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

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 consolidated financial statements
and the related notes to those statements included elsewhere in this Form 10-K.
In addition to historical financial information, the following discussion and
analysis contains forward-looking statements that involve risks, uncertainties
and assumptions. Our actual results may differ materially from those anticipated
in these forward-looking statements as a result of many factors, including those
discussed under "Risk Factors" and elsewhere in this Annual Report on Form 10-K.
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.

In July 2019, the Financial Accounting Standards Board (which we refer to as
"FASB") issued Accounting Standards Update 2019-07, "Codification Updates to SEC
Sections-Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No.
33-10532, Disclosure Update and Simplification", which changes were meant to
simplify certain disclosures in financial condition and results of operations,
particularly by eliminating year-to-year comparisons between prior periods
previously disclosed. This section of this Form 10-K generally discusses 2021
and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions
of 2019 items and year-to-year comparisons between 2020 and 2019 that are not
included in this Form 10-K can be found in "Management's Discussion and Analysis
of Financial Condition and Results of Operations" in Part II, Item 7 of the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2020.

Company overview

We are 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 selections. 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. Our homebuilding operations are organized into the
following five reportable segments: West, Mountain, Texas, Southeast, and
Century Complete.  Additionally, 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
home buyers 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
10,805 homes delivered during 2021, approximately 75% of our deliveries were
made to entry-level and approximately 87% of homes delivered were built as
move-in ready homes.

Impact of the COVID-19 pandemic

The outbreak of COVID-19, which was declared a pandemic by the World Health
Organization on March 11, 2020, created significant volatility, disruption, and
uncertainty across the nation and abroad. After an initial slowing of home sales
trends in early spring 2020, due in part to consumer uncertainty, home sales
sharply rebounded, aided by historically low interest rates, lack of supply, and
renewed desire from customers to move out of urban areas and/or apartments and
into new homes in suburban areas, which desire was likely accelerated by the
COVID-19 pandemic. These positive trends and market dynamics continued through
the year ended December 31, 2021.

While these positive trends and market dynamics continued through the year ended
December 31, 2021, we recognize that long term macro-economic effects of the
pandemic that could ultimately impact the homebuilding industry and our home
sales have yet to be known. There is still uncertainty regarding the extent and
duration of the COVID-19 pandemic and future increases in COVID-19

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positive cases and hospitalizations could result in changing plans of numerous
state and local municipalities, which may include government restrictions,
quarantines, travel advisories and social distancing measures. Despite overall
strong demand and sales of our homes during 2021, continued future demand is
uncertain as economic conditions are uncertain, in particular with respect to
unemployment levels, inflation, interest rates, and the extent to which and how
long COVID-19 and related government directives, actions, and economic relief
efforts will impact the U.S. economy, unemployment levels, financial markets,
credit and mortgage markets, consumer confidence, interest rates, availability
of mortgage loans to homebuyers, wage growth, household formations, levels of
new and existing homes for sale, cost of land, labor and construction materials,
demographic trends, and housing demand, and other factors, including those
described elsewhere in this Form 10-K. A decrease in demand for our homes would
adversely affect our operating results in future periods, as well as have a
direct effect on the origination volume of and revenues from our Financial
Services segment. In addition, because the full magnitude and duration of the
COVID-19 pandemic is uncertain and difficult to predict, changes in our cash
flow projections may change our conclusions on the recoverability of inventories
in the future.

Driven by the continued strong demand for our homes through the year ended
December 31, 2021, we ended 2021 with no amounts outstanding under our revolving
line of credit, $316.3 million of cash and cash equivalents, $52.3 million of
cash held in escrow, and a net homebuilding debt to net capital ratio of 26.3%.
Additionally, we increased our land acquisition and development activities
during 2021 to bolster our lot pipeline and support future community growth,
which resulted in 79,859 lots owned and controlled at December 31, 2021, a 60.0%
increase as compared to December 31, 2020. Although the trajectory and strength
of our markets have continued to remain strong and allowed us to pass on
increased costs through increases in our selling prices and increase our margins
during 2021, we continued to experience shortages of labor, land and raw
materials, 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 and inflation, during 2021
that could negatively impact our margins in future periods. While the impact of
the COVID-19 pandemic will continue to evolve and at any given time recovery
could be slowed or reversed by a number of factors, including the emergence of
new variants of COVID-19, such as Delta and Omicron, we believe we are well
positioned from a cash and liquidity standpoint not only to operate in an
uncertain environment, but also to continue to grow with the market and pursue
other ways to properly deploy capital to enhance returns, which may include
taking advantage of debt refinancing and/or strategic opportunities as they
arise.

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. Accordingly, our net sales, home deliveries, and average sales
price in future years could be negatively affected by economic conditions, such
as decreases in employment and median household incomes, as well as decreases in
household formations and increasing supply of inventories. Additionally, our
results could be impacted by a decrease in home affordability as a result of
price appreciation or increases in mortgage interest rates or tightening of
mortgage lending standards.

Results of operations – Years ended December 31, 2021 and 2020

During the year ended December 31, 2021, we generated record revenues of $4.2
billion, with home sales revenues of $4.0 billion, an increase of 33.2% over
2020, and financial services revenue of $123.7 million, an increase of 19.8%
over 2020.  The increase in home sales revenue was fueled by a 14.3% increase in
the number of homes delivered to 10,805 and a 16.6% increase in the average
sales price per home to $373,300.  This increase in home sales revenue combined
with a 580 basis point increase in homebuilding gross margin percent and a 160
basis point decrease in the percentage of selling, general and administrative
expense as a percent of home sales revenues, resulted in a record $641.1 million
in income before income tax expense for the year ended December 31, 2021.

Our financial results for the year ended December 31, 2021 were driven by
continued favorable market dynamics across our markets.  These conditions
included an increase in demand for new housing, particularly entry-level
housing, impacted by the COVID-19 pandemic, which accelerated the trend of
migration out of high-density urban areas and into suburban areas, historically
low interest rates on mortgage products, including rates on 30-year fixed
mortgages, a low supply of available inventories and positive demographic
trends.  These conditions, coupled with our strategy to focus on entry-level
housing (approximately 75% of our home deliveries in 2021 qualified for FHA
mortgages) resulted in a positive sales environment, which we leveraged in 2021
to increase net new home contracts to 12,017, an 11.0% increase over prior
period.

