News Release
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NVR, Inc. Announces Fourth Quarter and Full Year Results
For the year ended December 31, 2017, consolidated revenues were
Net income and diluted earnings per share for the fourth quarter and year ended
- The enactment of the Tax Cuts and Jobs Act in
December 2017 , which required a remeasurement of the Company's deferred tax assets, resulted in a charge of$62,702,000 in the fourth quarter, and
- The Company's
January 1, 2017 adoption of Accounting Standard Update 2016-09, which resulted in the Company recognizing an income tax benefit of$13,960,000 and$58,681,000 related to excess tax benefits from stock option exercises during the fourth quarter and year endedDecember 31, 2017 , respectively. For the fourth quarter and year ended December 31, 2016, the excess tax benefits of$2,712,000 and$13,661,000 , respectively, were recorded to additional paid-in capital within shareholders' equity on the consolidated balance sheet.
The following summarizes the impact of these items on income tax expense and diluted earnings per share ("EPS") during the fourth quarter and year ended
Three Months Ended December 31, 2017 |
Twelve Months Ended December 31, 2017 |
||||||||
Income Tax |
EPS Impact |
Income Tax |
EPS Impact |
||||||
GAAP Income Tax Expense |
$ |
136,699,000 |
$ |
309,390,000 |
|||||
Less: Impact of Tax Cuts and Jobs Act |
(62,702,000) |
$(14.53) |
(62,702,000) |
$(14.79) |
|||||
Add: Impact of excess tax benefits recognized |
13,960,000 |
$3.24 |
58,681,000 |
$13.84 |
|||||
Adjusted Income Tax Expense (non-GAAP measure) |
$ |
87,957,000 |
$ |
305,369,000 |
|||||
The Company's effective tax rate for the fourth quarter and year ended
Homebuilding
New orders in the fourth quarter of 2017 increased 18% to 4,306 units, when compared to 3,645 units in the fourth quarter of 2016. The average sales price of new orders in the fourth quarter of 2017 was
Homebuilding revenues in the fourth quarter of 2017 totaled
New orders for the year ended December 31, 2017 increased 13% to 17,608 units, when compared to 15,583 units in 2016. Settlements increased 7% year over year to 15,961 units in 2017 from 14,928 units in 2016. Homebuilding revenues for the year ended December 31, 2017 totaled
Mortgage Banking
Mortgage closed loan production in the fourth quarter of 2017 totaled
Mortgage closed loan production for the year ended December 31, 2017 increased 7% to
Financial Disclosure Advisory
The Company reports its financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). This press release references a non-GAAP financial measure, Adjusted Income Tax Expense, which reflects the Company's income tax expense excluding the impact of the charge associated with the enactment of the Tax Cut and Jobs Act and the impact of the income tax benefit recognized from excess tax benefits from stock option exercises. These adjustments result in an Adjusted Income Tax Expense for the current quarter and year that, in the Company's view, facilitate a more consistent comparison to GAAP income tax expense in the prior year.
