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Investing.com -- S&P Global Ratings has revised its outlook on Century Communities Inc. to negative from stable, while affirming all other ratings for the homebuilder.
The rating agency expects Century Communities’ adjusted year-end debt balance to decrease to between $1.3 billion and $1.4 billion from $1.63 billion as of June 30, 2025, as home closings and cash flow improve in the latter part of the year.
S&P Global forecasts that the company will manage its seasonal working capital to reduce its outstanding balance of $270 million on its $1.0 billion revolving credit facility, which matures on November 1, 2028.
The negative outlook reflects S&P’s projection that Century Communities’ debt to EBITDA ratio will remain elevated above 3x for the next six to nine months before potentially decreasing to 2.5x-3x in 2026.
The rating agency forecasts adjusted EBITDA margins of approximately 9.5% in 2025, down from about 13.3% in June 2024. This decline is attributed to the slower U.S. housing market resulting from reduced affordability due to elevated mortgage rates, higher home prices, increased marketing expenses, and reduced consumer sentiment.
S&P projects that Century Communities will generate EBITDA of $400 million-$415 million in 2025, with EBITDA interest coverage remaining above 5x based on adjusted debt of $1.3 billion-$1.4 billion.
The rating agency noted that it views Century Communities’ size, geographic diversity, and historical leverage of below 3x more favorably than its ’BB-’ rated peers, and still in line with other ’BB’ rated homebuilders.
S&P could downgrade Century Communities to ’BB-’ over the next 12 months if its debt to EBITDA does not fall below 3x, which could happen if the economy weakens or if construction costs increase significantly. Conversely, the outlook could be revised to stable if the company’s adjusted debt to EBITDA falls comfortably below 3x over the next 12 months.
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