NVR, Inc. Announces Fourth Quarter And Full Year Results

Jan 27, 2014, 09:01 ET from NVR, Inc.

RESTON, Va., Jan. 27, 2014 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its fourth quarter ended December 31, 2013 of $97,811,000, $21.15 per diluted share.  Net income and diluted earnings per share for its fourth quarter ended December 31, 2013 increased 61% and 77%, respectively, when compared to the 2012 fourth quarter.  Consolidated revenues for the fourth quarter of 2013 totaled $1,242,152,000, a 32% increase from $943,738,000 for the comparable 2012 quarter.

For the year ended December 31, 2013, consolidated revenues were $4,211,267,000, an increase of 32% from the $3,184,650,000 reported for the year ended December 31, 2012.  Net income for the year ended December 31, 2013 was $266,477,000, an increase of 48% when compared to the year ended December 31, 2012.  Diluted earnings per share for the year ended December 31, 2013 was $54.81, an increase of 56% from $35.12 per diluted share for the comparable period of 2012.

Homebuilding

New orders in the fourth quarter of 2013 were 2,631 units, which was flat when compared to 2,625 units in the fourth quarter of 2012.  The cancellation rate in the fourth quarter of 2013 was 14% compared to 15% in the fourth quarter of 2012 and 19% in the third quarter of 2013.  Settlements increased in the fourth quarter of 2013 to 3,342 units, 20% higher than the same period in 2012.  The Company's backlog of homes sold but not settled as of December 31, 2013 was down 1% on a unit basis to 4,945 units but was 7% higher on a dollar basis to $1,845,600,000 when compared to December 31, 2012.

Homebuilding revenues for the three months ended December 31, 2013 totaled $1,223,808,000, 32% higher than the year earlier period.  Gross profit margin in the fourth quarter of 2013 was 18.2% compared to 18.3% in the fourth quarter of 2012 and 17.4% in the third quarter of 2013.  Gross profit margin in the current quarter was negatively impacted by a $15,964,000 expense to increase the warranty accrual for a non-recurring service issue.  This is unrelated to the warranty accrual increase recognized in the second quarter.  Excluding this charge, gross profit margin for the fourth quarter of 2013 was 19.5%.  Income before tax from the homebuilding segment totaled $143,976,000 in the 2013 fourth quarter, an increase of 67% when compared to the fourth quarter of 2012.  The fourth quarter 2013 pre-tax income results also reflect a reversal of approximately $7,450,000 of stock-based compensation expense due to an adjustment to the Company's estimated forfeiture rate based on actual forfeiture experience.

New orders for the 2013 fiscal year increased 8% to 11,800 units, when compared to 10,954 units in fiscal year 2012.  Home settlements in 2013 increased 20% to 11,834 units from 9,843 units settled in 2012.  Homebuilding revenues for 2013 totaled $4,134,481,000, 32% higher than 2012.  Pre-tax homebuilding income for the 2013 fiscal year was $379,370,000, a 57% increase when compared to 2012.

Mortgage Banking

Mortgage closed loan production of $721,926,000 for the three months ended December 31, 2013 was 12% higher than the same period in 2012.  Operating income for the mortgage banking operations during the fourth quarter of 2013 decreased 19% to $7,844,000 when compared to $9,728,000 reported for the same period of 2012.  The decrease in the operating income was attributable to an increase in general and administrative costs resulting from increased headcount in the current year. 

Mortgage closed loan production for the 2013 fiscal year increased 15% to $2,538,072,000.  Income before tax from the mortgage banking segment for 2013 increased 15% to $39,326,000 from $34,153,000 in 2012.

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)

Three Months Ended December 31,

Twelve Months Ended December 31,

2013

2012

2013

2012

(Unaudited)

(Unaudited)

Homebuilding:

Revenues                                         

$     1,223,808

$       925,363

$      4,134,481

$      3,121,244

Other income

808

1,441

3,962

3,486

Cost of sales

(1,001,415)

(756,396)

(3,424,204)

(2,575,639)

Selling, general and administrative 

(73,599)

(78,701)

(313,029)

(301,184)

Operating income 

149,602

91,707

401,210

247,907

Interest expense

(5,626)

(5,404)

(21,840)

(6,983)

Homebuilding income 

143,976

86,303

379,370

240,924

Mortgage Banking:

Mortgage banking fees

18,344

18,375

76,786

63,406

Interest income

1,585

999

4,983

4,504

Other income

187

191

696

564

General and administrative

(12,135)

(9,746)

(42,594)

(33,775)

Interest expense

(137)

(91)

(545)

(546)

Mortgage banking income

7,844

9,728

39,326

34,153

Income before taxes 

151,820

96,031

418,696

275,077

Income tax expense

(54,009)

(35,404)

(152,219)

(94,489)

