NVR, Inc. Announces Second Quarter Results

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

RESTON, Va., July 21, 2014 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its second quarter ended June 30, 2014 of $68,178,000,or $15.17 per diluted share.  Net income and diluted earnings per share for its second quarter ended June 30, 2014 increased 34% and 50%, respectively, when compared to the 2013 second quarter.  Consolidated revenues for the second quarter of 2014 totaled $1,102,054,000, a 9% increase from $1,009,892,000 for the comparable 2013 quarter.

For the six months ended June 30, 2014, consolidated revenues were $1,913,364,000, 7% higher than the $1,780,148,000 reported for the same period of 2013.  Net income for the six months ended June 30, 2014 was $92,027,000, an increase of 7% when compared to the six months ended June 30, 2013.  Diluted earnings per share for the six months ended June 30, 2014 was $20.19, an increase of 19% from $16.92 per diluted share for the comparable period of 2013. 

Homebuilding

New orders in the second quarter of 2014 increased 4% to 3,415 units when compared to 3,278 units in the second quarter of 2013.  The cancellation rate in the second quarter of 2014 was 13% compared to 14% in the second quarter of 2013 and 12% in the first quarter of 2014.  Settlements increased in the second quarter of 2014 to 2,943 units, 2% higher than the same period in 2013.  The Company's backlog of homes sold but not settled as of June 30, 2014 decreased on a unit basis by 1% to 6,531 units, but increased on a dollar basis by 3% to $2,443,238,000 when compared to June 30, 2013.

Homebuilding revenues for the three months ended June 30, 2014 totaled $1,084,080,000, 9% higher than the year earlier period.  Gross profit margin in the second quarter of 2014 was 18.6% compared to 15.9% in the second quarter of 2013.  Gross profit margin in the second quarter of 2013 was negatively impacted by a previously disclosed service related accrual which reduced gross profit margin by 157 basis points of revenue.  Income before tax from the homebuilding segment totaled $102,578,000 in the 2014 second quarter, an increase of 43% when compared to the second quarter of 2013.

Mortgage Banking

Mortgage closed loan production of $675,625,000 for the three months ended June 30, 2014 was 5% higher than the same period last year.  Operating income for the mortgage banking operations during the second quarter of 2014 decreased 27% to $6,246,000, when compared to $8,518,000 reported for the same period of 2013. 

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 June 30,

Six Months Ended June 30,

2014

2013

2014

2013

Homebuilding:

Revenues                                         

$    1,084,080

$     992,210

$     1,883,267

$    1,743,078

Other income

452

1,098

1,449

2,124

Cost of sales

(882,778)

(834,288)

(1,537,930)

(1,458,373)

Selling, general and administrative 

(93,583)

(82,120)

(184,215)

(160,533)

Operating income 

108,171

76,900

162,571

126,296

Interest expense

(5,593)

(5,237)

(11,277)

(10,689)

Homebuilding income 

102,578

71,663

151,294

115,607

Mortgage Banking:

Mortgage banking fees

17,974

17,682

30,097

37,070

Interest income

825

1,047

2,009

2,002

Other income

194

178

253

291

General and administrative

(12,617)

(10,252)

(24,882)

(19,433)

Interest expense

(130)

(137)

(240)

(251)

Mortgage banking income

6,246

8,518

7,237

19,679

Income before taxes 

108,824

80,181

158,531

135,286

Income tax expense

(40,646)

(29,491)

(66,504)

(49,555)

Net income

$         68,178

$       50,690

$          92,027

$         85,731

Basic earnings per share 

$           15.68

$         10.37

$            20.88

$           17.38

Diluted earnings per share 

$           15.17

$         10.11

$            20.19

$           16.92

Basic weighted average shares outstanding 

4,349

4,889

4,408

4,934

Diluted weighted average shares outstanding 

4,495

5,013

4,557

5,067

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

June 30, 2014

December 31, 2013

ASSETS

(Unaudited)

Homebuilding:

Cash and cash equivalents

$                  538,940

$                 844,274

Receivables

15,196

9,529

Inventory:

Lots and housing units, covered under

sales agreements with customers

788,848

568,831

Unsold lots and housing units

89,275

117,467

Land under development

63,789

41,328

Building materials and other 

10,593

10,939

952,505

738,565

Assets related to consolidated variable interest entity

6,802

7,268

Contract land deposits, net

253,808

236,885

Property, plant and equipment, net

44,252

32,599

Reorganization value in excess of amounts

allocable to identifiable assets, net

41,580

41,580

Goodwill and finite-lived intangible assets, net

6,055

6,747

Other assets

311,060

307,933

2,170,198

2,225,380

Mortgage Banking:

Cash and cash equivalents

12,919

21,311

Mortgage loans held for sale, net

170,470

210,641

Property and equipment, net

6,433

4,699

Reorganization value in excess of amounts

allocable to identifiable assets, net

7,347

7,347

Other assets

14,696

16,770

211,865

260,768

Total assets

$               2,382,063

$              2,486,148

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

Homebuilding:

Accounts payable

$                  231,633

$                 181,687

Accrued expenses and other liabilities

296,045

316,227

Liabilities related to consolidated variable interest entity

2,277

1,646

Non-recourse debt related to consolidated variable

interest entity

1,258

3,365

Customer deposits

128,320

101,022

Senior notes

599,120

599,075

1,258,653

1,203,022

Mortgage Banking:

Accounts payable and other liabilities

24,195

21,774

24,195

21,774

Total liabilities

1,282,848

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 June 30, 2014 and December 31, 2013

206

206

Additional paid-in-capital

1,277,755

1,212,050

Deferred compensation trust – 109,256 shares of

NVR, Inc. common stock as of both 

June 30, 2014 and December 31, 2013

(17,741)

(17,741)

Deferred compensation liability

17,741

17,741

Retained earnings

4,697,584

4,605,557

Less treasury stock at cost –  16,342,156 and

16,121,605 shares at June 30, 2014

and December 31, 2013, respectively

(4,876,330)

(4,556,461)

Total shareholders' equity

1,099,215

1,261,352

    Total liabilities and shareholders' equity

$               2,382,063

$              2,486,148

 

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

Three Months Ended June 30,

Six Months Ended June 30,

2014

2013

2014

2013

Homebuilding data:

New orders (units)

Mid Atlantic (1)

1,751

1,671

3,426

3,387

North East (2)

288

274

586

567

Mid East (3)

825

833

1,716

1,782

South East (4)

551

500

1,012

1,052

   Total

3,415

3,278

6,740

6,788

Average new order price

$       368.0

$       361.1

$       368.0

$       351.8

Settlements (units)

Mid Atlantic (1)

1,547

1,493

2,671

2,631

North East (2)

271

259

504

450

Mid East (3)

707

722

1,185

1,315

South East (4)

418

404

794

754

   Total

2,943

2,878

5,154

5,150

Average settlement price

$       368.2

$       344.7

$       365.3

$       338.4

Backlog (units)

Mid Atlantic (1)

3,465

3,439

North East (2)

577

550

Mid East (3)

1,563

1,619

South East (4)

926

1,009

   Total

6,531

6,617

Average backlog price

$       374.1

$       358.6

Community count (average)

494

452

487

444

Lots controlled at end of period

67,500

61,200

Mortgage banking data:

Loan closings

$   675,625

$   646,450

$1,148,557

$1,120,216

Capture rate

82%

85%

80%

84%

Common stock information:

Shares outstanding at end of period

4,213,174

4,699,992

Number of shares repurchased

285,362

300,086

317,739

300,086

Aggregate cost of shares repurchased

$    314,870

$   294,979

$   347,448

$   294,979

(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.