NVR, Inc. Announces First Quarter Results

RESTON, Va., April 21, 2014 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its first quarter ended March 31, 2014 of $23,849,000 or $5.16 per diluted share.  Net income and diluted earnings per share for its first quarter ended March 31, 2014 decreased 32% and 25%, respectively, when compared to the 2013 first quarter.  Consolidated revenues for the first quarter of 2014 totaled $811,310,000, a 5% increase from $770,256,000 for the comparable 2013 quarter. Income tax expense for the quarter was negatively impacted by $6,879,000 due to the reversal of certain previously recognized tax deductions.

Homebuilding

New orders in the first quarter of 2014 decreased 5% to 3,325 units, when compared to 3,510 units in the first quarter of 2013.  The cancellation rate in the first quarter of 2014 was 12% compared to 13% in the first quarter of 2013 and 14% in the fourth quarter of 2013.  Settlements decreased in the first quarter of 2014 to 2,211 units, 3% lower than the first quarter of 2013.  The Company's backlog of homes sold but not settled as of March 31, 2014 decreased on a unit basis by 3% to 6,059 units, but increased on a dollar basis by 4% to $2,270,474,000 when compared to March 31, 2013.

Homebuilding revenues for the three months ended March 31, 2014 totaled $799,187,000, 6% higher than the year earlier period.  Gross profit margins increased to 18.0% in the 2014 first quarter compared to 16.9% for the same period in 2013.  The increase in selling, general and administrative expenses was primarily due to higher personnel and selling expenses associated with the increase in the number of communities.  Income before tax from the homebuilding segment totaled $48,716,000 in the first quarter of 2014, an increase of 11% when compared to the first quarter of 2013.

Mortgage Banking

Mortgage closed loan production of $472,933,000 for the three months ended March 31, 2014 was flat when compared to the first quarter ended March 31, 2013.  Operating income for the mortgage banking operations during the first quarter of 2014 decreased 91% to $991,000, when compared to $11,161,000 reported for the first quarter of 2013.  Operating income in the first quarter of 2014 was negatively impacted by a more competitive mortgage lending market, resulting in reduced loan profitability.  In addition, general and administrative expenses were higher due to increased staffing in response to increased mortgage regulations and expected higher loan volume.

About NVR

NVR, Inc. operates in two business segments:  homebuilding and mortgage banking.  The homebuilding unit sells and builds homes under the Ryan Homes, NVHomes, Fox Ridge Homes and Heartland Homes trade names, and operates in twenty-seven metropolitan areas in fourteen states and Washington, D.C.  For more information about NVR, Inc. and its brands, see www.nvrinc.com, www.ryanhomes.com, www.nvhomes.com, www.foxridgehomes.com and www.heartlandluxuryhomes.com.

Some of the statements in this release made by the Company constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "will," "should" or "anticipates" or the negative thereof or other comparable terminology.  All statements other than of historical facts are forward-looking statements.  Forward-looking statements contained in this document may include those regarding market trends, NVR's financial position, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations.  Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements.  Such risk factors include, but are not limited to the following: general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by NVR and NVR's customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by NVR in its homebuilding operations; shortages of labor; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which NVR has little or no control.  NVR undertakes no obligation to update such forward-looking statements except as required by law.


 

NVR, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

(Unaudited)












Three Months Ended March 31,




2014


2013

Homebuilding:





Revenues                                         

$        799,187


$        750,868


Other income

997


1,026


Cost of sales

(655,152)


(624,085)


Selling, general and administrative 

(90,632)


(78,413)



Operating income 

54,400


49,396


Interest expense

(5,684)


(5,452)



Homebuilding income 

48,716


43,944







Mortgage Banking:





Mortgage banking fees

12,123


19,388


Interest income

1,184


955


Other income

59


113


General and administrative

(12,265)


(9,181)


Interest expense

(110)


(114)



Mortgage banking income

991


11,161







Income before taxes 

49,707


55,105









Income tax expense

(25,858)


(20,064)







Net income

$          23,849


$          35,041







Basic earnings per share 

$              5.34


$              7.04







Diluted earnings per share 

$              5.16


$              6.84







Basic weighted average shares outstanding 

4,467


4,979







Diluted weighted average shares outstanding 

4,620


5,122







 

