on two fronts. We're making progress on taking existing UCP land positions that needed capital to take them from a entitled state into a developed state and so we've moved forward on that basis. And I think we've made very good progress in that regard. On the flip side, the other area that we've had a focus is, is adding new land position to each of the former UCP divisions because there is capital constrains that they had previously - they weren't able to enjoy some of the benefits that the individual markets would give them and so we have been to solve that. And so while it doesn't change overnight, we have made good progress, we're very happy about where we stand today.

Got it and financial services, where are you with the expansion of that, how many markets is it in so far and I think your intention is to roll it out broadly, so just wanted to get a progress check there please?

Yeah, no problem. We have loan officers in all of our divisions. We have somebody - we have a couple of divisions sharing people but we do have our inspire home loans rolled out to all of our divisions throughout the portfolio. And so as we've talked on previous calls, 2017 was really kind of a startup year in terms of putting people and process and licensing in place across our portfolio and now in 2018 we're really looking to really start improving the operations. Now that we have people like in the West Coast, now that we have loan officers there, we can start capturing home buyers and then in several months for now when the home building close, we'll start recognizing the revenue and profit dollars from that.

Got it. And the last one for me, the Century complete the press release you put out a few days ago, the Colorado community that will have Century complete. I believe the starting point which I assume was referring to the complete product was in the low 300s. So is that just a reflection of that market, what kind of price point are you aiming at with that, because in most markets 300 for entry level would be the kind of entry level plus segment.

So - Nishu, it really depends on the markets, so that's a function of the price points within the Denver market been an expensive market, one of the more expensive non-coastal markets in the U.S. and so the low 300 price point range is truly entry level in this market. You look at that as an example with say Houston, where we are bringing up Century Compete in the high ones in the Houston market. So it really depends market-by-market even though they would be essentially the same plans they may have a little bit of an exterior elevation difference, but generally speaking similar plans and so that price point at Denver that was just market driven.

Got it. Thank you.

Thank you.

You're welcome.

The next question is from the line of Alex Barron with Housing Research Center. Please proceed with your question.

Yeah thanks. Hey nice job guys.

Thanks Alex.

I was wondering on Wade Jurney is there any - been many progress in rolling these guys out to other markets or what's the progress there.

Well, yes that business is - we have looked at expanding it, we have acquired lots in Arizona at this point and we're continuing to explore additional markets, as well as within the markets that in terms of the states that the business previously operate in, we're continuing to expand into new markets within the same stage. So it's something that when you look at the demand for that price point of product, it's really unmatched in - with most other builders. So it's something we see a lot of opportunity and we are continuing to expand it into to new geographic horizon.

Okay. And as far as tax rate, what were the factors that helped out this quarter, obviously beside the 21% tax law?

Yeah so our tax rate this quarter was 13.5% due to just a couple of discrete one-time items, but going forward for quarters two, three, four for the balance of the year, we continue to expect a tax rate in the 25% range.

What were those couple of factors, I guess I missed them, sorry.

So the deferred tax adjustments for the remeasurement and some compensation adjustments that we made for the tax rate, due to share vesting.

Got it, okay, thanks.

Thank you. At this time I will turn the floor back to management for closing remarks.

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