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Century Communities Inc (CCS) Q1 2021 Earnings Call Transcript

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CCS earnings call for the period ending March 31, 2021.

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Century Communities Inc (CCS 6.03%)
Q1 2021 Earnings Call
Apr 28, 2021, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to Century Communities First Quarter 2021 Earnings Conference Call. [Operator Instructions]

I will now like to turn the conference over to Hunter Wells, Vice President of Investor Relations for Century Communities. Thank you. You may begin.

Hunter Wells -- Vice President of Investor Relations

Good afternoon. Thank you for joining us today for Century Communities Earnings Conference Call for the first quarter ended March 31, 2021. 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 as supplemented by our other SEC filings. Our SEC filings are available at www.sec.gov and on our website at www.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 conference call. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Management will be available after the call should you have any questions that did not get answered. Hosting the call today are Dale Francescon, Chairman and Co-Chief Executive Officer; Rob Francescon, Co-Chief Executive Officer and President; and David Messenger, Chief Financial Officer. Following today's prepared remarks, we will open up the line for questions.

With that, I will turn the call over to Dale.

Dale Francescon -- Chairman and Co-Chief Executive Officer

Thank you, Hunter, and welcome, everyone, to our quarterly conference call. 2021 is off to a very strong start. In the first quarter, we achieved multiple all-time records, including exceeding $1 billion in total revenues for the first time. Generating our highest quarterly net sales ever with 3,455 new contracts, a 45% year-over-year increase and producing $131 million in pre-tax income, a 284% increase, $102 million in net income, a 289% increase, and $152 million in EBITDA, a 198% increase. Home sales revenues increased 67% to nearly $960 million, driven by a 50% increase in deliveries. We delivered a first quarter record 2,797 homes with broad-based strength across our regions.

Century, like the rest of the construction industry, has been impacted by elevated costs in labor and materials stemming from surging demand. Our ability to successfully push price has offset any negative impact to our margins. In the first quarter, we increased home sales gross margins to 21.1% as compared to 17.7% on a year-over-year basis. In fact, our margins on new sales have sequentially increased each month since May of last year. SG&A as a percent of sales improved to 9.6%, the lowest in our history, reflecting a 330-basis point improvement over last year. Our pre-tax margin was 13%, the highest in our history and a significant improvement from 5.7% in the prior year quarter. Our national footprint and increased size, coupled with our focus on operational efficiencies, has allowed us to navigate a challenging inflationary environment while delivering top line growth, expanded profitability and continued progress against our long-term strategic goals. Mid last year, we saw an acceleration in our business that has continued into this year. The demand for new homes we are witnessing is the strongest we've seen in years. Our recent results reflect our ability to capitalize on these dynamic trends and demonstrate our proven ability to execute, reinforcing that we are on the right strategic path. Our solid foundation positions us for even greater financial achievements this year and beyond. Our two brands, Century Communities and Century Complete, provide a compelling value proposition for homebuyers, particularly for the millennial generation, driving new household formation.

Based on loans we originate, millennials are presently Century's largest age cohort of buyers. Our percentage of buyers aged 25 to 35 has continued to increase, while the average age of our new homeowner is decreasing. Overall, homeownership rates among younger demographic groups has been lower than that of previous generations for a variety of reasons, including affordability challenges. While we offer homes that appeal to a broad range of buyers, from entry-level to move up as well as lifestyle, our portfolio is heavily weighted within the affordable home category, with 80% exposure to entry-level buyers across our combined brands. Even if interest rates were to increase 50 basis points, we estimate that would only increase the monthly mortgage payment by $95 for a Century Communities homebuyer and $51 for a Century Complete homebuyer, further illustrating the impressive affordability of our homes. We're mindful of this demographic shift and are focused on positioning Century's products as well as refining our home buying processes to appeal to our younger buyers. We strategically invested and enhanced our online home buying platforms, even making it possible to complete a home purchase entirely from a smartphone as we understand their preference for shopping digitally.

