NVR, Inc. Announces First Quarter Results

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Apr 21, 2011, 09:00 ET

RESTON, Va., April 21, 2011 /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, 2011 of $15,174,000, $2.52 per diluted share. Net income and diluted earnings per share for its first quarter ended March 31, 2011 decreased 53% and 50%, respectively, when compared to the 2010 first quarter. Consolidated revenues for the first three months of 2011 totaled $514,504,000, a 13% decrease from $590,214,000 for the comparable 2010 quarter.

Homebuilding

New orders in the first quarter of 2011 decreased 18% to 2,403 units, when compared to 2,940 units in the first quarter of 2010. The cancellation rate in the first quarter of 2011 was 12% compared to 9% in the first quarter of 2010 and 18% in the fourth quarter of 2010. Settlements decreased in the first quarter of 2011 to 1,634 units, 15% lower than the same period of 2010. The Company's backlog of homes sold but not settled at the end of the 2011 quarter decreased on a unit basis by 19% to 3,685 units from the same period last year. On a dollar basis, backlog declined to $1,166,721,000, a decrease of 13% when compared to the same period last year.

Homebuilding revenues for the three months ended March 31, 2011 totaled $502,744,000, 13% lower than the year earlier period. Gross profit margins were 16.9% in the 2011 first quarter compared to 18.4% for the same period in 2010. Income before tax from the homebuilding segment totaled $18,872,000, a decrease of 59% when compared to the first quarter of the previous year.

Mortgage Banking

Mortgage closed loan production of $353,571,000 for the three months ended March 31, 2011 was 15% lower than the same period last year. Income before tax for the mortgage banking operations during the first quarter of 2011 decreased 14% to $5,963,000, when compared to $6,962,000 reported for the same period of 2010.

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, Rymarc Homes and Fox Ridge Homes trade names, and operates in twenty-five metropolitan areas in fourteen states. For more information about NVR, Inc. and its brands, see www.nvrinc.com, www.ryanhomes.com, www.nvhomes.com, www.foxridgehomes.com, and www.rymarc.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. 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 variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. All statements other than those of historical facts included herein, including those regarding market trends, NVR's financial position, business strategy, the outcome of pending litigation, projected plans and objectives of management for future operations, are forward-looking statements. 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, general economic and business conditions (on both a national and regional level), interest rate changes, access to suitable financing by NVR and by NVR's customers, increased regulation of the mortgage banking industry, 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 moratoria, governmental regulation, the ability of NVR to integrate any acquired business, fluctuation and volatility of stock and other financial markets, mortgage financing availability and other factors over which NVR has little or no control. The Company has no obligation to update such forward-looking statements.

NVR, Inc. Consolidated Statements of Income (in thousands, except per share data) (Unaudited)
			Three Months Ended March 31,
			2011	2010
*Homebuilding:*
	Revenues		$ 502,744	$ 577,381
	Other income		1,458	2,369
	Cost of sales		(417,920)	(471,069)
	Selling, general and administrative		(67,188)	(60,741)
		Operating income	19,094	47,940
	Interest expense		(222)	(2,171)
		Homebuilding income	18,872	45,769

*Mortgage Banking:*
	Mortgage banking fees		11,760	12,833
	Interest income		1,115	756
	Other income		39	166
	General and administrative		(6,677)	(6,529)
	Interest expense		(274)	(264)
		Mortgage banking income	5,963	6,962

*Income before taxes*			24,835	52,731

		Income tax expense	(9,661)	(20,644)

*Net income*			$ 15,174	$ 32,087

*Basic earnings per share*			$ 2.61	$ 5.29

*Diluted earnings per share*			$ 2.52	$ 5.01

*Basic average shares outstanding*			5,823	6,066

*Diluted average shares outstanding*			6,020	6,399

NVR, Inc. Consolidated Balance Sheets (in thousands, except share and per share data)
				March 31, 2011	December 31, 2010
ASSETS				(unaudited)

*Homebuilding:*
	Cash and cash equivalents			$ 1,217,670	$ 1,190,731
	Receivables			7,378	6,948
	Inventory:
		Lots and housing units, covered under
			sales agreements with customers	349,096	275,272
		Unsold lots and housing units		60,172	70,542
		Land under development		77,075	78,058
		Manufacturing materials and other		5,901	7,457
				492,244	431,329

