RESTON, Va., July 20 /PRNewswire-FirstCall/ -- NVR, Inc. (AMEX:NVR), one of the nation's largest homebuilding and mortgage banking companies, announced that diluted earnings per share for its second quarter ended June 30, 2007 decreased 50% and net income decreased 52% when compared to the 2006 second quarter. Net income for the 2007 second quarter was $90,747,000, $14.14 per diluted share, compared to net income of $190,352,000, $28.08 per diluted share, for the same period of 2006. Consolidated revenues for the second quarter of 2007 totaled $1,316,668,000, a 25% decrease from $1,748,928,000 for the comparable 2006 quarter.
Homebuilding New orders in the second quarter of 2007 decreased 11% to 3,745 units, when compared to 4,204 units in the second quarter of 2006. New order units and gross profit margins continue to be negatively impacted by high levels of new and existing home inventories, affordability issues and declining home buyer confidence. The cancellation rate in the quarter ended June 30, 2007 was 16% compared to 13% in the second quarter of 2006 and 16% in the first quarter of 2007. The Washington, D.C. cancellation rate in the quarter was 21% compared to 21% in the second quarter of 2006 and 22% in the first quarter of 2007.
Settlements decreased in the second quarter of 2007 to 3,463 units, 19% less than the same period of 2006. Homebuilding revenues for the three months ended June 30, 2007 totaled $1,297,140,000, 25% lower than the year earlier period. Income before tax from the homebuilding segment totaled $135,958,000 in the 2007 second quarter, a decrease of 54% when compared to the second quarter of the previous year. Gross profit margins decreased to 18.1% in the 2007 second quarter compared to 24.3% for the same period in 2006. The decline in gross profit margins was due to continued pricing pressure in many of our markets and land deposit impairments of approximately $55,000,000. These impairments lowered gross margins by 424 basis points and reduced diluted earnings per share by approximately $5.20 for the 2007 quarter. The Company's backlog of homes sold but not settled at the end of the 2007 quarter decreased on a unit basis by 11% to 7,887 units and 19% on a dollar basis to $3,085,939,000 when compared to the same period last year.
For the six months ended June 30, 2007, consolidated revenues were $2,409,857,000, 18% lower than the $2,953,583,000 reported for the same period of 2006. Net income for the six months ended June 30, 2007 was $175,568,000, a decrease of 46% when compared to the six months ended June 30, 2006. Earnings per diluted share for the six months ended June 30, 2007 was $27.11, a decrease of 43% from $47.54 per diluted share for the comparable period of 2006.
Mortgage Banking Mortgage closed loan production of $849,430,000 for the three months ended June 30, 2007 was 24% lower than the same period last year. Sub-prime loans accounted for approximately 6% of our captured mortgage closed loan volume in the current quarter compared to 5% for the second quarter of 2006. Operating income for the mortgage banking operations during the second quarter of 2007 decreased 33% to $11,719,000, when compared to $17,486,000 reported for the same period of 2006.
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. 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 variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. All statements other than those of historical facts included herein, including those regarding market trends, NVR's financial position, business strategy, projected plans and objectives of management for future operations, are forward-looking statements. 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, general economic and business conditions (on both a national and regional level), interest rate changes, access to suitable financing, 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 moratoria, governmental regulation, the ability of NVR to integrate any acquired business, fluctuation and volatility of stock and other financial markets and other factors over which NVR has little or no control. The Company has no obligation to update such forward- looking statements.