From a macro perspective, there are additional factors at play supporting demand, the most compelling being the severe lack of inventory for single family homes. There is a structural shortage of homes in the U.S. and past under building is a key reason for today's remarkable demand environment. A significant presence of large institutional investors purchasing single-family homes for the rental market has further constrained supply and depleted inventory available for purchase. According to recent analysis by Freddie Mac, the U.S. housing market is 3.8 million units short of what is needed to meet near-term demand. We believe tight inventory is pushing buyers to the new home market, an opportunity we are well positioned to benefit from. We ended the quarter with a formidable balance sheet, reaching $1.4 billion in stockholders' equity and $557 million in cash. We continue to de-lever, generate positive cash flow and build our cash reserves that will allow us to reinvest in our business and drive further growth. In March, we published our first ESG report, signifying our enhanced commitment to sustainable growth. This commitment, along with our continued execution on our strategic initiatives, will propel growth organically as we expand the business in current and future markets, further improve profitability, and deliver increased value to our shareholders.

With that, I'll turn the call over to Rob to discuss our business in more detail.

Robert J. Francescon -- Co-Chief Executive Officer and President

Thank you, Dale. We ended the first quarter with a backlog of 4,097 homes, a 58% increase over last year and the highest in our history, resulting in a record dollar value of $1.6 billion. Importantly, as a result of our business model, 95% of these homes were already under construction at quarter end. This healthy backlog has us well positioned to meet our growth objectives. Given the strength of the macro backdrop, we have prioritized our land investments. We ended the first quarter with nearly 58,000 owned and controlled lots, a 61% increase over last year. We already own and control all the lots we need to support our 2021 growth as well as most of 2022. While the land market continues to be competitive, we remain disciplined and still do not include home price appreciation or current absorption rates in our underwriting assumptions. We've advanced our land-light operating model, increasing our percentage of controlled lots to 64% from 42% last year. Controlled lots allow us to better manage risk as we can quickly respond to shifting market dynamics. Further supporting this land-light strategy is our continued focus on spec builds.

In the first quarter, 82% of our total deliveries were built on spec. Given the demand for quicker move-in homes and increasing input costs, especially lumber, today we allow very few presale homes to be offered for sale. This approach allows us to not only maximize the sales price of the home, but gives us good visibility into its costs. Our land acquisition efforts are based on our desire to deepen and widen our share positions within existing markets as well as strategically expand into additional ones. We recently entered the North Florida market and expect to open six new communities under our Century Complete line in 2021 across the Panhandle and Jacksonville areas. Jacksonville is one of the fastest-growing cities in Florida, with job growth over the next 10 years predicted to be 44%, well above the U.S. average. With its strong local economy, affordable price points and desirable climate, Jacksonville is a highly attractive market to many buyers.

We are also pleased to announce that our Century Communities brand has recently entered North Florida. As of today's call, we've secured over 2,000 lots under both brands, illustrating our continued success in growing the business organically. With the addition of Florida, we now operate both brands in six states joining Arizona, Georgia, North Carolina, South Carolina and Texas. This 2-brand strategy provides scale benefits, enabling Century to have a larger presence within a market, furthering operational synergies in our back-office systems and facilitating more efficient land buying. Across our 17 states and beyond, we see attractive opportunities for continued growth for both brands.

We're encouraged by the broad-based demand strength we are experiencing throughout our entire footprint and are seeing signs of an ever-improving U.S. economy. There continues to be steady progress with coronavirus vaccinations and American employers added 916,000 jobs in March, the biggest gain since August. We expect the positive recovery to drive continued momentum into the balance of the year and into 2022.

Across our organization, we're focused on pushing price, productivity and synergy benefits, allowing us to offset increased costs and minimize issues within our supply chain. We work closely with our local and national trade partners and suppliers to monitor, anticipate and address any supply chain challenges. The centralized controls and resources within our platform are both flexible and responsive. We're pleased with our recent performance and strong operating results and remain confident we're solidly positioned for even more robust future earnings growth.