As of December 31, 2021, we had a backlog of 4,651 homes, a 35.2% increase as
compared to December 31, 2020, representing approximately $1.9 billion in sales
value, a 44.5% increase as compared to December 31, 2020.

The increase in demand has also resulted in increased prices for and shortages
of labor, land and raw materials, as well as elongated construction cycle times
to build homes in many of our markets. During 2021, we successfully offset most
of the cost increases through increases in our selling prices.

Our results of operations resulted in net income of $498.5 million, or $14.47
per diluted share, compared to $206.2 million, or $6.13 per diluted share in the
prior year, and driving our return on equity to 33% for 2021. In May 2021, our
Board of Directors initiated a quarterly cash dividend, which paid our
stockholders of record $0.15 per share during the last nine months of 2021.

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Our net homebuilding debt to net capital was 26.3% as of December 31, 2021, down
from 27.2% as of December 31, 2020.  We believe our current net homebuilding
debt to net capital position allows us the flexibility to increase our debt
levels if necessary to continue to grow our operations and our approximately
80,000 lots owned and controlled in future periods.

While in early 2022 rates on 30-year fixed mortgages have risen modestly and the
Federal reserve has indicated that it may raise interest rates in March 2022, we
believe housing demographics and buyer demand will remain strong at least in the
short term and we believe 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, as well as 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.

In August 2021, we completed a private offering of $500.0 million aggregate
principal amount of our 3.875% senior notes due 2029 (which we refer to as the
"2029 Notes"), which were issued at 100% of their principal amount, and we
received net proceeds of $493.8 million. The indenture covering these notes
contains certain restrictive covenants on issuing future secured debt and other
transactions. The aggregate principal balance of the 3.875% senior notes due
2029 is due August 2029, with interest only payments due semi-annually in
February and August of each year, beginning on February 15, 2022. In addition,
in August 2021, we redeemed $400.0 million in outstanding principal of our
5.875% senior notes due 2025 at a redemption price equal to 102.938% of the
principal amount, plus accrued and unpaid interest, totaling $414.8 million. The
redemption was conditioned upon our prior consummation of the offering and
issuance of the 2029 Notes. The redemption transaction resulted in a loss of
$14.5 million, which is presented in loss on debt extinguishment in the
consolidated statement of operations.

Strategy

Our strategy is focused on increasing returns from our inventory while generating strong profitability. In general, we focus on the following initiatives:

?Maintain a strong balance sheet and prudent use of leverage;

“While we offer homes that appeal to a wide range of entry-level, upper-level and lifestyle buyers, our offerings are strongly focused on providing affordable housing options in each of our buyer segments;

?Preferring 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 home;

?Maintain a strong pipeline of future landholdings, including promoting lot option contracts to manage our landholding risk;

? Increase our market share in our existing markets through organic growth and/or acquisitions of other homebuilders already operating in the market;

“Expanding into new markets that meet our underwriting criteria either through organic start-up transactions or by acquiring existing homebuilders;

?Evaluation of opportunistic strategies for the construction of single-family and multi-family rental units; and

?Controlling costs, including costs of home sales revenue and selling, general
and administrative expenses, and generating further efficiencies, including
through the increased reliance on digital marketing and direct outreach to
potential customers through our website and digital tools, such as the
introduction of the ability to buy a home via our website, to achieve increased
profitability.

Our operating strategy has resulted in significant growth in revenue and income
before income taxes over the last five years, and we believe it will continue to
produce positive results. We expect our operating strategy will continue to
adapt to market changes, and we cannot provide any assurance that our strategies
will continue to be successful.

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The following table summarizes our results of operations for the years ended
December 31, 2021 and 2020.

(in thousands, except per
share amounts)                        Year Ended December 31,               Increase (Decrease)
                                      2021              2020               Amount            %
Consolidated Statements of
Operations:
Revenue
Home sales revenues              $   4,032,969     $   3,027,167         $ 1,005,802        33.2 %
Land sales and other revenues           59,607            30,717              28,890        94.1 %
Total homebuilding revenues          4,092,576         3,057,884           1,034,692        33.8 %
Financial services revenues            123,738           103,308              20,430        19.8 %
Total revenues                       4,216,314         3,161,192           1,055,122        33.4 %
Homebuilding cost of revenues
Cost of home sales revenues        (3,056,048)       (2,468,133)           (587,915)        23.8 %
Cost of land sales and other
revenues                              (39,315)          (21,929)            (17,386)        79.3 %
                                   (3,095,363)       (2,490,062)           (605,301)        24.3 %
Financial services costs              (72,578)          (54,797)            (17,781)        32.4 %
Selling, general, and
administrative                       (389,610)         (341,710)            (47,900)        14.0 %
Loss on debt extinguishment           (14,458)                 -            (14,458)     (100.0) %
Inventory impairment and other            (41)           (2,172)               2,131      (98.1) %
Other income (expense)                 (3,142)           (2,211)               (931)        42.1 %
Income before income tax
expense                                641,122           270,240             370,882       137.2 %
Income tax expense                   (142,618)          (64,083)            (78,535)       122.6 %
Net income                       $     498,504     $     206,157         $   292,347       141.8 %
Earnings per share:
Basic                            $       14.79     $        6.19         $      8.60       138.9 %
Diluted                          $       14.47     $        6.13         $      8.34       136.1 %
Adjusted diluted earnings per
share(1)                         $       14.80     $        6.22         $      8.58       137.9 %
Other Operating Information
(dollars in thousands):
Number of homes delivered               10,805             9,453               1,352        14.3 %
Average sales price of homes
delivered                        $       373.3     $       320.2         $      53.1        16.6 %
Homebuilding gross margin
percentage(2)                             24.2 %            18.4 %               5.8 %      31.5 %
Adjusted homebuilding gross
margin excluding interest and
inventory impairment and other
(1)                                       25.9 %            20.8 %               5.1 %      24.5 %
Backlog at end of period,
number of homes                          4,651             3,439               1,212        35.2 %
Backlog at end of period,
aggregate sales value            $   1,869,772     $   1,294,202         $   575,570        44.5 %
Average sales price of homes
in backlog                       $       402.0     $       376.3         $      25.7         6.8 %
Net new home contracts                  12,017            10,822               1,195        11.0 %
Selling communities at period
end                                        202               198                 (4)       (2.0) %
Average selling communities                189               217                (31)      (14.3) %
Total owned and controlled lot
inventory                               79,859            49,965              29,894        59.8 %
Adjusted EBITDA(1)               $     732,718     $     356,414         $   376,304       105.6 %
Adjusted income before income
tax expense(1)                   $     655,621     $     273,996         $   381,625       139.3 %
Adjusted net income(1)           $     509,778     $     209,022         $   300,756       143.9 %
Net homebuilding debt to net
capital (1)                               26.3 %            27.2 %          

