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NVR, Inc. Announces Second Quarter Results

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NVR, Inc. Announces Second Quarter Results

PR Newswire

RESTON, Va., July 20, 2018 /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, 2018 of $203,174,000, or $49.05 per diluted share.  Net income and diluted earnings per share for the second quarter ended June 30, 2018 increased 37% and 39%, respectively, when compared to 2017 second quarter net income of $147,877,000, or $35.19 per diluted share.  Consolidated revenues for the second quarter of 2018 totaled $1,787,305,000, a 16% increase from $1,544,492,000 in the second quarter of 2017.

For the six months ended June 30, 2018, consolidated revenues were $3,316,719,000, an 18% increase from $2,821,584,000 reported for 2017.  Net income for the six months ended June 30, 2018 was $369,223,000, an increase of 47% when compared to the six months ended June 30, 2017.  Diluted earnings per share for the six months ended June 30, 2018 was $88.31, an increase of 46% from $60.36 per diluted share for 2017.

Net income and diluted earnings per share were favorably impacted by the reduction in the Company's effective tax rate for the three and six months ended June 30, 2018 to 15.9% and 14.6%, respectively, compared to 29.2% and 26.5% for the three and six months ended June 30, 2017, respectively.  The reduction in the effective tax rate was primarily due to the enactment of the Tax Cuts and Jobs Act in December 2017, which lowered the Company's federal statutory tax rate from 35% to 21%.  Additionally, the effective tax rate for the three and six months ended June 30, 2018 was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $26,456,000 and $46,022,000, respectively.  For the three and six months ended June 30, 2017, the income tax benefit related to excess tax benefits from stock option exercises totaled $16,464,000 and $36,364,000, respectively.

Homebuilding

New orders in the second quarter of 2018 increased 6% to 4,964 units, when compared to 4,678 units in the second quarter of 2017. The average sales price of new orders in the second quarter of 2018 was $376,300, which was essentially flat when compared with the second quarter of 2017.  Settlements increased in the second quarter of 2018 to 4,611 units, 18% higher than the second quarter of 2017.  The Company's backlog of homes sold but not settled as of June 30, 2018 increased on a unit basis by 15% to 10,162 units and increased on a dollar basis by 12% to $3,861,853,000 when compared to June 30, 2017.

Homebuilding revenues in the second quarter of 2018 totaled $1,750,463,000, 16% higher than the year earlier period.  Gross profit margin in the second quarter of 2018 decreased to 19.1%, compared to 19.5% in the second quarter of 2017.  Income before tax from the homebuilding segment totaled $223,266,000 in the second quarter of 2018, an increase of 17% when compared to the second quarter of 2017.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2018 totaled $1,214,101,000, an increase of 17% when compared to the second quarter of 2017.  Income before tax from the mortgage banking segment totaled $18,320,000 in the second quarter of 2018, an increase of 4% when compared to $17,631,000 in the second quarter of 2017.

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-one 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: 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,



2018


2017


2018


2017










Homebuilding:









Revenues


$

1,750,463



$

1,512,714



$

3,240,556



$

2,760,301


Other income


2,164



1,447



4,141



2,549


Cost of sales


(1,416,797)



(1,218,083)



(2,628,743)



(2,244,100)


Selling, general and administrative


(106,517)



(99,100)



(212,064)



(199,004)


Operating income


229,313



196,978



403,890



319,746


Interest expense


(6,047)



(5,641)



(12,054)



(11,219)


Homebuilding income


223,266



191,337



391,836



308,527











Mortgage Banking:









Mortgage banking fees


36,842



31,778



76,163



61,283


Interest income


2,915



1,554



5,008



3,215


Other income


641



506



1,165



815


General and administrative


(21,796)



(15,934)



(41,031)



(32,180)


Interest expense


(282)



(273)



(557)



(531)


Mortgage banking income


18,320



17,631



40,748



32,602











Income before taxes


241,586



208,968



432,584



341,129


Income tax expense


(38,412)



(61,091)



(63,361)



(90,329)











Net income


$

203,174



$

147,877



$

369,223



$

250,800











Basic earnings per share


$

55.90



$

39.46



$

101.03



$

67.30











Diluted earnings per share


$

49.05



$

35.19



$

88.31



$

60.36











Basic weighted average shares outstanding


3,635



3,748



3,655



3,726











Diluted weighted average shares outstanding


4,142



4,202



4,181



4,155


 

