NVR, Inc. Announces Second Quarter Results

RESTON, Va., July 22, 2020 /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, 2020 of $164,075,000, or $42.50 per diluted share.  Net income and diluted earnings per share for the second quarter ended June 30, 2020 decreased 22% and 20%, respectively, when compared to 2019 second quarter net income of $210,209,000, or $53.09 per diluted share.  Consolidated revenues for the second quarter of 2020 totaled $1,620,368,000, which decreased 10% from $1,800,194,000 in the second quarter of 2019.

For the six months ended June 30, 2020, consolidated revenues were $3,202,896,000, an 8% decrease from $3,487,205,000 reported for 2019.  Net income for the six months ended June 30, 2020 was $339,778,000, a decrease of 15% when compared to the six months ended June 30, 2019.  Diluted earnings per share for the six months ended June 30, 2020 was $87.56, a decrease of 13% from $100.61 per diluted share for 2019.

Homebuilding

New orders in the second quarter of 2020 increased by 13% to 5,901 units, when compared to 5,239 units in the second quarter of 2019. The average sales price of new orders in the second quarter of 2020 was $365,400, an increase of 2% when compared with the second quarter of 2019.  The cancellation rate in the second quarter of 2020 increased to 16% compared to 13% in the second quarter of 2019.  Settlements decreased in the second quarter of 2020 to 4,296 units, which was 9% lower than the second quarter of 2019.  Our backlog of homes sold but not settled as of June 30, 2020 increased on both a unit and dollar basis by 11% and 14%, respectively, to 10,623 units and $4,009,695,000 compared to the respective backlog unit and dollar balances as of June 30, 2019.

Homebuilding revenues of $1,588,758,000 in the second quarter of 2020 decreased 10% compared to homebuilding revenues of $1,757,448,000 in the second quarter of 2019.  Gross profit margin in the second quarter of 2020 increased to 19.2%, compared to 18.9% in the second quarter of 2019.  Income before tax from the homebuilding segment totaled $194,805,000 in the second quarter of 2020, a decrease of 11% when compared to the second quarter of 2019.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2020 totaled $1,144,428,000, a decrease of 7% when compared to the second quarter of 2019.  Income before tax from the mortgage banking segment totaled $15,026,000 in the second quarter of 2020, a decrease of 40% when compared to $25,062,000 in the second quarter of 2019.  This decrease is due primarily to the reduction in secondary marketing gains on the sales of loans as a result of the disruption in the mortgage market related to the COVID-19 pandemic.

Effective Tax Rate

Our effective tax rate for the three and six months ended June 30, 2020 was 21.8% and 8.5%, respectively, compared to 14.1% and 14.0% for the three and six months ended June 30, 2019, respectively. The effective tax rate in each period was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $6,854,000 and $62,509,000 for the three and six months ended June 30, 2020, respectively, and $30,727,000 and $59,205,000, for the three and six months ended June 30, 2019.

Other Matters - COVID-19

The COVID-19 pandemic has had a significant impact on all facets of our business.  Our primary focus as we face this challenge is to do everything we can to ensure the safety and well-being of our employees, customers and trade partners. We are currently able to operate in all of the markets we serve. In each of our markets, we continue to operate in accordance with the safety guidelines issued by the Centers for Disease Control and Prevention as well as state and local guidelines.

There is uncertainty regarding the extent and timing of disruption to our business that may result from COVID-19 and related governmental actions.  There is also uncertainty as to the effects of economic relief efforts on the U.S. economy, unemployment, consumer confidence, demand for our homes and the mortgage market, including lending standards and secondary mortgage markets. We are unable to predict the extent to which this will impact our operational and financial performance including the impact of future developments such as the duration and spread of COVID-19, corresponding governmental actions, and the impact of such on our employees, customers and trade partners.

About NVR

NVR, Inc. operates in two business segments:  homebuilding and mortgage banking.  The homebuilding segment sells and builds homes under the Ryan Homes, NVHomes and Heartland Homes trade names, and operates in thirty-two 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 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: the impact of COVID-19 on the economy; 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.

SOURCE NVR, Inc.