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Headquartered in Reston, Virginia, NVR, Inc. is one of America’s leading homebuilders.

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NVR, Inc. Announces Fourth Quarter And Full Year Results

RESTON, Va., Jan. 25, 2019 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its fourth quarter ended December 31, 2018 of $232,158,000, or $58.57 per diluted share.  Net income and diluted earnings per share for the fourth quarter ended December 31, 2018 increased 86% and 103%, respectively, when compared to 2017 fourth quarter net income of $124,619,000, or $28.88 per diluted share.  Consolidated revenues for the fourth quarter of 2018 totaled $1,994,548,000, a 10% increase from $1,816,336,000 in the fourth quarter of 2017.

For the year ended December 31, 2018, consolidated revenues were $7,163,674,000, a 14% increase from $6,305,840,000 reported for 2017.  Net income for the year ended December 31, 2018 was $797,197,000, an increase of 48% when compared to the year ended December 31, 2017.  Diluted earnings per share for the year ended December 31, 2018 was $194.80, an increase of 54% from $126.77 per diluted share for 2017.

Net income and diluted earnings per share were favorably impacted by a reduction in the Company's effective tax rate.  The effective tax rates for the fourth quarter and year ended December 31, 2018 were 16.3% and 16.9%, respectively, compared to 52.3% and 36.5% for the fourth quarter and year ended December 31, 2017, respectively.  The lower effective tax rate in 2018 resulted primarily from the enactment of the Tax Cuts and Jobs Act in December 2017, which had the following impacts on comparability between periods:

  • Reduction in the Company's federal statutory tax rate from 35% to 21% in 2018.
  • Remeasurement of the Company's deferred tax assets in the fourth quarter of 2017, which resulted in a charge of $62,702,000 in that quarter.

Additionally, the effective tax rates for the fourth quarter and year ended December 31, 2018 were favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $18,870,000 and $77,478,000, respectively.  For the fourth quarter and year ended December 31, 2017, the income tax benefit related to excess tax benefits from stock option exercises totaled $13,960,000 and $58,681,000, respectively.

Homebuilding

New orders in the fourth quarter of 2018 decreased by 11% to 3,841 units, when compared to 4,306 units in the fourth quarter of 2017. The average sales price of new orders in the fourth quarter of 2018 was $376,100, a decrease of 1% when compared with the fourth quarter of 2017.  Settlements increased in the fourth quarter of 2018 to 5,186 units, which was 12% higher than the fourth quarter of 2017.  The Company's backlog of homes sold but not settled as of December 31, 2018 decreased on a unit basis by 2% to 8,365 units and decreased on a dollar basis by 4% to $3,152,873,000 when compared to December 31, 2017.

Homebuilding revenues in the fourth quarter of 2018 totaled $1,954,403,000, 10% higher than the year earlier period.  Gross profit margin in the fourth quarter of 2018 decreased to 18.6%, compared to 19.3% in the fourth quarter of 2017.  Income before tax from the homebuilding segment totaled $255,074,000 in the fourth quarter of 2018, an increase of 5% when compared to the fourth quarter of 2017.

New orders for the year ended December 31, 2018 increased by 4% to 18,281 units, when compared to 17,608 units in 2017.  Settlements increased 16% year over year to 18,447 units in 2018 from 15,961 units in 2017.  Homebuilding revenues for the year ended December 31, 2018 totaled $7,004,304,000, which was 13% higher than 2017.  Gross profit margin for the year ended December 31, 2018 was 18.7%, compared to 19.2% in 2017.  Income before tax for the homebuilding segment for the year ended December 31, 2018 was $871,106,000, a 12% increase when compared to 2017.

Mortgage Banking

Mortgage closed loan production in the fourth quarter of 2018 totaled $1,356,430,000, an increase of 10% when compared to the fourth quarter of 2017.  Income before tax from the mortgage banking segment totaled $22,364,000 in the fourth quarter of 2018, an increase of 15% when compared to $19,518,000 in the fourth quarter of 2017.

Mortgage closed loan production for the year ended December 31, 2018 increased 14% to $4,829,406,000. Income before tax from the mortgage banking segment for the year ended December 31, 2018 increased 26% to $88,626,000 from $70,541,000 in 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-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: 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,



2018


2017


2018


2017



(Unaudited)


(Unaudited)


(Unaudited)



Homebuilding:









Revenues


$

1,954,403


$

1,781,494


$

7,004,304


$

6,175,521

Other income


4,858


2,272


11,839


6,536

Cost of sales


(1,590,735)


(1,438,307)


(5,692,127)


(4,990,378)

Selling, general and administrative


(107,438)


(97,662)


(428,874)


(392,272)

Operating income


261,088


247,797


895,142


799,407

Interest expense


(6,014)


(5,997)


(24,036)


(23,037)

Homebuilding income


255,074


241,800


871,106


776,370










Mortgage Banking:









Mortgage banking fees


40,145


34,842


159,370


130,319

Interest income


3,223


2,682


11,593


7,850

Other income


722


650


2,546


2,048

General and administrative


(21,467)


(18,338)


(83,838)


(68,528)

Interest expense


(259)


(318)


(1,045)


(1,148)

Mortgage banking income


22,364


19,518


88,626


70,541










Income before taxes


277,438


261,318


959,732


846,911

Income tax expense


(45,280)


(136,699)


(162,535)


(309,390)










Net income


$

232,158


$

124,619


$

797,197


$

537,521










Basic earnings per share


$

64.46


$

33.39


$

219.58


$

144.00










Diluted earnings per share


$

58.57


$

28.88


$

194.80


$

126.77










Basic weighted average shares outstanding


3,601


3,732


3,631


3,733










Diluted weighted average shares outstanding


3,964


4,315


4,092


4,240

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)








December 31, 2018


December 31, 2017



(Unaudited)



ASSETS





Homebuilding:





Cash and cash equivalents


$

688,783


$

645,087

Restricted cash


16,982


19,438

Receivables


18,641


20,026

Inventory:





Lots and housing units, covered under sales agreements with customers


1,076,904


1,046,094

Unsold lots and housing units


115,631


148,620

Land under development


38,857


34,212

Building materials and other


21,718


17,273



1,253,110


1,246,199






Contract land deposits, net


396,177


370,429

Property, plant and equipment, net


42,234


43,191

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


41,580


41,580

Deferred tax assets, net


112,333


111,953

Other assets


71,671


86,977



2,641,511


2,584,880

Mortgage Banking:





Cash and cash equivalents


23,092


21,707

Restricted cash


3,071


2,256

Mortgage loans held for sale, net


458,324


352,489

Property and equipment, net


6,510


6,327

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


7,347


7,347

Other assets


26,078


14,273



524,422


404,399

Total assets


$

3,165,933


$

2,989,279






LIABILITIES AND SHAREHOLDERS' EQUITY





Homebuilding:





Accounts payable


$

244,496


$

261,973

Accrued expenses and other liabilities


332,871


341,891

Customer deposits


138,246


150,033

Senior notes


597,681


597,066



1,313,294


1,350,963

Mortgage Banking:





Accounts payable and other liabilities


44,077


32,824



44,077


32,824

Total liabilities


1,357,371


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 December 31, 2018 and December 31, 2017


206


206

Additional paid-in capital


1,820,223


1,644,197

Deferred compensation trust – 107,340 and 108,640 shares of NVR, Inc. common stock as of
December 31, 2018 and December 31, 2017, respectively


(16,937)


(17,383)

Deferred compensation liability


16,937


17,383

Retained earnings


7,031,333


6,231,940

Less treasury stock at cost – 16,977,499 and 16,864,324 shares as of December 31, 2018 and
December 31, 2017, respectively


(7,043,200)


(6,270,851)

Total shareholders' equity


1,808,562


1,605,492

Total liabilities and shareholders' equity


$

3,165,933


$

2,989,279

NVR, Inc.

Operating Activity

(dollars in thousands)

(Unaudited)








Three Months Ended December 31,


Twelve Months Ended December 31,



2018


2017


2018


2017

Homebuilding data:









New orders (units)









  Mid Atlantic (1)


1,865


2,153


8,906


8,654

  North East (2)


245


296


1,296


1,362

  Mid East (3)


914


953


4,314


4,171

  South East (4)


817


904


3,765


3,421

  Total


3,841


4,306


18,281


17,608










Average new order price


$

376.1


$

380.8


$

376.3


$

383.2










Settlements (units)









  Mid Atlantic (1)


2,520


2,289


8,982


7,971

  North East (2)


393


358


1,415


1,288

  Mid East (3)


1,271


1,079


4,406


3,772

  South East (4)


1,002


904


3,644


2,930

  Total


5,186


4,630


18,447


15,961










Average settlement price


$

376.8


$

384.7


$

379.7


$

386.9










Backlog (units)









  Mid Atlantic (1)






4,148


4,224

  North East (2)






563


682

  Mid East (3)






1,806


1,898

  South East (4)






1,848


1,727

  Total






8,365


8,531










Average backlog price






$

376.9


$

384.2










New order cancellation rate


17%



14%



15%



14%


Community count (average)


463


484


477


485

Lots controlled at end of period






99,700


88,700










Mortgage banking data:









Loan closings


$

1,356,430


$

1,229,695


$

4,829,406


$

4,229,507

Capture rate


88%



88%



88%



88%











Common stock information:









Shares outstanding at end of period






3,577,831


3,691,006

Number of shares repurchased


78,591


56,128


300,815


166,520

Aggregate cost of shares repurchased


$

188,765


$

191,967


$

846,134


$

422,166


















(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

SOURCE NVR, Inc.