The Company believes that the non-GAAP financial measure included in this press release allows investors to understand and compare results in a more consistent manner for the fourth quarters and years ended
About NVR
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) |
||||||||||||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
(Unaudited) |
(Unaudited) |
(Unaudited) |
||||||||||||||
Homebuilding: |
||||||||||||||||
Revenues |
$ |
1,781,494 |
$ |
1,718,527 |
$ |
6,175,521 |
$ |
5,709,223 |
||||||||
Other income |
2,272 |
597 |
6,536 |
2,820 |
||||||||||||
Cost of sales |
(1,438,307) |
(1,413,440) |
(4,990,378) |
(4,707,861) |
||||||||||||
Selling, general and administrative |
(97,662) |
(91,534) |
(392,272) |
(382,459) |
||||||||||||
Operating income |
247,797 |
214,150 |
799,407 |
621,723 |
||||||||||||
Interest expense |
(5,997) |
(5,887) |
(23,037) |
(20,621) |
||||||||||||
Homebuilding income |
241,800 |
208,263 |
776,370 |
601,102 |
||||||||||||
Mortgage Banking: |
||||||||||||||||
Mortgage banking fees |
34,842 |
34,239 |
130,319 |
113,321 |
||||||||||||
Interest income |
2,682 |
2,458 |
7,850 |
7,569 |
||||||||||||
Other income |
650 |
512 |
2,048 |
1,652 |
||||||||||||
General and administrative |
(18,338) |
(16,516) |
(68,528) |
(60,861) |
||||||||||||
Interest expense |
(318) |
(294) |
(1,148) |
(1,086) |
||||||||||||
Mortgage banking income |
19,518 |
20,399 |
70,541 |
60,595 |
||||||||||||
Income before taxes |
261,318 |
228,662 |
846,911 |
661,697 |
||||||||||||
Income tax expense |
(136,699) |
(77,771) |
(309,390) |
(236,435) |
||||||||||||
Net income |
$ |
124,619 |
$ |
150,891 |
$ |
537,521 |
$ |
425,262 |
||||||||
Basic earnings per share |
$ |
33.39 |
$ |
40.25 |
$ |
144.00 |
$ |
110.53 |
||||||||
Diluted earnings per share |
$ |
28.88 |
$ |
37.80 |
$ |
126.77 |
$ |
103.61 |
||||||||
Basic weighted average shares outstanding |
3,732 |
3,749 |
3,733 |
3,847 |
||||||||||||
Diluted weighted average shares outstanding |
4,315 |
3,992 |
4,240 |
4,104 |
NVR, Inc. Consolidated Balance Sheets (in thousands, except share and per share data) (unaudited) |
||||||||
December 31, 2017 |
December 31, 2016 |
|||||||
ASSETS |
||||||||
Homebuilding: |
||||||||
Cash and cash equivalents |
$ |
645,087 |
$ |
375,748 |
||||
Restricted cash |
19,438 |
17,561 |
||||||
Receivables |
20,026 |
18,937 |
||||||
Inventory: |
||||||||
Lots and housing units, covered under sales agreements with customers |
1,046,094 |
883,868 |
||||||
Unsold lots and housing units |
148,620 |
145,065 |
||||||
Land under development |
34,212 |
46,999 |
||||||
Building materials and other |
17,273 |
16,168 |
||||||
1,246,199 |
1,092,100 |
|||||||
Contract land deposits, net |
370,429 |
379,844 |
||||||
Property, plant and equipment, net |
43,191 |
45,915 |
||||||
Reorganization value in excess of amounts allocable to identifiable assets, net |
41,580 |
41,580 |
||||||
Deferred tax assets, net |
111,953 |
170,652 |
||||||
Other assets |
86,977 |
91,009 |
||||||
2,584,880 |
2,233,346 |
|||||||
Mortgage Banking: |
||||||||
Cash and cash equivalents |
21,707 |
19,657 |
||||||
Restricted cash |
2,256 |
1,857 |
||||||
Mortgage loans held for sale, net |
352,489 |
351,958 |
||||||
Property and equipment, net |
6,327 |
4,903 |
||||||
Reorganization value in excess of amounts allocable to identifiable assets, net |
7,347 |
7,347 |
||||||
Other assets |
14,273 |
24,875 |
||||||
404,399 |
410,597 |
|||||||
Total assets |
$ |
2,989,279 |
$ |
2,643,943 |
||||