(0.9)% (3.3)%


(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 within
our "Homebuilding Gross Margin" and "Non-GAAP Financial Measures" sections in
this Management's Discussion and Analysis of Financial Condition and Results of
Operations. 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 is inclusive of nominal impairment
charges and $2.2 million in impairment charges for the years ended December 31,
2021 and 2020, respectively, in inventory impairment included within inventory
impairment and other on our consolidated statements of operations. See Note 12 -
Fair Value Disclosures in the Notes to the Consolidated Financial Statements for
further detail.




?

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Operating results by segment

(dollars in thousands)



                                     Average Sales Price of                                  Income before Income Tax
             New Homes Delivered        Homes Delivered           Home Sales Revenues                 Expense
             Year Ended December      Year Ended December
                     31,                      31,               Year Ended 

the 31st of DecemberYear ended the 31st of December,

               2021        2020         2021         2020          2021           2020           2021          2020
West             1,602       1,242   $     629.4   $  545.7   $    1,008,274   $   677,755   $    213,301   $   71,417
Mountain         2,315       1,973         481.2      424.8        1,114,078       838,055        212,335      114,722
Texas            1,615       1,338         295.1      251.8          476,664       336,882         68,565       34,694
Southeast        1,683       1,903         394.1      353.1          663,224       672,034         92,420       57,181
Century
Complete         3,590       2,997         214.7      167.6          770,729       502,441        109,213       33,449
Financial
Services             -           -             -          -                -             -         51,160       48,511
Corporate            -           -             -          -                -             -      (105,872)     (89,734)
Total           10,805       9,453   $     373.3   $  320.2   $    4,032,969   $ 3,027,167   $    641,122   $  270,240


West

During the year ended December 31, 2021, our West segment generated income
before income tax expense of $213.3 million, a 198.7% increase over the prior
year period. This increase was driven by an increase in home sales revenue of
$330.5 million and an increase of 1,062 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 margin on home
sales. The revenue increase during the year ended December 31, 2021 was
primarily generated by a 29.0% increase in the number of homes delivered, as
well as a 15.3% increase in the average sales price per home.  During the year
ended December 31, 2021, the increase in the number of homes delivered was
driven by favorable market dynamics across our markets. 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 year ended December 31, 2021, our Mountain segment generated income
before income tax expense of $212.3 million, an 85.1% increase over the prior
year period. This increase was driven by an increase in home sales revenue of
$276.0 million and an increase of 537 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 margin on home
sales. The revenue increase during the year ended December 31, 2021 was
primarily generated by a 17.3% increase in the number of homes delivered, as
well as a 13.3% increase in the average sales price per home.  During the year
ended December 31, 2021, the increase in the number of homes delivered was
driven by favorable market dynamics across our markets. 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 year ended December 31, 2021, our Texas segment generated income
before income tax expense of $68.6 million a 97.6% increase over the prior year
period. This increase was driven by an increase in home sales revenue of $139.8
million and an increase of 409 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 margin on home sales. The
revenue increase during the year ended December 31, 2021 was primarily generated
by a 20.7% increase in the number of homes delivered, as well as a 17.2%
increase in the average sales price per home.  During the year ended December
31, 2021, the increase in the number of homes delivered was driven by favorable
market dynamics across our markets. 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.

South East

During the year ended December 31, 2021, our Southeast segment generated income
before income tax expense of $92.4 million a 61.6% increase over the prior year
period. This increase was primarily driven by an increase of 543 basis points in
the percentage of income before income tax expense to home sales revenues, as a
result of increased gross margin on home sales. Homes sales revenue decreased
during the year ended December 31, 2021, primarily generated by a decrease in
the number of homes delivered due to a

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decrease in the number of communities opened, and partially offset by an 11.6%
increase in the average sales price per home. 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.

Complete century

During the year ended December 31, 2021, our Century Complete segment generated
income before income tax expense of $109.2 million, a 226.5% increase over the
prior year period. This increase was driven by an increase in home sales revenue
of $268.3 million and an increase of 751 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 margin
on home sales. The revenue increase during the year ended December 31, 2021 was
primarily generated by a 19.8% increase in the number of homes delivered, as
well as a 28.1% increase in the average sales price per home.  During the year
ended December 31, 2021, the increase in the number of homes delivered was
driven by favorable market dynamics across our markets. The average sales price
increase was driven by the mix of deliveries within markets between years, as
well as increased pricing power as a result of strong market dynamics.

Financial services

Our Financial Services segment generated income before income tax of $51.2
million for the year ended December 31, 2021, a 5.5% increase over the prior
year. This increase was primarily the result of a $20.4 million increase in
financial services revenue during the year ended December 31, 2021 compared to
the prior year period. This increase was due to (1) a 21.1% increase to 8,375 in
the number of mortgages originated during the year ended December 31, 2021, due
to our increased capture rate of 76% as of December 31, 2021 as compared to 64%
for the prior year period and the increase in the number of homes delivered by
our Century Communities and Century Complete brands year over year, and (2) a
25.2% increase in the number of loans sold to third parties during the year
ended December 31, 2021 as compared to the prior year period. These increases
were partially offset by (1) lower fair value of our mortgage loans held for
sale and our mortgage loans in process for which interest rates were locked by
borrowers, (2) reduced gain on sale margin from loans sold and (3) increased
headcount to support continued growth.

