NVR, Inc. Announces First Quarter Results

21 Apr, 2014, 09:00 ET from NVR, Inc.

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.