News Release

NVR, Inc. Announces Third Quarter Results

RESTON, Va., Oct. 19, 2017 /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, 2017 of $162,102,000, or $38.02 per diluted share.  Net income and diluted earnings per share for the third quarter ended September 30, 2017 increased 38% and 34%, respectively, when compared to the 2016 third quarter net income of $117,392,000, or $28.46 per diluted share.  Consolidated revenues for the third quarter of 2017 totaled $1,667,920,000, an 8% increase from $1,537,569,000 in the third quarter of 2016.

For the nine months ended September 30, 2017, consolidated revenues were $4,489,504,000, a 10% increase from $4,069,778,000 reported for the same period of 2016.  Net income for the nine months ended September 30, 2017 was $412,902,000, an increase of 50% when compared to the nine months ended September 30, 2016.  Diluted earnings per share for the nine months ended September 30, 2017 was $98.33, an increase of 48% from $66.24 per diluted share for the comparable period of 2016.

Homebuilding

New orders in the third quarter of 2017 increased 21% to 4,200 units, when compared to 3,477 units in the third quarter of 2016. The average sales price of new orders in the third quarter of 2017 was $382,800, a decrease of 3% when compared with the third quarter of 2016.  The decrease in the average sales price of new orders is primarily attributable to a shift in new orders to lower priced markets and lower priced products.  Settlements increased in the third quarter of 2017 to 4,158 units, 6% higher than the third quarter of 2016.  The Company's backlog of homes sold but not settled as of September 30, 2017 increased on a unit basis by 16% to 8,855 units and increased on a dollar basis by 15% to $3,418,710,000 when compared to September 30, 2016.

Homebuilding revenues in the third quarter of 2017 totaled $1,633,726,000, 8% higher than the year earlier period.  Gross profit margin in the third quarter of 2017 increased to 19.9%, compared to 17.6% in the third quarter of 2016.  Gross profit margin was favorably impacted by modest improvement in pricing combined with moderating construction costs.  Income before tax from the homebuilding segment totaled $226,043,000 in the third quarter of 2017, an increase of 35% when compared to the third quarter of 2016.

Mortgage Banking

Mortgage closed loan production in the third quarter of 2017 totaled $1,115,494,000, an increase of 6% when compared to the third quarter of 2016. Income before tax from the mortgage banking segment totaled $18,421,000 in the third quarter of 2017, an increase of 6% when compared to the third quarter of 2016.

Income Taxes

Net income and diluted earnings per share were favorably impacted by the reduction in the Company's effective tax rate for the three and nine months ended September 30, 2017 to 33.7% and 29.5%, respectively, compared to 36.5% and 36.6% for the three and nine months ended September 30, 2016, respectively.  The reduction in the effective tax rate was primarily due to the Company's January 1, 2017 adoption of Accounting Standard Update 2016-09, which resulted in the Company recognizing an income tax benefit of $8,357,000 and $44,720,000 related to excess tax benefits from stock option exercises during the three and nine months ended September 30, 2017, respectively.  For the three and nine months ended September 30, 2016, the excess tax benefits of $2,271,000 and $10,949,000, respectively, were recorded to additional paid-in capital within shareholders' equity on the consolidated balance sheet.  Excluding the impact of the excess tax benefits recognized during the three and nine months ended September 30, 2017, the effective tax rate would have been 37.1% for both periods.  Additionally, the excess tax benefits recognized during the three and nine months ended September 30, 2017 favorably impacted diluted earnings per share by $1.96 and $10.65 per share, respectively.

About NVR

NVR, Inc. operates in two business segments:  homebuilding and mortgage banking.  The homebuilding unit sells and builds homes under the Ryan Homes, NVHomes and Heartland Homes trade names, and operates in twenty-nine 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 September 30,


Nine Months Ended September 30,



2017


2016


2017


2016

Homebuilding:









Revenues


$

1,633,726



$

1,507,451



$

4,394,027



$

3,990,696


Other income


1,715



703



4,264



2,223


Cost of sales


(1,307,971)



(1,242,292)



(3,552,071)



(3,294,421)


Selling, general and administrative


(95,606)



(92,867)



(294,610)



(290,925)


Operating income


231,864



172,995



551,610



407,573


Interest expense


(5,821)



(5,338)



(17,040)



(14,734)


Homebuilding income


226,043



167,657



534,570



392,839











Mortgage Banking:









Mortgage banking fees


34,194



30,118



95,477



79,082


Interest income


1,953



2,000



5,168



5,111


Other income


583



473



1,398



1,140


General and administrative


(18,010)



(14,959)



(50,190)



(44,345)


Interest expense


(299)



(286)



(830)



(792)


