NVR, Inc. Announces Second Quarter Results

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Jul 22, 2010, 09:00 ET

RESTON, Va., July 22 /PRNewswire-FirstCall/ -- 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, 2010 of $71,276,000, $11.13 per diluted share. Net income and diluted earnings per share for its second quarter ended June 30, 2010 increased 72% and 64%, respectively, when compared to the 2009 second quarter. Consolidated revenues for the second quarter of 2010 totaled $964,504,000, a 54% increase from $625,431,000 for the comparable 2009 quarter.

For the six months ended June 30, 2010, consolidated revenues were $1,554,718,000, 31% higher than the $1,184,030,000 reported for the same period of 2009. Net income for the six months ended June 30, 2010 was $103,363,000, an increase of 74% when compared to the six months ended June 30, 2009. Diluted earnings per share for the six months ended June 30, 2010 was $16.15, an increase of 64% from $9.85 per diluted share for the comparable period of 2009.

Homebuilding

New orders in the second quarter of 2010 decreased 6% to 2,559 units, when compared to 2,728 units in the second quarter of 2009. The original June 30, 2010 settlement deadline to qualify for the Federal homebuyer tax credit resulted in a surge in settlement activity in the second quarter of 2010. As a result, settlements increased in the second quarter of 2010 to 3,345 units, 63% more than the same period of 2009. Homebuilding revenues for the three months ended June 30, 2010 totaled $946,972,000, 55% higher than the year earlier period. Gross profit margins decreased to 18.5% in the 2010 second quarter compared to 19.3% for the same period in 2009. Income before tax from the homebuilding segment totaled $106,573,000 in the 2010 second quarter, an increase of 70% when compared to the second quarter of the previous year. The Company's backlog of homes sold but not settled at the end of the 2010 quarter decreased on a unit basis by 16% to 3,766 units and on a dollar basis by 11% to $1,187,599,000 when compared to the same period last year.

Mortgage Banking

Mortgage closed loan production of $706,551,000 for the three months ended June 30, 2010 was 45% higher than the same period last year. Operating income for the mortgage banking operations during the second quarter of 2010 increased 68% to $11,686,000, when compared to $6,957,000 reported for the same period of 2009.

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, 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 June 30,		Six Months Ended June 30,
			2010	2009	2010	2009
*Homebuilding:*
	Revenues		$ 946,972	$ 612,488	$ 1,524,353	$ 1,160,817
	Other income		2,110	1,750	4,479	4,289
	Cost of sales		(771,475)	(494,240)	(1,242,544)	(956,870)
	Selling, general and administrative		(69,137)	(54,664)	(129,878)	(114,358)
		Operating income	108,470	65,334	156,410	93,878
	Interest expense		(1,897)	(2,462)	(4,068)	(5,236)
		Homebuilding income	106,573	62,872	152,342	88,642

*Mortgage Banking:*
	Mortgage banking fees		17,532	12,943	30,365	23,213
	Interest income		1,492	611	2,248	1,195
	Other income		233	154	399	243
	General and administrative		(7,275)	(6,475)	(13,804)	(12,233)
	Interest expense		(296)	(276)	(560)	(613)
		Mortgage banking income	11,686	6,957	18,648	11,805

*Income before taxes*			118,259	69,829	170,990	100,447

		Income tax expense	(46,983)	(28,403)	(67,627)	(41,033)

*Net income*			$ 71,276	$ 41,426	$ 103,363	$ 59,414

*Basic earnings per share*			$ 11.64	$ 7.17	$ 16.96	$ 10.41

*Diluted earnings per share*			$ 11.13	$ 6.79	$ 16.15	$ 9.85

*Basic average shares outstanding*			6,123	5,777	6,095	5,710

*Diluted average shares outstanding*			6,405	6,101	6,402	6,032

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

				June 30, 2010	December 31, 2009
ASSETS				(unaudited)