	Assets related to consolidated variable interest entity			22,801	22,371
	Contract land deposits, net			116,753	100,786
	Property, plant and equipment, net			18,963	19,523
	Reorganization value in excess of amounts
		allocable to identifiable assets, net		41,580	41,580
	Other assets, net			232,072	243,005
				2,149,461	2,056,273

*Mortgage Banking:*
	Cash and cash equivalents			2,555	2,661
	Mortgage loans held for sale, net			105,611	177,244
	Property and equipment, net			887	950
	Reorganization value in excess of amounts
		allocable to identifiable assets, net		7,347	7,347
	Other assets			9,867	15,586
				126,267	203,788

			Total assets	$ 2,275,728	$ 2,260,061

NVR, Inc. Consolidated Balance Sheets (Continued) (in thousands, except share and per share data)
			March 31, 2011	December 31, 2010
LIABILITIES AND SHAREHOLDERS' EQUITY			(unaudited)

*Homebuilding:*
	Accounts payable		$ 115,977	$ 115,578
	Accrued expenses and other liabilities		172,608	237,052
	Liabilities related to consolidated variable interest entity		995	500
	Non-recourse debt related to consolidated variable
		interest entity	7,587	7,592
	Customer deposits		62,894	53,705
	Other term debt		1,714	1,751
			361,775	416,178

*Mortgage Banking:*
	Accounts payable and other liabilities		20,405	13,171
	Note payable		75,347	90,338
			95,752	103,509

		Total liabilities	457,527	519,687

*Commitments and contingencies*

*Shareholders' equity:*
	Common stock, $0.01 par value; 60,000,000 shares
		authorized; 20,556,198 and 20,557,913 shares
		issued as of March 31, 2011 and December 31,	206	206
		2010, respectively
	Additional paid-in-capital		1,014,017	951,234
	Deferred compensation trust – 152,964 and
		158,894 shares of NVR, Inc. common
		stock as of March 31, 2011 and December
		31, 2010, respectively	(25,582)	(27,582)
	Deferred compensation liability		25,582	27,582
	Retained earnings		4,044,246	4,029,072
	Less treasury stock at cost – 14,688,939 and
		14,894,357 shares at March 31, 2011
		and December 31, 2010, respectively	(3,240,268)	(3,240,138)
		Total shareholders’ equity	1,818,201	1,740,374
		Total liabilities and shareholders’ equity	$ 2,275,728	$ 2,260,061

NVR, Inc. Operating Activity (unaudited) (dollars in thousands)
			Three Months Ended March 31,
			2011	2010

*Homebuilding data:*
	New orders (units)
		Mid Atlantic (1)	1,145	1,391
		North East (2)	252	260
		Mid East (3)	691	879
		South East (4)	315	410
		Total	2,403	2,940

	Average new order price		$ 295.8	$ 286.7

	Settlements (units)
		Mid Atlantic (1)	836	935
		North East (2)	128	220
		Mid East (3)	431	565
		South East (4)	239	199
		Total	1,634	1,919

	Average settlement price		$ 307.6	$ 300.8

	Backlog (units)
		Mid Atlantic (1)	1,904	2,319
		North East (2)	356	365
		Mid East (3)	990	1,274
		South East (4)	435	594
		Total	3,685	4,552

	Average backlog price		$ 316.6	$ 294.8

	Community count (average)		379	358
	Lots controlled at end of period		52,900	48,100

*Mortgage banking data:*
	Loan closings		$ 353,571	$ 418,042
	Capture rate		87%	90%

*Common stock information:*
	Shares outstanding at end of period		5,867,259	6,149,335
	Number of shares repurchased		85,460	-
	Aggregate cost of shares repurchased		$ 63,408	$ -

(1) Virginia, West Virginia, Maryland and Delaware (2) Eastern Pennsylvania and New Jersey (3) Western Pennsylvania, Kentucky, New York, Ohio and Indiana (4) North Carolina, South Carolina, Tennessee and Florida