I'll now turn the call over to Dave to discuss our financial results in more detail.

David L. Messenger -- Chief Financial Officer

Thank you, Rob. During the first quarter of 2021, net income increased 289% to a record $101.7 million or $3 per diluted share compared to $26.1 million and $0.78 in the prior year quarter. First quarter pre-tax income was $131 million, an increase of 284%. Pretax margin was 13% compared to 5.7% in the prior year quarter. Home sales revenues for the first quarter increased to $959.3 million, an increase of 67% compared to $572.7 million in the prior year quarter. Total revenues increased 67% to a record $1 billion from $602.6 million, propelled by a 50% increase in deliveries. In the first quarter, net new contracts across our divisions were up 45% to 3,455 homes, a quarterly record, with the Century Complete division increasing by 90%, followed by the Texas and Mountain regions, up 56% and 54%, respectively.

Our financial services business capitalized on low interest rates and increased geographic penetration, capturing 75% of closings, generating $33.6 million in revenues compared to $9.8 million in the first quarter of 2020, and contributing $15.3 million in pre-tax income. We're pleased with the performance of this business segment, which provides significant value to our homebuyers by creating an efficient, streamlined home buying experience.

During the quarter, our Century Communities and Century Complete buyers had respective FICO scores of 744 and 710. But the current rate of 3% on a 30-year fixed mortgage is still substantially lower than the current five-year average of 3.8%, and many potential buyers have bolstered their personal savings over the past year, strengthening their financial profiles. Homebuilding gross margin percentage improved to 21.1% compared to 17.7% for the same period last year. Adjusted homebuilding gross margin percentage was 23.1% compared to 20.2% in the prior year quarter. We expect continued year-over-year margin improvement in the second quarter, given last year's heavy usage of incentives and this year's price appreciation. SG&A as a percent of home sales revenue improved 330 basis points to 9.6% in the first quarter compared to 12.9% in the prior year. Our net homebuilding debt to net capital ratio improved to 19.9%, down significantly from 46.6% in the prior year quarter. Our operations generated positive cash flows of approximately $110 million, ending the quarter with approximately $557 million of cash and total liquidity of $1.2 billion, which includes our available and undrawn $640 million unsecured revolving credit facility.

Recently, both Moody's and S&P upgraded their credit ratings on Century. In February, we were upgraded by Moody's to B1 in a positive outlook. In April, S&P raised their rating on Century to BB-. Our improved ratings reflect the continued and sustained operating performance of the company. In the first quarter, our tax rate was 22.4% compared to 23.4% in the same quarter last year. Our record first quarter results have set us up for a strong year. Our improved sales, deliveries and ASP growth lead us to increase our guidance for the year. Home deliveries are now expected to be in the range of 10,750 to 11,750 homes, and home sales revenues are now expected to be in the range of $3.7 billion to $4 billion.

With that, I'll open the line for questions. Operator?

Questions and Answers:

Operator

[Operator Instructions] Our first question is with Michael Rehaut with JP Morgan. Please proceed with your question.

Michael Rehaut -- JP Morgan -- Analyst

Hi. This is Maggie on for Mike. Congrats on the quarter. First, I'd like to dig into the SG&A line a little bit more. Obviously, you saw some really nice volume leverage during the first quarter. But I was wondering if you could talk about any other moving pieces during the quarter there? And also, how we should be thinking about that line item as the year progresses?

David L. Messenger -- Chief Financial Officer

Yes, Meg, this is Dave. I would say that we've obviously seen a lot of tremendous benefits on the SG&A line item over the past several years as we had historically done a variety of acquisitions, and we've grown our top line and we've made a lot of significant advances internally with our G&A structure, especially on the fixed side. And you're seeing some of those benefits coming through here in the first quarter. And I think you saw benefits various quarters last year as well. I think going forward, we're probably somewhere in that high single, low double-digit range on a go-forward basis, as it will bounce around a little bit, whether it's due to commissions or other initiatives that we have ongoing with our corporate office and the fixed structure. But we're very pleased with where we are today.