The following table presents selected operational data for our Financial Services segment (in thousands of dollars):

                                       Year Ended December 31,
                                         2021           2020
Total originations:
Number of loans                            8,375          6,918
Principal                           $  2,714,764    $ 2,045,871
Capture rate of Century homebuyers            76 %           64 %
Century Communities                           81 %           74 %
Century Complete                              63 %           40 %
Average FICO score                           737            735
Century Communities                          743            739
Century Complete                             712            713

Loans sold to third parties:
Number of loans sold                       8,245          6,587
Principal                           $  2,629,808    $ 1,945,113




Corporate

During the year ended December 31, 2021, our Corporate segment generated a loss
of $105.9 million, as compared to a loss of $89.7 million during 2020.  This
increase in loss is primarily attributed to a $14.5 million loss on debt
extinguishment during the year ended December 31, 2021 related to the redemption
of our 5.75% senior notes due 2025, as described above, as well as increased
compensation and bonus costs for our Corporate segment of approximately $6.4
million, partially offset by a decrease in stock-based compensation expense of
$4.7 million primarily due to accelerated expense recognized during 2020 for the
updated estimates related to our performance-based share awards.

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Residential Construction Gross Margin

Homebuilding gross margin represents home sales revenue 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 to 24.2% for the year ended December 31, 2021, as compared
to 18.4% for the year ended December 31, 2020. This increase was primarily
driven by (1) the positive homebuilding sales environment across our markets,
which resulted in increased demand, (2) our ability to increase sales price in
excess of an increase in our labor and direct costs year over year, (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 adjusted to
exclude inventory impairment and other and interest in cost of home sales
revenues.

(dollars in thousands)

                                                         Year Ended December 31,

                                               2021            %           2020           %

Home sales revenues                        $   4,032,969     100.0 %   $   3,027,167    100.0 %
Cost of home sales revenues                  (3,056,048)    (75.8) %     (2,468,133)   (81.5) %
Inventory impairment and other                      (41)     (0.0) %         (2,172)    (0.1) %
Gross margin from home sales                     976,880      24.2 %         556,862     18.4 %
Add: Inventory impairment and other                   41       0.0 %           2,172      0.1 %
Add: Interest in cost of home sales
revenues                                          66,846       1.7 %          72,002      2.4 %
Adjusted homebuilding gross margin
excluding interest and inventory
impairment and other (1)                   $   1,043,767      25.9 %   $    

631,036 20.8%


(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 year ended December 31, 2021, excluding inventory impairment and other,
and interest in cost of home sales revenues, our adjusted homebuilding gross
margin percentage was 25.9% as compared to 20.8% for 2020. 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.

Selling, general and administrative expenses

(dollars in thousands)

                                            Year Ended December 31,           Increase
                                            2021                2020       Amount      %
Selling, general and administrative    $    389,610          $ 341,710    $ 47,900   14.0 %
As a percentage of home sales revenue           9.7  %            11.3 %


Our selling, general and administrative expense increased $47.9 million for the
year ended December 31, 2021 as compared to the year ended December 31, 2020.
This increase was primarily attributable to an increase of $34.4 million in
salaries and wages expense as compared to 2020, as well as an increase of $13.8
million in internal and external commission expense, which is directly related
to the increases in home sales revenues. The increase for the year ended
December 31, 2021 was partially offset by a decrease in expenses in numerous
areas, including advertising and legal expenses. During the year ended December
31, 2021, our selling, general and administrative expense decreased 160 basis
points as a percentage of home sales revenue as compared to the year ended
December 31, 2020, as a result of increased revenues on a partially fixed cost
base.

Income Tax Expense

Our income tax expense for the year ended December 31, 2021 was $142.6 million,
or 22.2% of income before income tax expense, as compared to $64.1 million, or
23.7% of income before income tax expense, for the year ended December 31, 2020.
Our effective tax

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rates for the years ended December 31, 2021 and 2020 were benefited by a $16.5
million and $8.5 million benefit, respectively, related to the Energy Efficient
Home Credit.

Our effective tax rate of 22.2% for the year ended December 31, 2021 is
comprised of our statutory federal and blended state rate of 24.8%, partially
offset by certain permanent differences between taxable income and GAAP income
before tax expense. These differences include certain compensation paid to
executive officers, which is not deductible for federal income tax purposes and
increased our effective tax rate by 0.6%, and the Energy Efficient Home Credit,
which benefited our effective tax rate by 2.6%.

The Energy Efficient Home Credit provides eligible contractors a federal income
tax credit of $2,000 for each home delivered that meets the energy saving and
certification requirements under the statute. On December 27, 2020, an extension
of the Federal Energy Credit was enacted which extended the current provisions
through December 31, 2021. Of the $16.5 million benefit recognized during the
year ended December 31, 2021, approximately $2.6 million and $1.6 million were
related to homes closed during the years ended 2019 and 2018 and prior,
respectively. Proposed legislation included in the pending "Build Back Better
Act" would extend the Federal Energy Credits through December 31, 2031 but would
modify the current qualification requirements and provide a $2,500 or $5,000
tiered credit for new single-family homes meeting designated "Energy Star" or
"Zero Energy" program requirements, respectively. Neither the Build Back Better
Act nor any similar legislation has been enacted as of the date of this Form
10-K, and it is uncertain whether an extension or similar tax credit will be
adopted or available in the future or the scope of any modified program
requirements.

Segment Assets

(dollars in thousands)
                     December 31,    December 31,       Increase (Decrease)
                         2021            2020           Amount         Change
West                $      668,830  $      536,907  $     131,923       24.6 %
Mountain                 1,008,481         778,198        230,283       29.6 %
Texas                      322,302         207,746        114,556       55.1 %
Southeast                  360,644         329,930         30,714        9.3 %
Century Complete           371,096         218,604        152,492       69.8 %
Financial Services         533,159         421,153        112,006       26.6 %
Corporate                  232,364         352,555      (120,191)     (34.1) %
Total assets        $    3,496,876  $    2,845,093  $     651,783       22.9 %


Total assets increased by $651.8 million, or 22.9%, to $3.5 billion at December
31, 2021, as compared to $2.8 billion at December 31, 2020, as a result of the
overall growth of the Company, and the increase in the number of owned lots year
over year.

