News Release

NVR, Inc. Announces First Quarter Results

RESTON, Va., April 19, 2018 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its first quarter ended March 31, 2018 of $166,049,000, or $39.34 per diluted share.  Net income and diluted earnings per share for the first quarter ended March 31, 2018 increased 61% and 57%, respectively, when compared to 2017 first quarter net income of $102,923,000, or $25.12 per diluted share.  Consolidated revenues for the first quarter of 2018 totaled $1,529,414,000, a 20% increase from $1,277,092,000 in the first quarter of 2017.

Net income and diluted earnings per share were favorably impacted by the reduction in the Company's effective tax rate in the first quarter of 2018 to 13.1% from 22.1% in the first quarter of 2017.  The reduction in the effective tax rate was primarily due to the following items:

  • 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%, and

  • The retroactive reinstatement of certain expired energy tax credits under the Bipartisan Budget Act of 2018, which resulted in the Company recognizing a tax benefit of approximately $6,200,000 related to homes settled in 2017.

Additionally, the effective tax rate in both the first quarter of 2018 and 2017 was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $19,567,000 and $19,900,000, respectively.

Homebuilding

New orders in the first quarter of 2018 increased 17% to 5,174 units, when compared to 4,424 units in the first quarter of 2017. The average sales price of new orders in the first quarter of 2018 was $378,200, a decrease of 4% when compared with the first quarter of 2017.  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 first quarter of 2018 to 3,896 units, 20% higher than the first quarter of 2017.  The Company's backlog of homes sold but not settled as of March 31, 2018 increased on a unit basis by 22% to 9,809 units and increased on a dollar basis by 17% to $3,744,523,000 when compared to March 31, 2017.

Homebuilding revenues in the first quarter of 2018 totaled $1,490,093,000, 19% higher than the year earlier period.  Gross profit margin in the first quarter of 2018 increased to 18.7%, compared to 17.8% in the first quarter of 2017.  Income before tax from the homebuilding segment totaled $168,570,000 in the first quarter of 2018, an increase of 44% when compared to the first quarter of 2017.

Mortgage Banking

Mortgage closed loan production in the first quarter of 2018 totaled $1,009,673,000, an increase of 20% when compared to the first quarter of 2017.  Income before tax from the mortgage banking segment totaled $22,428,000 in the first quarter of 2018, an increase of 50% when compared to $14,971,000 in the first 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 March 31,



2018


2017






Homebuilding:





Revenues


$

1,490,093



$

1,247,587


Other income


1,977



1,102


Cost of sales


(1,211,946)



(1,026,017)


Selling, general and administrative


(105,547)



(99,904)


Operating income


174,577



122,768


Interest expense


(6,007)



(5,578)


Homebuilding income


168,570



117,190







Mortgage Banking:





Mortgage banking fees


39,321



29,505


Interest income


2,093



1,661


Other income


524



309


General and administrative


(19,235)



(16,246)


Interest expense


(275)



(258)


Mortgage banking income


22,428



14,971







Income before taxes


190,998



132,161


Income tax expense


(24,949)



(29,238)







Net income


$

166,049



$

102,923







Basic earnings per share


$

45.19



$

27.78







Diluted earnings per share


$

39.34



$

25.12







Basic weighted average shares outstanding


3,675



3,705







Diluted weighted average shares outstanding


4,220



4,097


 

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)




March 31, 2018


December 31, 2017

ASSETS





Homebuilding:





Cash and cash equivalents


$

414,763



$

645,087


Restricted cash


20,767



19,438


Receivables


22,374



20,026


Inventory:





Lots and housing units, covered under sales agreements with customers


1,170,604



1,046,094


Unsold lots and housing units


124,312



148,620


Land under development


33,078



34,212


Building materials and other


16,398



17,273




1,344,392



1,246,199







Contract land deposits, net


361,891



370,429


Property, plant and equipment, net


41,326



43,191


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


41,580



41,580


Other assets


204,329



198,930




2,451,422



2,584,880


Mortgage Banking:





Cash and cash equivalents


10,803



21,707


Restricted cash


3,230



2,256


Mortgage loans held for sale, net


344,023



352,489


Property and equipment, net


6,237



6,327


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


7,347



7,347


Other assets


23,003



14,273




394,643



404,399


Total assets


$

2,846,065



$

2,989,279







LIABILITIES AND SHAREHOLDERS' EQUITY





Homebuilding:





Accounts payable


$

265,155



$

261,973


Accrued expenses and other liabilities


314,897



341,891


Customer deposits


167,486



150,033


Senior notes


597,220



597,066




1,344,758



1,350,963


Mortgage Banking:





Accounts payable and other liabilities


34,499



32,824




34,499



32,824


Total liabilities


1,379,257



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 March 31, 2018 and December 31, 2017


206



206


Additional paid-in capital


1,678,100



1,644,197


Deferred compensation trust – 108,642 and 108,640 shares of NVR, Inc. common stock as of
  March 31, 2018 and December 31, 2017, respectively


(17,389)



(17,383)


Deferred compensation liability


17,389



17,383


Retained earnings


6,400,185



6,231,940


Less treasury stock at cost – 16,936,586 and 16,864,324 shares as of March 31, 2018 and December 31, 
  2017, respectively


(6,611,683)



(6,270,851)


Total shareholders' equity


1,466,808



1,605,492


Total liabilities and shareholders' equity


$

2,846,065



$

2,989,279


 

NVR, Inc.

Operating Activity

(dollars in thousands)

(Unaudited)




Three Months Ended March 31,



2018


2017

Homebuilding data:





New orders (units)





 Mid Atlantic (1)


2,503



2,125


 North East (2)


371



359


 Mid East (3)


1,296



1,134


 South East (4)


1,004



806


Total


5,174



4,424







Average new order price


$

378.2



$

392.6







Settlements (units)





 Mid Atlantic (1)


1,926



1,658


 North East (2)


301



268


 Mid East (3)


879



725


 South East (4)


790



605


Total


3,896



3,256







Average settlement price


$

382.4



$

383.1







Backlog (units)





 Mid Atlantic (1)


4,801



4,008


 North East (2)


752



699


 Mid East (3)


2,315



1,908


 South East (4)


1,941



1,437


Total


9,809



8,052







Average backlog price


$

381.7



$

396.6







New order cancellation rate


14

%


16

%

Community count (average)


485



486


Lots controlled at end of period


91,300



79,100







Mortgage banking data:





Loan closings


$

1,009,673



$

843,341


Capture rate


86

%


86

%






Common stock information:





Shares outstanding at end of period


3,618,744



3,735,638


Number of shares repurchased


116,268



50,922


Aggregate cost of shares repurchased


$

357,242



$

85,547



(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-first-quarter-results-300632611.html

SOURCE NVR, Inc.

Curt McKay, (703) 956-4058, ir@nvrinc.com