LIABILITIES AND SHAREHOLDERS' EQUITY |
||||||||
Homebuilding: |
||||||||
Accounts payable |
$ |
261,973 |
$ |
251,212 |
||||
Accrued expenses and other liabilities |
341,891 |
337,200 |
||||||
Customer deposits |
150,033 |
122,236 |
||||||
Senior notes |
597,066 |
596,455 |
||||||
1,350,963 |
1,307,103 |
|||||||
Mortgage Banking: |
||||||||
Accounts payable and other liabilities |
32,824 |
32,399 |
||||||
32,824 |
32,399 |
|||||||
Total liabilities |
1,383,787 |
1,339,502 |
||||||
Commitments and contingencies |
||||||||
Shareholders' equity: |
||||||||
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of |
206 |
206 |
||||||
Additional paid-in capital |
1,644,197 |
1,515,828 |
||||||
Deferred compensation trust – 108,640 shares of NVR, Inc. common stock as of both |
(17,383) |
(17,375) |
||||||
Deferred compensation liability |
17,383 |
17,375 |
||||||
Retained earnings |
6,231,940 |
5,695,376 |
||||||
Less treasury stock at cost – 16,864,324 and 16,862,327 shares as of December 31, 2017 and |
(6,270,851) |
(5,906,969) |
||||||
Total shareholders' equity |
1,605,492 |
1,304,441 |
||||||
Total liabilities and shareholders' equity |
$ |
2,989,279 |
$ |
2,643,943 |
NVR, Inc. Operating Activity (dollars in thousands) (Unaudited) |
||||||||||||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
|||||||||||||||
2017 |
2016 |
2017 |
2016 |
|||||||||||||
Homebuilding data: |
||||||||||||||||
New orders (units) |
||||||||||||||||
Mid Atlantic (1) |
2,153 |
1,828 |
8,654 |
7,916 |
||||||||||||
North East (2) |
296 |
354 |
1,362 |
1,314 |
||||||||||||
Mid East (3) |
953 |
830 |
4,171 |
3,659 |
||||||||||||
South East (4) |
904 |
633 |
3,421 |
2,694 |
||||||||||||
Total |
4,306 |
3,645 |
17,608 |
15,583 |
||||||||||||
Average new order price |
$ |
380.8 |
$ |
395.2 |
$ |
383.2 |
$ |
386.4 |
||||||||
Settlements (units) |
||||||||||||||||
Mid Atlantic (1) |
2,289 |
2,311 |
7,971 |
7,512 |
||||||||||||
North East (2) |
358 |
350 |
1,288 |
1,246 |
||||||||||||
Mid East (3) |
1,079 |
950 |
3,772 |
3,658 |
||||||||||||
South East (4) |
904 |
808 |
2,930 |
2,512 |
||||||||||||
Total |
4,630 |
4,419 |
15,961 |
14,928 |
||||||||||||
Average settlement price |
$ |
384.7 |
$ |
388.8 |
$ |
386.9 |
$ |
381.2 |
||||||||
Backlog (units) |
||||||||||||||||
Mid Atlantic (1) |
4,224 |
3,541 |
||||||||||||||
North East (2) |
682 |
608 |
||||||||||||||
Mid East (3) |
1,898 |
1,499 |
||||||||||||||
South East (4) |
1,727 |
1,236 |
||||||||||||||
Total |
8,531 |
6,884 |
||||||||||||||
Average backlog price |
$ |
384.2 |
$ |
392.8 |
||||||||||||
New order cancellation rate |
14 |
% |
17 |
% |
14 |
% |
15 |
% |
||||||||
Community count (average) |
484 |
495 |
485 |
485 |
||||||||||||
Lots controlled at end of period |
88,700 |
78,000 |
||||||||||||||
Mortgage banking data: |
||||||||||||||||
Loan closings |
$ |
1,229,695 |
$ |
1,201,164 |
$ |
4,229,507 |
$ |
3,952,575 |
||||||||
Capture rate |
88 |
% |
89 |
% |
88 |
% |
88 |
% |
||||||||
Common stock information: |
||||||||||||||||
Shares outstanding at end of period |
3,691,006 |
3,693,003 |
||||||||||||||
Number of shares repurchased |
56,128 |
101,982 |
166,520 |
280,288 |
||||||||||||
Aggregate cost of shares repurchased |
$ |
191,967 |
$ |
163,608 |
$ |
422,166 |
$ |
455,351 |
(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 |
View original content:http://www.prnewswire.com/news-releases/nvr-inc-announces-fourth-quarter-and-full-year-results-300587929.html
SOURCE
Investor Relations: Curt McKay, (703) 956-4058, ir@nvrinc.com