Michael Rehaut -- JP Morgan -- Analyst

Got it. Thank you. And next, I was just wondering if you could talk a little bit about what you've seen in the market through the first few weeks of April in terms of demand trends, sales pace? Any color you can give around that?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Sure, Maggie. This is Dale. Well, we're really almost a month into the second quarter, and we've seen no reduction in demand or sales momentum. When we look at April, we're tracking to end April up about 50% on a year-over-year basis. So relatively consistent with where we were in Q1.

Michael Rehaut -- JP Morgan -- Analyst

Got it. Thanks guys.

Dale Francescon -- Chairman and Co-Chief Executive Officer

Thank you.

Operator

Our next question is with Alex Rygiel with B. Riley FBR. Please proceed with your question.

Alex Rygiel -- B. Riley FBR -- Analyst

Thank you, and fantastic quarter, gentlemen.

David L. Messenger -- Chief Financial Officer

Thanks Alex.

Alex Rygiel -- B. Riley FBR -- Analyst

A couple of questions here. Obviously, the first quarter was fantastic from a gross margin standpoint. How should we think about the cadence of gross margin over the next couple of quarters?

David L. Messenger -- Chief Financial Officer

Yes. We had a tremendous first quarter, and I think that as we look at our backlog of 4,000 homes and what we think we'll be delivering in Q2, Q3, we expect gross margin to be relatively in line with where Q1 was. As we're able to be pushing price at the moment. we're also experiencing relatively significant increases on the prices of materials on the supply side. So we'll continue to try pushing as much through to the end user. We are seeing pressures on the margin line from that standpoint.

Alex Rygiel -- B. Riley FBR -- Analyst

And based upon the cadence of order activity and your timeline for deliveries, historically the fourth quarter always witnessed a pretty significant step-up in closings. How should we think about the fourth quarter of this year based upon your timeline of closings?

David L. Messenger -- Chief Financial Officer

I think there's probably still a fair trend that you're going to see. We had a good first quarter. You see second quarter and third quarter would be lower than the fourth quarter, just given the way the selling season works and when we've got our sales pace happening. And especially if certain closings get moved out from Q2, Q3, they'll end up in the fourth quarter.

Alex Rygiel -- B. Riley FBR -- Analyst

One last question. The Century Complete ASP grew significantly in the quarter. Can you expand upon this a little?

David L. Messenger -- Chief Financial Officer

Yes. It's really a function of two things. We've been raising prices on the Century Complete line as we have been on the Century Communities line. So on a unit by unit basis, we have increased prices. As well as, over time, we've improved that product, we've enhanced our offering. We've gone into more subdivisions as opposed to more scattered lots. And so when you look at that, we're just having homes that we can sell for more than where the previous business was set up before we started making all the transitions.

Alex Rygiel -- B. Riley FBR -- Analyst

Great. Thank you very much.

David L. Messenger -- Chief Financial Officer

Okay. Thank you.

Operator

Our next question is with Deepa Raghavan with Wells Fargo Securities. Please proceed with your question.

Deepa Raghavan -- Wells Fargo Securities -- Analyst

Hi. Good evening. Thanks for taking the question. Appreciate it. Can you talk a little bit about how the quarter deliveries performed, closings, with respect to your expectation? It looks like it outpaced meaningfully, but the guide raise kind of seems a little conservative to us. I mean, 250 units higher. Just curious, how much did you beat Q1 by versus your expectation? Also, any color on if the guide raise reflects just Q1 outperformance? Is there second half outlook increase also in that guide? Or conversely, is there pull-forward that you might have factored in? Just curious if you're able to just talk to the components within that raise of delivery rate, 250 units.