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)






















March 31, 2014


December 31, 2013

ASSETS



(Unaudited)











Homebuilding:






Cash and cash equivalents


$                  874,062


$                 844,274


Receivables


10,055


9,529


Inventory:







Lots and housing units, covered under








sales agreements with customers


687,080


568,831



Unsold lots and housing units


98,478


117,467



Land under development


46,083


41,328



Building materials and other 


10,357


10,939






841,998


738,565










Assets related to consolidated variable interest entity

6,588


7,268


Contract land deposits, net


246,204


236,885


Property, plant and equipment, net


34,321


32,599


Reorganization value in excess of amounts







allocable to identifiable assets, net


41,580


41,580


Goodwill and finite-lived intangible assets, net


6,401


6,747


Other assets


311,684


307,933






2,372,893


2,225,380









Mortgage Banking:






Cash and cash equivalents


4,477


21,311


Mortgage loans held for sale, net


123,833


210,641


Property and equipment, net


4,999


4,699


Reorganization value in excess of amounts







allocable to identifiable assets, net


7,347


7,347


Other assets


11,204


16,770






151,860


260,768












Total assets


$               2,524,753


$              2,486,148








 






















LIABILITIES AND SHAREHOLDERS' EQUITY












Homebuilding:






Accounts payable


$                  186,459


$                 181,687


Accrued expenses and other liabilities


271,875


316,227


Liabilities related to consolidated variable interest entity

1,689


1,646


Non-recourse debt related to consolidated variable






interest entity


2,153


3,365


Customer deposits


119,101


101,022


Senior notes


599,098


599,075





1,180,375


1,203,022








Mortgage Banking:






Accounts payable and other liabilities


18,296


21,774





18,296


21,774










Total liabilities


1,198,671


1,224,796








Commitments and contingencies












Shareholders' equity:






Common stock, $0.01 par value; 60,000,000 shares







authorized; 20,555,330 shares issued as of







both March 31, 2014 and December 31, 2013


206


206


Additional paid-in-capital


1,259,410


1,212,050


Deferred compensation trust – 109,256 shares of







NVR, Inc. common stock as of both 







March 31, 2014 and December 31, 2013


(17,741)


(17,741)


Deferred compensation liability


17,741


17,741


Retained earnings


4,629,406


4,605,557


Less treasury stock at cost – 16,061,912 and







16,121,605 shares at March 31, 2014







and December 31, 2013, respectively


(4,562,940)


(4,556,461)



Total shareholders' equity


1,326,082


1,261,352



    Total liabilities and shareholders' equity


$               2,524,753


$              2,486,148








 

NVR, Inc.
Operating Activity

(dollars in thousands)

(Unaudited)








Three Months Ended March 31,




2014


2013

Homebuilding data:





New orders (units)






Mid Atlantic (1)

1,675


1,716



North East (2)

298


293



Mid East (3)

891


949



South East (4)

461


552



   Total

3,325


3,510








Average new order price

$            368.1


$            343.0








Settlements (units)






Mid Atlantic (1)

1,124


1,138



North East (2)

233


191



Mid East (3)

478


593



South East (4)

376


350



   Total

2,211


2,272








Average settlement price

$            361.4


$            330.4








Backlog (units)






Mid Atlantic (1)

3,261


3,261



North East (2)

560


535



Mid East (3)

1,445


1,508



South East (4)

793


913



   Total

6,059


6,217








Average backlog price

$            374.7


$            350.6








Community count (average)

481


435


Lots controlled at end of period

65,800


59,700







Mortgage banking data:





Loan closings

$        472,933


$        473,766


Capture rate

78%


84%







Common stock information:





Shares outstanding at end of period

4,493,418


4,996,884


Number of shares repurchased

32,377


-


Aggregate cost of shares repurchased

$          32,578


$                    -

 

(1)

Maryland, Virginia, West Virginia, Delaware and Washington, D.C.

(2)

New Jersey and eastern Pennsylvania

(3)

New York, Ohio, western Pennsylvania, Indiana and Illinois

(4)

North Carolina, South Carolina, Tennessee and Florida

 

SOURCE NVR, Inc.



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