 

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)




June 30, 2018


December 31, 2017

ASSETS





Homebuilding:





Cash and cash equivalents


$

417,341



$

645,087


Restricted cash


22,130



19,438


Receivables


30,179



20,026


Inventory:





Lots and housing units, covered under sales agreements with customers


1,263,408



1,046,094


Unsold lots and housing units


113,493



148,620


Land under development


35,292



34,212


Building materials and other


21,422



17,273




1,433,615



1,246,199







Contract land deposits, net


361,052



370,429


Property, plant and equipment, net


41,612



43,191


Reorganization value in excess of amounts allocable to identifiable assets, net


41,580



41,580


Other assets


205,760



198,930




2,553,269



2,584,880


Mortgage Banking:





Cash and cash equivalents


14,209



21,707


Restricted cash


3,672



2,256


Mortgage loans held for sale, net


399,806



352,489


Property and equipment, net


7,018



6,327


Reorganization value in excess of amounts allocable to identifiable assets, net


7,347



7,347


Other assets


24,074



14,273




456,126



404,399


Total assets


$

3,009,395



$

2,989,279







LIABILITIES AND SHAREHOLDERS' EQUITY





Homebuilding:





Accounts payable


$

290,923



$

261,973


Accrued expenses and other liabilities


306,452



341,891


Customer deposits


172,033



150,033


Senior notes


597,373



597,066




1,366,781



1,350,963


Mortgage Banking:





Accounts payable and other liabilities


35,043



32,824




35,043



32,824


Total liabilities


1,401,824



1,383,787







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, 2018 and December 31, 2017


206



206


Additional paid-in capital


1,721,696



1,644,197


Deferred compensation trust – 107,904 and 108,640 shares of NVR, Inc. common stock as
of June 30, 2018 and December 31, 2017, respectively


(17,148)



(17,383)


Deferred compensation liability


17,148



17,383


Retained earnings


6,603,359



6,231,940


Less treasury stock at cost – 16,926,815 and 16,864,324 shares as of June 30, 2018 and
December 31, 2017, respectively


(6,717,690)



(6,270,851)


Total shareholders' equity


1,607,571



1,605,492


Total liabilities and shareholders' equity


$

3,009,395



$

2,989,279


 

 

NVR, Inc.

Operating Activity

(dollars in thousands)

(Unaudited)




Three Months Ended June 30,


Six Months Ended June 30,



2018


2017


2018


2017

Homebuilding data:









New orders (units)









  Mid Atlantic (1)


2,414



2,263



4,917



4,388


  North East (2)


365



361



736



720


  Mid East (3)


1,142



1,145



2,438



2,279


  South East (4)


1,043



909



2,047



1,715


 Total


4,964



4,678



10,138



9,102











Average new order price


$

376.3



$

377.0



$

377.3



$

384.6











Settlements (units)









  Mid Atlantic (1)


2,239



1,976



4,165



3,634


  North East (2)


354



329



655



597


  Mid East (3)


1,092



947



1,971



1,672


  South East (4)


926



665



1,716



1,270


 Total


4,611



3,917



8,507



7,173











Average settlement price


$

379.6



$

386.1



$

380.9



$

384.8











Backlog (units)









  Mid Atlantic (1)






4,976



4,295


  North East (2)






763



731


  Mid East (3)






2,365



2,106


  South East (4)






2,058



1,681


 Total






10,162



8,813











Average backlog price






$

380.0



$

390.9











New order cancellation rate


13

%


13

%


13

%


14

%

Community count (average)


480



491



483



488


Lots controlled at end of period






94,200



83,700











Mortgage banking data:









Loan closings


$

1,214,101



$

1,041,613



$

2,223,774



$

1,884,954


Capture rate


87

%


88

%


87

%


87

%










Common stock information:









Shares outstanding at end of period






3,628,515



3,747,606


Number of shares repurchased


42,112



32,840



158,380



83,762


Aggregate cost of shares repurchased


$

126,296



$

73,959



$

483,538



$

159,506



(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

 

 

Cision View original content:http://www.prnewswire.com/news-releases/nvr-inc-announces-second-quarter-results-300684031.html

SOURCE NVR, Inc.

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