David L. Messenger -- Chief Financial Officer

Deepa, this is Dave. I would say that in terms of the delivery raise in our guidance, we do it on an annual basis. We don't necessarily comment on quarterly expectations, and that's why we don't provide quarterly guidance. Internally, as you can probably imagine, we have fairly lofty and high expectations for what the company can deliver and what we've built and what it will achieve. So I would say we're looking at it, 250 being a raise, is really over the course of the year and not necessarily a pull-forward of anything from next year.

Deepa Raghavan -- Wells Fargo Securities -- Analyst

Okay, that's fair. My second is on pricing strength. Any thoughts on the pricing strength that's being witnessed here, especially as we head into 2022? What are some of the drivers that you're probably monitoring to test how long this run could last?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Well, I think really from an operational standpoint, what we've done is, in many cases, we've reduced the size of the releases that we provide. And then every time we have a release, we have a price increase. In some of our communities where we may have larger releases, then we set a set price increase every so many homes that are sold. So when we look at that, we're really monitoring down to the subdivision level. And we really have not seen any price resistance at any levels that we've achieved. If we start seeing that, then we can adjust, but it's really down to our teams are managing on a subdivision level, and each grouping of homes that are sold, we're trying to get the maximum sales price for those homes.

Deepa Raghavan -- Wells Fargo Securities -- Analyst

Okay, that's fair. My final one, if I can sneak it in, are you seeing any incremental challenges on the supply chain, especially with delivery of, I don't know, appliances, windows, doors, lumber. Obviously, those kind of cast more on the price increase side. But just curious, any -- are your cycle times extending because of any incremental supply chain pressures?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Yes. We've seen a little bit of impact to that. And our management team here at the corporate level that's devoted to helping the divisions with their purchasing and supply chain management has really done a very good job of anticipating where we're going to have shortages or delays. And they've been able to, in many cases, transfer from different suppliers. In certain cases, even different markets to satisfy the need that we have. To date, the -- really, the delays we've seen have been pretty manageable. They've been in the case of a maximum of a week to two weeks. And it's not everywhere. Some markets are more than others and some we're not seeing any impact at all. But it's something that we're keeping a close eye on, and we anticipate as the year progresses, we certainly could see more delays. But so far, it's not something that's been a big impact to us.

Deepa Raghavan -- Wells Fargo Securities -- Analyst

Got it. Thanks so much. I'll pass it up.

Dale Francescon -- Chairman and Co-Chief Executive Officer

Sure, thanks.

Operator

Our next question is with Jay McCanless with Wedbush. Please proceed with your question.

Jay McCanless -- Wedbush -- Analyst

Okay, good afternoon. Congrats on a great quarter. I'll maybe ask the guidance question a little bit differently. The unit midpoint went up 2%, but the revenue midpoint went up 8% on the guidance. Is that price mix you think you're going to be getting from different parts of the country? Is it some of the new expansion? Could you all maybe just talk about why the revenue midpoint moved up so much more than the unit midpoint?

David L. Messenger -- Chief Financial Officer

Jay, this is Dave. The ASP that we're seeing right now was outpacing our expectations at the beginning of the year. And so given where we're delivering homes today in the first quarter, where we expect the ASP we're seeing in backlog, it felt prudent to be increasing the revenue accordingly.

Jay McCanless -- Wedbush -- Analyst

Okay. So just price mix. And sorry, so my second question is on the community count. Can you talk about where you think that might be for 2Q and where it could end the year?

David L. Messenger -- Chief Financial Officer

Yes. Q2, as we said on our last call, we expected Q1 to decline. Q2 probably has a small dip to it as well as we're selling out of communities faster than we had originally intended last year when we brought them on. So then you start seeing some growth in Q3 and Q4, but it will be back-end weighted to the end of the year.

