RESTON, Va., Oct. 25, 2022 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its third quarter ended September 30, 2022 of $411.4 million, or $118.51 per diluted share. Net income and diluted earnings per share for the third quarter ended September 30, 2022 increased 24% and 37%, respectively, when compared to 2021 third quarter net income of $332.1 million, or $86.44 per diluted share. Consolidated revenues for the third quarter of 2022 totaled $2.78 billion, which increased 16% from $2.40 billion in the third quarter of 2021.
For the nine months ended September 30, 2022, consolidated revenues were $7.81 billion, a 16% increase from $6.72 billion reported in 2021. Net income for the nine months ended September 30, 2022 was $1.27 billion, an increase of 41% when compared to net income for the nine months ended September 30, 2021 of $902.1 million. Diluted earnings per share for the nine months ended September 30, 2022 was $358.61, an increase of 55% from $231.75 per diluted share for 2021.
Homebuilding
New orders in the third quarter of 2022 decreased by 15% to 4,421 units, when compared to 5,201 units in the third quarter of 2021. The average sales price of new orders in the third quarter of 2022 was $453,400, an increase of 3% when compared with the third quarter of 2021. The cancellation rate in the third quarter of 2022 was 15% compared to 9% in the third quarter of 2021. Settlements in the third quarter of 2022 increased by 5% to 5,949 units, compared to 5,683 units in the third quarter of 2021. The average settlement price in the third quarter of 2022 was $460,500, an increase of 12% from the third quarter of 2021. Our backlog of homes sold but not settled as of September 30, 2022 decreased on a unit basis by 11% to 10,758 units and decreased on a dollar basis by 5% to $5.09 billion when compared to the respective backlog unit and dollar balances as of September 30, 2021.
Homebuilding revenues of $2.74 billion in the third quarter of 2022 increased by 17% compared to homebuilding revenues of $2.34 billion in the third quarter of 2021. Gross profit margin in the third quarter of 2022 increased to 23.6%, compared to 22.2% in the third quarter of 2021. Income before tax from the homebuilding segment totaled $520.9 million in the third quarter of 2022, an increase of 32% when compared to the third quarter of 2021.
Mortgage Banking
Mortgage closed loan production in the third quarter of 2022 totaled $1.66 billion, an increase of 2% when compared to the third quarter of 2021. Income before tax from the mortgage banking segment totaled $17.6 million in the third quarter of 2022, a decrease of 55% when compared to $39.0 million in the third quarter of 2021. This decrease was primarily attributable to a decrease in secondary marketing gains.
Effective Tax Rate
Our effective tax rate for the three and nine months ended September 30, 2022 was 23.6% and 24.3%, respectively, compared to 23.5% and 22.5% for the three and nine months ended September 30, 2021, respectively. The increase in the effective tax rate for the nine month period in 2022 is primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled $27.7 million for the nine month period ended September 30, 2022, compared to $37.8 million for the nine month period ended September 30, 2021.