Mortgage banking income


18,421



17,346



51,023



40,196











Income before taxes


244,464



185,003



585,593



433,035


Income tax expense


(82,362)



(67,611)



(172,691)



(158,664)











Net income


$

162,102



$

117,392



$

412,902



$

274,371











Basic earnings per share


$

43.26



$

30.43



$

110.60



$

70.70











Diluted earnings per share


$

38.02



$

28.46



$

98.33



$

66.24











Basic weighted average shares outstanding


3,747



3,858



3,733



3,881











Diluted weighted average shares outstanding


4,263



4,125



4,199



4,142


 

 

 

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

 








September 30, 2017


December 31, 2016

ASSETS





Homebuilding:





Cash and cash equivalents


$

611,094



$

375,748


Restricted cash


13,797



17,561


Receivables


20,448



18,937


Inventory:





Lots and housing units, covered under sales agreements with customers


1,187,508



883,868


Unsold lots and housing units


158,049



145,065


Land under development


19,182



46,999


Building materials and other


11,820



16,168




1,376,559



1,092,100


Assets related to consolidated variable interest entity


1,222



1,251


Contract land deposits, net


365,142



379,844


Property, plant and equipment, net


43,822



45,915


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


41,580



41,580


Goodwill and finite-lived intangible assets, net


1,563



2,599


Other assets


266,572



257,811




2,741,799



2,233,346


Mortgage Banking:





Cash and cash equivalents


15,790



19,657


Restricted cash


2,075



1,857


Mortgage loans held for sale, net


258,554



351,958


Property and equipment, net


6,308



4,903


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


7,347



7,347


Other assets


17,638



24,875




307,712



410,597


Total assets


$

3,049,511



$

2,643,943







LIABILITIES AND SHAREHOLDERS' EQUITY





Homebuilding:





Accounts payable


$

267,039



$

251,212


Accrued expenses and other liabilities


337,932



336,318


Liabilities related to consolidated variable interest entity


853



882


Customer deposits


162,285



122,236


Senior notes


596,913



596,455




1,365,022



1,307,103


Mortgage Banking:





Accounts payable and other liabilities


33,813



32,399




33,813



32,399


Total liabilities


1,398,835



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 both September 30, 2017 and December 31, 2016


206



206


Additional paid-in capital


1,626,112



1,515,828


Deferred compensation trust – 108,638 and 108,640 shares of NVR, Inc. common stock as of September 30, 2017 and December 31, 2016, respectively


(17,376)



(17,375)


Deferred compensation liability


17,376



17,375


Retained earnings


6,107,321



5,695,376


Less treasury stock at cost – 16,819,467 and 16,862,327 shares as of September 30, 2017 and December 31, 2016, respectively


(6,082,963)



(5,906,969)


Total shareholders' equity


1,650,676



1,304,441


Total liabilities and shareholders' equity


$

3,049,511



$

2,643,943


 

 

 

NVR, Inc.

Operating Activity

(dollars in thousands)

(Unaudited)

 








Three Months Ended September 30,


Nine Months Ended September 30,



2017


2016


2017


2016

Homebuilding data:









New orders (units)









Mid Atlantic (1)


2,113



1,817



6,501



6,088


North East (2)


346



305



1,066



960


Mid East (3)


939



769



3,218



2,829


South East (4)


802



586



2,517



2,061


Total


4,200



3,477



13,302



11,938











Average new order price


$

382.8



$

392.8



$

384.0



$

383.6











Settlements (units)









Mid Atlantic (1)


2,048



1,984



5,682



5,201


North East (2)


333



330



930



896


Mid East (3)


1,021



1,013



2,693



2,708


South East (4)


756



595



2,026



1,704


Total


4,158



3,922



11,331



10,509











Average settlement price


$

392.9



$

384.1



$

387.7



$

378.0











Backlog (units)









Mid Atlantic (1)






4,360



4,024


North East (2)






744



604


Mid East (3)






2,024



1,619


South East (4)






1,727



1,411


Total






8,855



7,658











Average backlog price






$

386.1



$

389.4











New order cancellation rate


13

%


18

%


14

%


15

%

Community count (average)


479



484



485



482


Lots controlled at end of period






84,000



77,300











Mortgage banking data:









Loan closings


$

1,115,494



$

1,055,163



$

3,000,448



$

2,751,410


Capture rate


88

%


88

%


87

%


88

%










Common stock information:









Shares outstanding at end of period






3,735,863



3,789,295


Number of shares repurchased


26,630



116,318



110,392



178,306


Aggregate cost of shares repurchased


$

70,693



$

195,235



$

230,199



$

291,743


 

(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-third-quarter-results-300539456.html

SOURCE NVR, Inc.

Investor Relations Contact: Curt McKay, (703) 956-4058, ir@nvrinc.com