Jay McCanless -- Wedbush -- Analyst

And then could you talk about order growth by month? I know everyone felt the pinch from Texas, but were your orders evenly weighted through the different months of the quarter? Or how did that flow?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Yes. We really didn't see any spike or dip in any of the months. When we look at the absolute number of orders, they were fairly consistent throughout the three months. On a year-over-year basis, obviously, March was up more just because of the impact in the second half of March last year. But in terms of absolute number of orders, they were very consistent.

Jay McCanless -- Wedbush -- Analyst

And then the last question I had, could you give the stat again? I apologize if I missed it, but what percentage of the backlog was started that you guys sold this quarter?

David L. Messenger -- Chief Financial Officer

95%. That's what's in our backlog, 95% of those homes were already started by quarter end. When we look at what closed for the quarter, that was about 83% of them were started as specs.

Jay McCanless -- Wedbush -- Analyst

Okay, great. Congrats again. Thanks for taking my question.

Operator

[Operator Instructions] Our next question is with Alan Ratner from Zelman & Associates. Please proceed with your question.

Alan Ratner -- Zelman & Associates -- Analyst

Hey, guys. Good afternoon. Congrats on the great results. First question, I would love to dig in a little bit to the comment you made earlier, just about land underwriting, just as far as not assuming HPA or current absorptions. First, any details you could give just in terms of what type of absorptions you are assuming on new land acquisitions? And yes, I guess more broadly, I'm a little surprised just in general that land sellers would be kind of willing to go along with that. Just it seems like the land market is pretty heated and all builders are ramping their lot counts pretty significantly. So when you come to a land seller with your assumptions and underwriting and tell them, hey, we're incorporating something lower than where the market is today, how does that conversation go in general? I mean, is that pretty much the norm across the industry or have you started to see builders get a little bit more irrational?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Well, we're seeing some builders get more aggressive, but there's many publics that take the same approach that we do, Alan. And there's a difference between using home price appreciation in your underwriting and using current pricing. And so we'll look at the absolute most current pricing as we go forward, but we're not going to put in an accelerator on appreciation and think that we're just going to keep clipping away at a large percentage each and every year during the life of that project. So we're looking at it just where it is today. Same thing on absorptions. We're looking at what we think a project can sustain over the life of it. And so if we're taking lots on the balance sheet, we may have those lots for in excess of a year let's say. And so with that, we're going to look at what we're going to average over that period of time versus what somebody may have been selling at a robust time in the spring on a competing project. So we're going to look at it that way. And candidly, most of our contemporaries from the public realm look at it that way as well.

Alan Ratner -- Zelman & Associates -- Analyst

Okay. That's helpful. And then second question, given the fact that you made the comment you're not really allowing many presale homes to be available for sale, can you talk a little bit about kind of the production cadence in terms of how many homes you're starting each month? Are you kind of running at that 1,000 per month range that obviously your closing guidance would imply? Or have you been able to accelerate that even further in recent months to potentially provide some upside if the demand environment allows it?

David L. Messenger -- Chief Financial Officer

Alan, this is Dave. The closing guidance is doing about 1,000 a month. We feel comfortable with what we've been starting since the last part of last year. We obviously took a big pause in Q1, Q2 and then ramped it back up, and we've been pretty consistent with what we've been doing for starts through call it Q4 into Q1. And we feel comfortable with where we are today with what we're starting and what we think will ultimately deliver for the year.

Alan Ratner -- Zelman & Associates -- Analyst

So Dave, are you confirming that the 1,000 per month that I just threw out, that is kind of roughly what you're starting? Or do you have a specific number there? I'm just curious what that pace is running at today.

David L. Messenger -- Chief Financial Officer

No, we've never disclosed what our starts are per month or any statistics like that. I mean I understand that that's what the guidance implies, but we haven't previously disclosed what our quarterly starts are.

Alan Ratner -- Zelman & Associates -- Analyst

Okay. I appreciate it. Good luck guys.

David L. Messenger -- Chief Financial Officer

Thanks.