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-five metropolitan areas in fifteen 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 and related supply chain disruptions; 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 September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Homebuilding: | ||||||||
Revenues | $ 2,739,445 | $ 2,336,615 | $ 7,658,734 | $ 6,524,886 | ||||
Other income | 10,211 | 1,496 | 15,446 | 4,714 | ||||
Cost of sales | (2,092,457) | (1,817,939) | (5,668,549) | (5,117,065) | ||||
Selling, general and administrative | (129,416) | (112,226) | (391,358) | (347,051) | ||||
Operating income | 527,783 | 407,946 | 1,614,273 | 1,065,484 | ||||
Interest expense | (6,854) | (12,838) | (31,510) | (38,694) | ||||
Homebuilding income | 520,929 | 395,108 | 1,582,763 | 1,026,790 | ||||
Mortgage Banking: | ||||||||
Mortgage banking fees | 37,455 | 59,025 | 155,518 | 195,798 | ||||
Interest income | 3,437 | 2,336 | 8,283 | 6,577 | ||||
Other income | 1,294 | 1,022 | 3,669 | 2,877 | ||||
General and administrative | (24,252) | (22,959) | (70,646) | (67,228) | ||||
Interest expense | (348) | (405) | (1,115) | (1,216) | ||||
Mortgage banking income | 17,586 | 39,019 | 95,709 | 136,808 | ||||
Income before taxes | 538,515 | 434,127 | 1,678,472 | 1,163,598 | ||||
Income tax expense | (127,122) | (102,046) | (407,665) | (261,460) | ||||
Net income | $ 411,393 | $ 332,081 | $ 1,270,807 | $ 902,138 | ||||
Basic earnings per share | $ 125.97 | $ 93.25 | $ 383.68 | $ 249.30 | ||||
Diluted earnings per share | $ 118.51 | $ 86.44 | $ 358.61 | $ 231.75 | ||||
Basic weighted average shares outstanding | 3,266 | 3,561 | 3,312 | 3,619 | ||||
Diluted weighted average shares outstanding | 3,471 | 3,842 | 3,544 | 3,893 | ||||
NVR, Inc. | ||||
Consolidated Balance Sheets | ||||
(in thousands, except share and per share data) | ||||
(unaudited) | ||||
September 30, 2022 | December 31, 2021 | |||
ASSETS | ||||
Homebuilding: | ||||
Cash and cash equivalents | $ 1,748,506 | $ 2,545,069 | ||
Restricted cash | 51,239 | 60,730 | ||
Receivables | 28,378 | 18,552 | ||
Inventory: | ||||
Lots and housing units, covered under sales agreements with customers | 1,931,639 | 1,777,862 | ||
Unsold lots and housing units | 194,882 | 127,434 | ||
Land under development | 15,230 | 12,147 | ||
Building materials and other | 28,698 | 29,923 | ||
2,170,449 | 1,947,366 | |||
Contract land deposits, net | 521,572 | 497,139 | ||
Property, plant and equipment, net | 55,982 | 56,979 | ||
Operating lease right-of-use assets | 69,933 | 59,010 | ||
Reorganization value in excess of amounts allocable to identifiable assets, net | 41,580 | 41,580 | ||
Other assets | 230,255 | 229,018 | ||
4,917,894 | 5,455,443 | |||
Mortgage Banking: | ||||
Cash and cash equivalents | 18,431 | 28,398 | ||
Restricted cash | 2,924 | 2,519 | ||
Mortgage loans held for sale, net | 316,094 | 302,192 | ||
Property and equipment, net | 3,250 | 3,658 | ||
Operating lease right-of-use assets | 14,534 | 9,758 | ||
Reorganization value in excess of amounts allocable to identifiable assets, net | 7,347 | 7,347 | ||
Other assets | 109,060 | 25,160 | ||
471,640 | 379,032 | |||
Total assets | $ 5,389,534 | $ 5,834,475 | ||
NVR, Inc. | ||||
Consolidated Balance Sheets (Continued) | ||||
(in thousands, except share and per share data) | ||||
(unaudited) | ||||
September 30, 2022 | December 31, 2021 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Homebuilding: | ||||
Accounts payable | $ 393,941 | $ 336,560 | ||
Accrued expenses and other liabilities | 427,072 | 435,860 | ||
Customer deposits | 376,160 | 417,463 | ||
Operating lease liabilities | 74,670 | 64,128 | ||
Senior notes | 915,346 | 1,516,255 | ||
2,187,189 | 2,770,266 | |||
Mortgage Banking: | ||||