Lots owned and controlled

                           December 31, 2021              December 31, 2020                   % Change
                      Owned    Controlled   Total    Owned    Controlled   Total     Owned    Controlled     Total

West                   4,440        4,877    9,317    3,266        3,392    6,658    35.9 %        43.8 %    39.9 %
Mountain              11,860        8,039   19,899    7,951        5,910   13,861    49.2 %        36.0 %    43.6 %
Texas                  5,340        8,159   13,499    3,035        5,873    8,908    75.9 %        38.9 %    51.5 %
Southeast              5,928       14,195   20,123    3,076        6,389    9,465    92.7 %       122.2 %   112.6 %
Century Complete       5,287       11,734   17,021    3,473        7,600   11,073    52.2 %        54.4 %    53.7 %
Total                 32,855       47,004   79,859   20,801       29,164   49,965    57.9 %        61.2 %    59.8 %


Of our total lots owned and controlled as of December 31, 2021, 41.1% were owned
and 58.9% were controlled, as compared to 41.6% owned and 58.4% controlled as of
December 31, 2020.

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Other residential construction operating data

Net new home contracts      Year Ended December 31,         Increase (Decrease)
                            2021                  2020    Amount          % Change
West                           1,640              1,526        114            7.5 %
Mountain                       2,571              2,389        182            7.6 %
Texas                          1,616              1,448        168           11.6 %
Southeast                      1,595              2,191      (596)         (27.2) %
Century Complete               4,595              3,268      1,327           40.6 %
Total                         12,017             10,822      1,195           11.0 %


Net new home contracts (new home contracts net of cancellations) for the year
ended December 31, 2021 increased by 1,195 homes, or 11.0%, to 12,017, as
compared to 10,822 for the year ended December 31, 2020.  The increase in our
net new home contracts was primarily driven by stronger sales across all of our
segments as the homebuilding industry continued to experience positive trends
during 2021, partially offset by a decrease in net new home contracts in the
Southeast region. This decrease in our Southeast segment is driven by a 42.7%
decrease in average selling communities opened during the year as 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 years ended December 31, 2021 and 2020 by segment is shown in the table below:

                       Year Ended December 31,          Increase (Decrease)
                      2021                     2020   Amount          % Change
West                       7.2                  7.5      (0.3)          (4.0) %
Mountain                   6.0                  5.2        0.8           15.4 %
Texas                      8.4                  8.0        0.4            5.0 %
Southeast                  6.0                  7.0      (1.0)         (14.3) %
Century Complete           3.5                  2.7        0.8           29.6 %
Total                      5.0                  4.6        0.4            8.7 %

During the year ended December 31, 2021our burn rates increased by 8.7% to 5.0 per month compared to the same period in 2020. Burn rates remained high in all our markets, due to the maintenance of historically high interest rates low and strong demand for new homes during the current year period.

Selling communities at period end     As of December 31,          Increase/(Decrease)
                                     2021               2020    Amount          % Change

West                                      19              17           2           11.8 %
Mountain                                  36              38         (2)          (5.3) %
Texas                                     16              15           1            6.7 %
Southeast                                 22              26         (4)         (15.4) %
Century Complete                         109             102           7            6.9 %
Total                                    202             198           4            2.0 %

Our sales communities grew by 4 communities to reach 202 communities at
December 31, 2021compared to 198 communities in December 31, 2020. The increase is the result of new community openings, which outpaced the strong sales environment.

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Backlog

(dollars in thousands)

                                         As of December 31,
                             2021                                  2020                               % Change

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

West            524   $      371,848   $    709.6     486   $      294,113   $    605.2      7.8 %         26.4  %     17.3    %
Mountain      1,045          574,085        549.4     789          365,328        463.0     32.4 %         57.1  %     18.7    %
Texas           386          136,893        354.6     385          134,023        348.1      0.3 %          2.1  %      1.9    %
Southeast       713          308,663        432.9     801          306,644        382.8   (11.0) %          0.7  %     13.1    %
Century
Complete      1,983          478,283        241.2     978          194,094        198.5    102.8 %        146.4  %     21.5    %
Total /
Weighted
Average       4,651   $    1,869,772   $    402.0   3,439   $    1,294,202   $    376.3     35.2 %         44.5  %      6.8    %


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 December 31, 2021, we had 4,651 homes in backlog with a
total value of $1.9 billion, which represents increases of 35.2% and 44.5%,
respectively, as compared to 3,439 homes in backlog with a total value of $1.3
billion at December 31, 2020.  The increase in backlog dollar value is primarily
attributable to the increase in backlog units and a 6.8% increase in the average
sales price of homes in backlog, partially offset by a decrease in backlog units
for our Southeast segment which correlates directly with the decrease in selling
communities.

Cash and capital resources

Overview

Our liquidity, consisting of our cash and cash equivalents and our cash held in escrow and the availability of our credit facilities, was $1.2 billion from December 31, 2021compared to $1.1 billion from December 31, 2020.

Our principal uses of capital for the year ended December 31, 2021 were our land
purchases, land development, home construction, and the payment of routine
liabilities. We increased our land acquisition and development activities during
2021, which resulted in 79,859 lots owned and controlled at December 31, 2021, a
59.8% increase as compared to December 31, 2020.

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 revolving
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.

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Our financial services operations use cash generated from operations and the availability of our mortgage buyout facilities to fund its operations, including origination 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 conduct additional
public or private offerings of our securities, refinance debt, or dispose of
certain assets to fund our operating activities and capital needs.

Material cash needs

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. Our contractual
obligations as of December 31, 2021 were as follows (in thousands):

                                                      Payments due by period
                             Total       Less than     1 - 3 years     3 - 5 years     More than 5 years
                                           1 year

Maturities of long-term debt, including $1,683,740 $399,886 $106,250 $606,250 $

           571,354
interest (1)
Operating leases (2)            18,688        5,989          10,320           2,362                    17
Total contractual         $  1,702,428   $  405,875   $     116,570   $     608,612   $           571,371
obligations


(1)Principal payments in accordance with our revolving line of credit, mortgage
repurchase facilities and long-term debt agreements, and interest payments for
outstanding long-term debt obligations. Interest on variable rate debt was
calculated using the interest rate as of December 31, 2021. See Note 9 - Debt in
the Notes to the Consolidated Financial Statements for further detail.

(2)Operating lease obligations do not include payments to landlords covering property taxes and maintenance of common areas. See Note 13 – Leases in the Notes to the consolidated financial statements for more details.