Operator

Our next question is with Alex Barron from Housing Research Center. Please proceed with your question.

Alex Barron -- Housing Research Center -- Analyst

Good afternoon gentlemen and great job on the quarter.

Dale Francescon -- Chairman and Co-Chief Executive Officer

Thanks Alex.

Alex Barron -- Housing Research Center -- Analyst

I saw the progress you've been making on the land front. It seems like you guys are holding the line on owned lots and increasing your option lots significantly. Just kind of curious how you see that playing out over the next few quarters? Is that going to increase in terms of that direction?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Well, we're definitely moving toward a more asset-light, land-light business model. And so we've made tremendous progress to get to now 64% of our lots being controlled, and we would hope to improve on that on a go-forward basis, but at a minimum, be at that level.

Alex Barron -- Housing Research Center -- Analyst

Is there something that has fundamentally changed in the business that's allowing that now? Or is it more just your choice to move in that direction?

Dale Francescon -- Chairman and Co-Chief Executive Officer

Part of it is we're moving through with velocities. We're moving through our inventory quicker. And so that's allowing us to do that. Plus, we've spent additional time on trying to bring land on, on a just-in-time basis, so that it is controlled until we're ready to actually use it and go forward with construction.

Alex Barron -- Housing Research Center -- Analyst

Okay. Great. So from a capital perspective, it would seem that that's going to free up some cash flow and it looks like your balance sheet is obviously improving. So any thoughts around share buybacks or dividends at this point based on that?

David L. Messenger -- Chief Financial Officer

This is Dave. We have a share repurchase program in place that we've had for some time that has about 3.9 million shares available for repurchase on it. Obviously, with the cash balance that we have today, our capital preference is to reinvest in the business. We've got a significant amount of lots that we are working on today. But we always evaluate whether or not a share repurchase or some other distribution of capital is in the best interest of the company.

Alex Barron -- Housing Research Center -- Analyst

Okay. Great. And if I could ask one last one, obviously it looks like the order momentum in the Century Complete was very strong this quarter. Should we anticipate that that line of business is going to keep growing faster than the rest of the company?

Dale Francescon -- Chairman and Co-Chief Executive Officer

It's really been our goal to increase the Century Complete brand. And as we've said on past calls, that was the brand that was hurt the most when we hit pause last year. And that momentum has picked back up. It's very dependent on land closings because virtually every lot that we have on balance sheet for Century Complete is taken on when we're starting that home. So when we look at that now that that machine has ramped back up, we would certainly expect to see that the starts and the sales and the resultant closings will continue to increase.

Alex Barron -- Housing Research Center -- Analyst

Okay, great. Best of luck for the year.

Dale Francescon -- Chairman and Co-Chief Executive Officer

Thank you.

Operator

We will now turn the line back over to Dale for some brief closing remarks.

Dale Francescon -- Chairman and Co-Chief Executive Officer

Thank you, Operator. I'd like to thank our entire team, especially our frontline employees who've continued to outperform expectations, demonstrate their commitment to exceptional customer service and their tenacity and unparalleled work ethic. Without your efforts, Century would not be where it is today. Thank you all for your time today. We appreciate your continued support, investment and look forward to speaking to you again next quarter.

Operator

[Operator Closing Remarks]

Duration: 41 minutes

Call participants:

Hunter Wells -- Vice President of Investor Relations

Dale Francescon -- Chairman and Co-Chief Executive Officer

Robert J. Francescon -- Co-Chief Executive Officer and President

David L. Messenger -- Chief Financial Officer

Michael Rehaut -- JP Morgan -- Analyst

Alex Rygiel -- B. Riley FBR -- Analyst

Deepa Raghavan -- Wells Fargo Securities -- Analyst

Jay McCanless -- Wedbush -- Analyst

Alan Ratner -- Zelman & Associates -- Analyst

Alex Barron -- Housing Research Center -- Analyst

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