Net income

$           97,811

$         60,627

$         266,477

$         180,588

Basic earnings per share 

$             21.74

$           12.38

$             56.25

$             36.04

Diluted earnings per share 

$             21.15

$           11.98

$             54.81

$             35.12

Basic weighted average shares outstanding 

4,500

4,897

4,737

5,011

Diluted weighted average shares outstanding 

4,626

5,060

4,862

5,142

 

NVR, Inc. Consolidated Balance Sheets (in thousands, except share and per share data)

December 31, 2013

December 31, 2012

(Unaudited)

ASSETS

Homebuilding:

Cash and cash equivalents

$                    844,274

$                 1,139,103

Receivables

9,529

9,421

Inventory:

Lots and housing units, covered under

sales agreements with customers

568,831

515,498

Unsold lots and housing units

117,467

81,932

Land under development

41,328

68,336

Manufacturing materials and other 

10,939

12,365

738,565

678,131

Assets related to consolidated variable interest entity

7,268

15,626

Contract land deposits, net

236,885

191,538

Property, plant and equipment, net

32,599

27,016

Reorganization value in excess of amounts

allocable to identifiable assets, net

41,580

41,580

Goodwill and finite-lived intangible assets, net

6,747

9,219

Other assets

307,933

270,636

2,225,380

2,382,270

Mortgage Banking:

Cash and cash equivalents

21,311

13,498

Mortgage loans held for sale, net

210,641

188,929

Property and equipment, net

4,699

2,465

Reorganization value in excess of amounts

allocable to identifiable assets, net

7,347

7,347

Other assets

16,770

10,333

260,768

222,572

Total assets

$                 2,486,148

$                 2,604,842

LIABILITIES AND SHAREHOLDERS' EQUITY

Homebuilding:

Accounts payable

$                  181,687

$                  163,446

Accrued expenses and other liabilities

316,227

234,804

Liabilities related to consolidated variable interest entity

1,646

2,180

Non-recourse debt related to consolidated variable interest entity

3,365

4,574

Customer deposits

101,022

99,687

Senior notes

599,075

598,988

1,203,022

1,103,679

Mortgage Banking:

Accounts payable and other liabilities

21,774

20,686

21,774

20,686

Total liabilities

1,224,796

1,124,365

Commitments and contingencies

Shareholders' equity:

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

authorized; and 20,555,330 and 20,556,198 

shares issued as of December 31, 2013 and 

December 31, 2012, respectively

206

206

Additional paid-in-capital

1,212,050

1,169,699

Deferred compensation trust – 109,256 and

152,223 shares of NVR, Inc. common

stock as of December 31, 2013 and 

December 31, 2012, respectively

(17,741)

(25,331)

Deferred compensation liability

17,741

25,331

Retained earnings

4,605,557

4,339,080

Less treasury stock at cost – 16,121,605 and

15,642,068 shares at December 31, 2013

and December 31, 2012, respectively

(4,556,461)

(4,028,508)

Total shareholders' equity

1,261,352

1,480,477

    Total liabilities and shareholders' equity

$               2,486,148

$               2,604,842

 

NVR, Inc. Operating Activity (dollars in thousands) (Unaudited)

Three Months Ended December 31,

Twelve Months Ended December 31,

2013

2012

2013

2012

Homebuilding data:

New orders (units)

Mid Atlantic (1)

1,445

1,418

6,056

5,757

North East (2)

243

234

1,075

946

Mid East (3)

578

574

2,903

2,625

South East (4)

365

399

1,766

1,626

   Total

2,631

2,625

11,800

10,954

Average new order price

$            375.7

$            340.2

$            360.4

$            328.8

Settlements (units)

Mid Atlantic (1)

1,698

1,427

6,029

5,047

North East (2)

299

224

1,013

889

Mid East (3)

818

733

3,023

2,472

South East (4)

527

404

1,769

1,435

   Total

3,342

2,788

11,834

9,843

Average settlement price

$            365.3

$            331.9

$            349.1

$            317.1

Backlog (units)

Mid Atlantic (1)

2,710

2,683

North East (2)

495

433

Mid East (3)

1,032

1,152

South East (4)

708

711

   Total

4,945

4,979

Average backlog price

$            373.2

$            346.2

Community count (average)

462

414

451

404

Lots controlled at end of period

64,600

58,500

Mortgage banking data:

Loan closings

$        721,926

$        642,171

$     2,538,072

$     2,206,092

Capture rate

78%

87%

81%

87%

Common stock information:

Shares outstanding at end of period

4,433,725

4,914,130

Number of shares repurchased

126,605

8,500

581,387

285,495

Aggregate cost of shares repurchased

$        118,682

$            7,153

$        554,491

$        227,281

(1)

   Virginia, West Virginia, Maryland, 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.