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 December 31, 2021, we had outstanding purchase contracts and option
contracts for 47,004 lots totaling approximately $2.0 billion and we had $61.6
million of deposits for land contracts, of which $38.1 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 use of land option contracts depends, among other things, on the availability of land sellers willing to enter into option contracts

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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

One of our principal liquidity needs is the payment of principal and interest on
outstanding indebtedness. Our outstanding indebtedness is described in detail in
Note 9 - Debt to our Notes to the Consolidated Financial Statements. We are
required to meet certain covenants, and as of December 31, 2021, we were in
compliance with all such covenants and requirements on our revolving line of
credit and mortgage repurchase facilities. See Note 9 - Debt in the Notes to the
Consolidated Financial Statements for further detail.

Our outstanding debt obligations included the following as of December 31, 2021
and 2020 (in thousands):



                                          December 31,    December 31,
                                              2021            2020
3.875% senior notes, due August 2029(1)  $      494,117  $            -
6.750% senior notes, due May 2027(1)            495,581         494,768
5.875% senior notes, due July 2025(1)                 -         396,821
Other financing obligations                       9,238           3,286
Notes payable                                   998,936         894,875
Revolving line of credit                              -               -
Mortgage repurchase facilities                  331,876         259,050
Total debt                               $    1,330,812  $    1,153,925


(1) The carrying value of senior notes reflects the effect of premiums, discounts and issue costs which are amortized to interest expense over the respective term of the senior notes.

During the year ended December 31, 2021, we completed a private offering of
$500.0 million aggregate principal amount of our 3.875% senior notes due 2029,
and used a portion of the net proceeds from the offering to redeem all $400.0
million aggregate principal amount of our 5.875% senior notes due 2025, with the
remaining net proceeds from the offering to be used for general corporate
purposes.

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.

Letters of credit and performance guarantees

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 December 31, 2021 and December 31, 2020, we had
$492.5 million and $402.7 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. We anticipate that the obligations secured by these
performance bonds and letters of credit generally will be performed in the
ordinary course of business.

Revolving line of credit

On May 21, 2021, we entered into a Second Amended and Restated Credit Agreement
(which we refer to as 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 our prior Amended and Restated Credit Agreement, provides us with a
senior unsecured revolving line of credit (which we refer to as the "Credit
Facility") of up to $800.0 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,
we are 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,

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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 December 31, 2021,
no amounts were outstanding under the Credit Facility and we were in compliance
with all covenants.

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 December 31, 2021. 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. We did not sell or issue any shares of our common stock during the
years ended December 31, 2021 and 2020, respectively.

Share buyback 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
revolving 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 years ended December 31, 2021 and 2020, no shares were repurchased
under our stock share repurchase program. The maximum number of shares that may
yet be purchased under the stock repurchase program as of December 31, 2021 is
3,812,939.

Dividends

On May 19, 2021, our Board of Directors approved 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 year
ended December 31, 2021 (in thousands, except per share information):

                                                                  Cash Dividends Declared
Declaration Date        Record Date          Payable Date         Per Share         Amount
  May 19, 2021         June 2, 2021         June 16, 2021       $         0.15    $    5,064

August 18, 2021 September 1, 2021 September 15, 2021 $0.15 $5,064
November 10, 2021 December 1, 2021 December 15, 2021 $0.15 $5,064


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.

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Cash Flow – Year Ended December 31, 2021 Compared to the year ended December 31, 2020

For the years ended December 31, 2021 and 2020, the cash flow comparison 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 used in operating
activities was $201.2 million during the year ended December 31, 2021 as
compared to net cash provided by operating activities of $340.6 million during
2020. The increase in cash used in operations is primarily a result of increased
investment in our homebuilding inventories for the year ended December 31, 2021
as compared to the year ended December 31, 2020, partially offset by a $292.3
million increase in net income during year ended December 31, 2021 as compared
to the year ended December 31, 2020.

?Net cash used in investing activities was $6.5 million during the year ended
December 31, 2021, compared to $8.4 million used during 2020. The decrease was
primarily related to the proceeds from a secured note receivable during the year
ended December 31, 2021.

?Net cash provided by financing activities was $131.8 million during the year
ended December 31, 2021, compared to $7.4 million during the year ended December
31, 2020. The increase was primarily attributable to 1) the issuance of $500.0
million in senior notes due 2029, offset by the extinguishment of our former
senior notes due 2025 resulting in a payment of $411.8 million, net of interest
and 2) a decrease of $68.7 million in net payments under our revolving line of
credit. The increase was partially offset by a $12.1 million decrease in net
proceeds on our mortgage repurchase facilities and $15.2 million in dividend
payments during the year ended December 31, 2021.

From December 31, 2021our cash, cash and equivalents and restricted cash have been $322.2 million.

Additional 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 December
31, 2021, 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 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.

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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 Bonds and the guarantees for the old 2025 Bonds were made as part of 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.

On March 2, 2020, the SEC adopted amendments to Rules 3-10 and 3-16 of
Regulation S-X, under Rule Release No. 33-10762, Financial Disclosures about
Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities
Collateralize a Registrant's Securities ("Rule 33-10762"), that reduce and
simplify the financial disclosure requirements applicable to registered debt
offerings for guarantors and issuers of guaranteed securities (which we
previously included within the notes to our consolidated financial statements in
our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q). The
amendments under Rule 33-10762 were effective January 4, 2021, but voluntary
compliance was permitted in advance of the effective date. We adopted the new
disclosure requirements permitted under Rule 33-10762, beginning with the three
and six month period ended June 30, 2020.

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.

Summarized balance sheet data (in thousands) December 31, 2021

Assets
Cash and cash equivalents                     $           180,843
Cash held in escrow                                        52,297
Accounts receivable                                        39,492
Inventories                                             2,456,614
Prepaid expenses and other assets                         160,999
Property and equipment, net                                24,220
Deferred tax assets, net                                   21,239
Goodwill                                                   30,395
Total assets                                  $         2,966,099
Liabilities and stockholders' equity
Liabilities:
Accounts payable                              $            82,734
Accrued expenses and other liabilities                    288,229
Notes payable                                             998,936
Revolving line of credit                                        -
Total liabilities                                       1,369,899
Stockholders' equity:                                   1,596,200

Total liabilities and equity $2,966,099

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Summary income statement data (in thousands) End of year December 31, 2021

Total homebuilding revenues                              $                  

4,092,576

Total homebuilding cost of revenues                                         

(3,095,363)

Selling, general and administrative                                         

(389,610)

Loss on debt extinguishment                                                 

(14,458)

