NVR, Inc. Announces Second Quarter Results

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.



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