*Homebuilding:*
	Cash and cash equivalents			$ 1,089,399	$ 1,248,689
	Marketable securities			175,000	219,535
	Receivables			15,011	7,995
	Inventory:
		Lots and housing units, covered under
			sales agreements with customers	340,577	337,523
		Unsold lots and housing units		55,871	73,673
		Land under development		17,000	-
		Manufacturing materials and other		7,253	7,522
				420,701	418,718

	Assets related to consolidated variable interest entities			22,980	70,430
	Contract land deposits, net			71,389	49,906
	Property, plant and equipment, net			19,075	20,215
	Reorganization value in excess of amounts
		allocable to identifiable assets, net		41,580	41,580
	Other assets, net			240,394	258,659
				2,095,529	2,335,727

*Mortgage Banking:*
	Cash and cash equivalents			1,483	1,461
	Mortgage loans held for sale, net			244,313	40,097
	Property and equipment, net			821	446
	Reorganization value in excess of amounts
		allocable to identifiable assets, net		7,347	7,347
	Other assets			9,942	10,692
				263,906	60,043

			Total assets	$ 2,359,435	$ 2,395,770

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

			June 30, 2010	December 31, 2009
LIABILITIES AND SHAREHOLDERS' EQUITY			(unaudited)

*Homebuilding:*
	Accounts payable		$ 161,708	$ 120,464
	Accrued expenses and other liabilities		207,281	221,352
	Liabilities related to consolidated variable interest entities		-	65,915
	Customer deposits		69,344	63,591
	Other term debt		1,999	2,166
	Senior notes		-	133,370
			440,332	606,858

*Mortgage Banking:*
	Accounts payable and other liabilities		24,612	19,306
	Note payable		79,025	12,344
			103,637	31,650

		Total liabilities	543,969	638,508

*Commitments and contingencies*

*Shareholders' equity:*
	Common stock, $0.01 par value; 60,000,000
		shares authorized; 20,559,671 shares issued as
		of both June 30, 2010 and December 31, 2009	206	206
	Additional paid-in-capital		914,585	830,531
	Deferred compensation trust – 158,894 and
		265,278 shares of NVR, Inc. common
		stock as of June 30, 2010 and December 31,
		2009, respectively	(27,582)	(40,799)
	Deferred compensation liability		27,582	40,799
	Retained earnings		3,926,430	3,823,067
	Less treasury stock at cost – 14,635,123 and
		14,609,560 shares at June 30, 2010 and
		December 31, 2009, respectively	(3,025,755)	(2,896,542)
		Total shareholders’ equity	1,815,466	1,757,262
		Total liabilities and shareholders’ equity	$ 2,359,435	$ 2,395,770

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

			Three Months Ended June 30,		Six Months Ended June 30,
			2010	2009	2010	2009

*Homebuilding data:*
	New orders (units)
		Mid Atlantic (1)	1,303	1,421	2,694	2,624
		North East (2)	219	246	479	481
		Mid East (3)	749	746	1,628	1,447
		South East (4)	288	315	698	602
		Total	2,559	2,728	5,499	5,154

	Average new order price		$ 309.6	$ 294.8	$ 297.4	$ 288.7

	Settlements (units)
		Mid Atlantic (1)	1,672	1,057	2,607	1,985
		North East (2)	282	197	502	381
		Mid East (3)	922	533	1,487	946
		South East (4)	469	261	668	509
		Total	3,345	2,048	5,264	3,821

	Average settlement price		$ 283.0	$ 298.6	$ 289.5	$ 303.3

	Backlog (units)
		Mid Atlantic (1)			1,950	2,415
		North East (2)			302	403
		Mid East (3)			1,101	1,232
		South East (4)			413	447
		Total			3,766	4,497

	Average backlog price				$ 315.3	$ 296.2

	Community count (average)		373	356	366	357
	Lots controlled at end of period				47,500	44,300

*Mortgage banking data:*
	Loan closings		$ 706,551	$ 487,618	$ 1,124,593	$ 914,912
	Capture rate		90%	92%	90%	91%

*Common stock information:*
	Shares outstanding at end of period				5,924,548	5,801,600
	Number of shares repurchased		261,973	-	261,973	-
	Aggregate cost of shares repurchased		$ 176,084	-	$ 176,084	-

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