Inventory impairment and other                                              

(41)

Other income (expense)                                                      

(3,307)

Income before income tax expense                                                589,797
Income tax expense                                                            (131,201)
Net income                                               $                      458,596

Critical accounting policies

Critical accounting estimates are those that we believe are both significant and
that 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. Our
management believes that the following accounting policies are among the most
important to the portrayal of our financial condition and results of operations
and require among the most difficult, subjective or complex judgments:

Revenue recognition

Under Accounting Standards Codification (which we refer to as "ASC") 606,
revenues from home sales and the related profit are recorded when our
performance obligations are satisfied, which generally occurs when the
respective homes are closed and title has passed to our homebuyers.  We
generally satisfy our performance obligations in less than one year from the
contract date.  Proceeds from home closings that are held for our benefit in
escrow, are presented as cash held in escrow on our consolidated balance
sheets.  Cash held for our benefit in escrow is typically held by the escrow
agent for less than a few days. When it is determined that the earnings process
is not complete and we have remaining performance obligations that are material
in the context of the contract, the related revenue and costs are deferred for
recognition in future periods until those performance obligations have been
satisfied. Prior to satisfying our performance obligations, we typically receive
deposits from customers related to sold but undelivered homes. These deposits
are classified as earnest money deposits and are included in accrued expenses
and other liabilities on our consolidated balance sheets. Earnest money deposits
totaled $56.8 million and $30.6 million at December 31, 2021 and December 31,
2020, respectively.

Inventory and cost of sales

We capitalize pre-acquisition, land, development and other allocated costs, including interest, during the qualifying, development and home construction periods.

Land, development, and other common costs are allocated to inventory using the
relative-sales-value method; however, as lots within a project typically have
comparable market values, we generally allocate land, development, and common
costs equally to each lot within the project. Home construction costs are
recorded using the specific-identification method. Cost of sales for homes
closed includes the allocation of construction costs of each home and all
applicable land acquisition, land development, and related common costs, both
incurred and estimated to be incurred. Changes to estimated total development
costs subsequent to initial home closings in a community are generally allocated
to the remaining homes in the community.

When a home is closed, the Company generally has not paid all incurred costs
necessary to complete the home, and a liability and a charge to cost of home
sales revenues are recorded for the amount that is estimated will ultimately be
paid related to completed homes.

Inventory write-down

We review all of our communities for an indicator of impairment and record an
impairment loss when conditions exist where the carrying amount of inventory is
not recoverable and exceeds its fair value. Indicators of impairment include,
but are not limited to, significant decreases in local housing market values and
selling prices of comparable homes, significant decreases to gross margins and
sales absorption rates, costs in excess of budget, and actual or projected cash
flow losses. We prepare and analyze cash flows at the lowest level for which
there is identifiable cash flows that are independent of the cash flows of other
groups of assets, which we have determined as the community level.

If events or circumstances indicate that the carrying amount may be impaired,
such impairment will be measured based upon the difference between the carrying
amount and the fair value of such assets determined using the estimated future
discounted cash flows,

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excluding interest charges, generated from the use and ultimate disposition of
the respective inventories. Such losses, if any, are reported within costs of
sales. The discount rate used in determining each asset's fair value reflects
inherent risks associated with the related estimated cash flows, as well as
current risk-free rates available in the market and estimated market risk
premiums. We have utilized a discount rate of approximately 12% in our
valuations.

When estimating undiscounted cash flows, we make various assumptions, including
the following: the expected sales prices and sales incentives to be offered,
including the number of homes available, pricing and incentives offered by us or
other builders in other communities, and future sales price adjustments based on
market and economic trends; the costs incurred to date and expected to be
incurred including, but not limited to, land and land development costs, home
construction costs, interest costs, indirect construction, and selling and
marketing costs; any alternative product offerings that may be offered that
could have an impact on sales, sales prices and/or building costs; and
alternative uses for the property.

For the years ended December 31, 2021 and 2020, the following table shows the
number of communities for which we identified an indicator of impairment and
therefore tested for whether an impairment existed, compared to the total number
of communities that existed during such period.

                                    Number of Communities        Total Number of
                                    Tested for Impairment           Existing
                                                                   Communities
Year ended December 31, 2021                              7                    202
Year ended December 31, 2020                             13                    198


For the year ended December 31, 2021, we recorded nominal impairment charges on
one community. During the year ended December 31, 2020, we recorded impairment
charges on four communities totaling $2.2 million. The impairment charges are
included in inventory impairment and other in our consolidated statement of
operations.

Warranties

Estimated future direct warranty costs are accrued and charged to cost of sales
in the period when the related homebuilding revenues are recognized. Amounts
accrued, which are included in accrued expenses and other liabilities on the
consolidated balance sheet, are based upon historical experience rates. We
subsequently assess the adequacy of our warranty accrual on a quarterly basis
through an analysis that incorporates historical payment trends and adjust the
amounts recorded if necessary.

Mortgages held for sale and revenue recognition

Mortgage loans held for sale, including the rights to service the mortgage
loans, mortgage loans in process for which interest rates were committed to the
borrowers (referred to as "interest rate lock commitments"), as well as the
derivative instruments used to economically hedge our interest rate risk, which
are typically forward commitments on mortgage-backed securities and interest
rate lock commitments, are carried at fair value. Changes in fair value are
reflected in financial services revenue on the consolidated statement of
operations. Management believes carrying loans held for sale at fair value
improves financial reporting by mitigating volatility in reported earnings
caused by measuring the fair value of the loans and the derivative instruments
used to economically hedge them.

Also included in financial services revenue are gains and losses from the sale
of mortgage loans held for sale, that are recognized based upon the difference
between the sales proceeds and carrying value of the related loans upon sale,
and loan origination fees. Loan origination fees represent revenue earned from
originating mortgage loans which generally represent a flat per loan fee based
on a percentage of the original principal loan balance and are recognized at the
time the mortgage loans are funded.