Accounts payable and other liabilities | 102,101 | 51,394 | ||
Operating lease liabilities | 15,405 | 10,437 | ||
117,506 | 61,831 | |||
Total liabilities | 2,304,695 | 2,832,097 | ||
Commitments and contingencies | ||||
Shareholders' equity: | ||||
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 | 206 | 206 | ||
Additional paid-in capital | 2,538,812 | 2,378,191 | ||
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as | (16,710) | (16,710) | ||
Deferred compensation liability | 16,710 | 16,710 | ||
Retained earnings | 11,318,646 | 10,047,839 | ||
Less treasury stock at cost – 17,343,353 and 17,107,889 shares as of | (10,772,825) | (9,423,858) | ||
Total shareholders' equity | 3,084,839 | 3,002,378 | ||
Total liabilities and shareholders' equity | $ 5,389,534 | $ 5,834,475 | ||
NVR, Inc. | ||||||||||||||||
Operating Activity | ||||||||||||||||
(dollars in thousands) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | Units | Average Price | |||||||||
New orders, net of cancellations: | ||||||||||||||||
Mid Atlantic (1) | 1,813 | $ 516.2 | 2,024 | $ 523.7 | 5,980 | $ 527.1 | 6,405 | $ 519.8 | ||||||||
North East (2) | 348 | $ 510.5 | 403 | $ 496.7 | 1,249 | $ 512.7 | 1,237 | $ 489.7 | ||||||||
Mid East (3) | 955 | $ 406.7 | 1,190 | $ 376.8 | 3,603 | $ 404.4 | 4,305 | $ 365.4 | ||||||||
South East (4) | 1,305 | $ 385.0 | 1,584 | $ 372.9 | 4,179 | $ 410.2 | 5,089 | $ 356.2 | ||||||||
Total | 4,421 | $ 453.4 | 5,201 | $ 442.0 | 15,011 | $ 463.9 | 17,036 | $ 429.8 | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | Units | Average Price | |||||||||
Settlements: | ||||||||||||||||
Mid Atlantic (1) | 2,417 | $ 530.6 | 2,177 | $ 497.3 | 6,889 | $ 527.3 | 6,411 | $ 478.4 | ||||||||
North East (2) | 487 | $ 513.5 | 455 | $ 468.3 | 1,307 | $ 507.3 | 1,260 | $ 451.2 | ||||||||
Mid East (3) | 1,468 | $ 388.3 | 1,430 | $ 351.8 | 4,034 | $ 384.8 | 4,097 | $ 343.2 | ||||||||
South East (4) | 1,577 | $ 403.9 | 1,621 | $ 331.6 | 4,753 | $ 381.0 | 4,672 | $ 317.3 | ||||||||
Total | 5,949 | $ 460.5 | 5,683 | $ 411.1 | 16,983 | $ 450.9 | 16,440 | $ 396.9 | ||||||||
As of September 30, | |||||||||
2022 | 2021 | ||||||||
Units | Average Price | Units | Average Price | ||||||
Backlog: | |||||||||
Mid Atlantic (1) | 4,009 | $ 536.2 | 4,473 | $ 530.3 | |||||
North East (2) | 911 | $ 519.1 | 927 | $ 499.0 | |||||
Mid East (3) | 2,596 | $ 407.8 | 3,082 | $ 375.4 | |||||
South East (4) | 3,242 | $ 433.5 | 3,663 | $ 377.0 | |||||
Total | 10,758 | $ 472.8 | 12,145 | $ 442.4 | |||||
NVR, Inc. | ||||||||
Operating Activity (Continued) | ||||||||
(dollars in thousands) | ||||||||
(unaudited) | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Average active communities: | ||||||||
Mid Atlantic (1) | 164 | 151 | 157 | 154 | ||||
North East (2) | 37 | 34 | 36 | 34 | ||||
Mid East (3) | 126 | 125 | 126 | 130 | ||||
South East (4) | 96 | 104 | 92 | 108 | ||||
Total | 423 | 414 | 411 | 426 | ||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2022 | 2021 | 2022 | 2021 | |||||
Homebuilding data: | ||||||||
New order cancellation rate | 15.0 % | 9.2 % | 13.0 % | 9.1 % | ||||
Lots controlled at end of period | 131,400 | 118,600 | ||||||
Mortgage banking data: | ||||||||
Loan closings | $ 1,656,187 | $ 1,615,880 | $ 4,788,751 | $ 4,593,854 | ||||
Capture rate | 81 % | 88 % | 84 % | 89 % | ||||
Common stock information: | ||||||||
Shares outstanding at end of period | 3,211,977 | 3,512,686 | ||||||
Number of shares repurchased | 88,016 | 79,620 | 295,148 | 244,595 | ||||
Aggregate cost of shares repurchased | $ 368,490 | $ 398,488 | $ 1,384,193 | $ 1,152,855 | ||||
(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, Florida and Georgia |
SOURCE NVR, Inc.
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