Stock-based compensation

We estimate the grant date fair value of stock-based compensation awards and
recognize the fair value as compensation costs over the requisite service
period, which is generally three years, for all awards that vest. We value the
fair value of our restricted stock units and awards in the form of unrestricted
shares of common stock equal to the closing price of our common stock on the New
York Stock Exchange on the date of grant. Stock-based compensation expense
associated with outstanding performance share units is measured using the grant
date fair value and is based on the estimated achievement of the established
performance criteria at the end of each reporting period until the performance
period ends, recognized on a straight-line basis over the performance period.
Stock-based compensation expense is only recognized for performance share units
that we expect to vest, which we estimate based upon an assessment of the
probability that the performance criteria will be achieved. The performance
share units granted during the fiscal years ended December 31, 2021 and 2020
have three-year performance-based metrics measured over performance periods
ending on December 31 for each three-year period. Stock-based compensation
expense associated with outstanding performance share units is

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updated for actual forfeitures.

Income taxes

We account for income taxes in accordance with ASC 740, Income Taxes, which
requires recognition of deferred tax assets and liabilities at enacted income
tax rates for the temporary differences between the financial reporting bases
and the tax bases of its assets and liabilities. Any effects of changes in
income tax rates or tax laws are included in the provision for income taxes in
the period of enactment. When it is more likely than not that a portion or all
of a deferred tax asset will not be realized in the future, we provide a
corresponding valuation allowance against the deferred tax asset. In addition,
when it is more likely than not that a tax position will be sustained upon
examination by a tax authority that has full knowledge of all relevant
information, we measure the amount of tax benefit from the position and record
the largest amount of tax benefit that is more likely than not of being realized
after settlement with a tax authority. Our policy is to recognize interest to be
paid on an underpayment of income taxes in interest expense and any related
statutory penalties in the provision for income taxes on our consolidated
statements of operations.

Good will

We evaluate goodwill for possible impairment in accordance with ASC 350,
Intangibles-Goodwill and Other, on an annual basis, or more frequently if events
or changes in circumstances indicate that the carrying amount of such assets may
not be recoverable. We use a two step process to assess whether or not goodwill
can be realized. The first step is a qualitative assessment that analyzes
current economic indicators associated with a particular reporting unit. If the
qualitative assessment indicates a stable or improved fair value, no further
testing is required.

If a qualitative assessment indicates that a significant decline to fair value
of a reporting unit is more likely than not, we will proceed to the second step
where we calculate the fair value of a reporting unit based on discounted future
cash flows. If this step indicates that the carrying value of a reporting unit
is in excess of its fair value, an impairment loss shall be recognized in an
amount equal to that excess, limited to the total amount of goodwill allocated
to that reporting unit.

Business Combinations

We account for business combinations in accordance with ASC Topic 850, Business
Combinations, if the acquired assets assumed and liabilities incurred constitute
a business. We consider acquired companies to constitute a business if the
acquired net assets and processes have the ability to create outputs in the form
of revenue. For acquired companies constituting a business, we recognize the
identifiable assets acquired and liabilities assumed at their acquisition-date
fair values and recognize any excess of total consideration paid over the fair
value of the identifiable assets as goodwill.

The fair value of acquired inventories largely depends on the stage of
production of the acquired land and work in process inventory. For acquired land
inventory, we typically utilize, with the assistance of a third party appraiser,
a forecasted cash flow approach for the development, marketing, and sale of each
community acquired. Significant assumptions included in our estimates include
future per lot development costs, construction and overhead costs, mix of
products sold in each community, as well as average sales price. For work in
process inventories, we estimate the fair value based upon the stage of
production of each unit and a gross margin that we believe a market participant
would require to complete the remaining development and requisite selling
efforts.

Non-GAAP Financial Measures

In this Form 10-K, we use certain non-GAAP financial measures, including EBITDA,
Adjusted EBITDA, net homebuilding debt to net capital, and adjusted net income
and adjusted earnings per diluted share. 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.

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EBITDA and Adjusted EBITDA

The following table presents EBITDA and Adjusted EBITDA for the years ended
December 31, 2021 and 2020. 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)

                                             Year Ended December 31,
                                           2021       2020      % Change
Net income                               $ 498,504  $ 206,157     141.8 %
Income tax expense                         142,618     64,083     122.6 %

Interest on cost of home sales 66,846 72,002 (7.2)% Interest expense (income)

                    (661)    (1,141)    (42.1) %

Depreciation and amortization 10,912 13,141 (17.0)% EBITDA

                                     718,219    354,242     102.7 %
Loss on debt extinguishment                 14,458          -        NM
Inventory impairment and other                  41      2,172    (98.1) %
Adjusted EBITDA                          $ 732,718  $ 356,414     105.6 %


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)



                                       December 31,    December 31,
                                           2021            2020
Total homebuilding debt               $      998,936  $      894,875
Total stockholders' equity            1,764,508       1,280,705
Total capital                         $    2,763,444  $    2,175,580
Homebuilding debt to capital                   36.1%           41.1%

Total homebuilding debt               $      998,936  $      894,875
Cash and cash equivalents                  (316,310)       (394,001)
Cash held in escrow                         (52,297)        (23,149)
Net homebuilding debt                        630,329         477,725
Total stockholders' equity            1,764,508       1,280,705
Net capital                           $    2,394,837  $    1,758,430

Net homebuilding debt to net capital           26.3%           27.2%


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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 of dollars, except share and per share information)

                                                        Year Ended December 31,
                                                          2021           2020
Numerator
Net income                                            $    498,504   $    206,157
Denominator

Weighted average common shares outstanding – basic 33,706,782 33,312,554 Dilutive effect of restricted share units

                  738,136        

297,544

Weighted average common shares outstanding - diluted    34,444,918     33,610,098
Earnings per share:
Basic                                                 $      14.79   $       6.19
Diluted                                               $      14.47   $       6.13

Adjusted earnings per share
Numerator
Net income                                            $    498,504   $    206,157
Income tax expense                                         142,618         64,083
Income before income tax expense                           641,122        

270 240

Inventory impairment and other                                  41          2,172
Restructuring costs                                               -         1,584
Loss on debt extinguishment                                 14,458               -
Adjusted income before income tax expense                  655,621        

273,996

Adjusted income tax expense(1)                            (145,843)       (64,974)
Adjusted net income                                   $    509,778   $    209,022

Denominator - Diluted                                   34,444,918     33,610,098

Adjusted diluted earnings per share                   $      14.80   $      

6.22


(1)The tax rates used in calculating adjusted net income for the years ended
December 31, 2021 and 2020 were 22.2% and 23.7%, respectively, which reflect of
the Company's GAAP tax rates for the applicable periods.

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