NVR, Inc. Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited) Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006 Homebuilding:
Revenues $1,297,140 $1,722,797 $2,372,250 $2,906,539
Other income 5,251 2,634 12,216 5,010
Cost of sales (1,061,937) (1,304,183) (1,915,347) (2,165,222)
Selling, general and
administrative (101,198) (119,551) (198,604) (233,557)
Operating income 139,256 301,697 270,515 512,770
Interest expense (3,298) (6,105) (6,620) (11,632)
Homebuilding income 135,958 295,592 263,895 501,138 Mortgage Banking:
Mortgage banking fees 19,528 26,131 37,607 47,044
Interest income 1,030 1,791 2,337 3,250
Other income 276 383 460 614
General and
administrative (8,954) (9,852) (18,277) (19,020)
Interest expense (161) (967) (313) (1,921)
Mortgage banking income 11,719 17,486 21,814 29,967 Income before taxes 147,677 313,078 285,709 531,105 Income tax expense (56,930) (122,726) (110,141) (208,193) Net income $90,747 $190,352 $175,568 $322,912
Basic earnings per share $16.19 $33.27 $31.16 $57.06 Diluted earnings per share $14.14 $28.08 $27.11 $47.54 Basic average
shares outstanding 5,606 5,722 5,634 5,659 Diluted average
shares outstanding 6,420 6,779 6,477 6,792 NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) June 30, 2007 December 31,
(unaudited) 2006 ASSETS Homebuilding:
Cash and cash equivalents $571,522 $551,738
Receivables 13,474 12,213
Inventory:
Lots and housing units,
covered under sales
agreements with customers 830,964 667,100
Unsold lots and housing units 46,839 58,248
Manufacturing materials and other 8,759 8,268 886,562 733,616 Contract land deposits 327,015 402,170
Assets not owned,
consolidated per FIN 46R 199,246 276,419
Property, plant and equipment, net 35,798 40,430
Reorganization value in excess
of amounts allocable to
identifiable assets, net 41,580 41,580
Goodwill and other indefinite and
definite life intangibles, net 11,849 11,936
Other assets 240,305 207,468 2,327,351 2,277,570 Mortgage Banking:
Cash and cash equivalents 2,560 4,381
Mortgage loans held for sale, net 158,882 178,444
Property and equipment, net 987 1,168
Reorganization value in excess of amounts
allocable to identifiable assets, net 7,347 7,347
Other assets 6,154 4,898 175,930 196,238 Total assets $2,503,281 $2,473,808 NVR, Inc. Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data) June 30, 2007 December 31,
(unaudited) 2006 LIABILITIES AND SHAREHOLDERS' EQUITY Homebuilding:
Accounts payable $272,688 $273,936
Accrued expenses and other liabilities 230,858 265,223
Liabilities related to assets not
owned, consolidated per FIN 46R 172,054 244,805
Customer deposits 195,165 165,354
Other term debt 2,954 3,080
Senior notes 200,000 200,000
1,073,719 1,152,398
Mortgage Banking:
Accounts payable and
other liabilities 13,818 15,784
Notes payable 136,124 153,552
149,942 169,336 Total liabilities 1,223,661 1,321,734 Commitments and contingencies Shareholders' equity:
Common stock, $0.01 par value; 60,000,000
shares authorized; 20,592,640 shares
issued for both June 30, 2007
and December 31, 2006 206 206
Additional paid-in capital 676,003 585,438
Deferred compensation trust - 516,004 and
547,911 shares of NVR, Inc. common stock
for June 30, 2007 and December 31, 2006,
respectively (75,599) (80,491)
Deferred compensation liability 75,599 80,491
Retained earnings 3,371,608 3,196,040
Less treasury stock at cost - 14,984,212
and 15,075,113 shares for June 30, 2007
and December 31, 2006, respectively (2,768,197) (2,629,610)
Total shareholders' equity 1,279,620 1,152,074 Total liabilities and shareholders' equity $2,503,281 $2,473,808 NVR, Inc. Operating Activity
(unaudited)
(dollars in thousands) Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006 Homebuilding data:
New orders (units)
Mid Atlantic (1) 1,803 1,978 3,724 3,612
North East (2) 345 404 762 855
Mid East (3) 923 1,079 1,953 2,007
South East (4) 674 743 1,223 1,363
Total 3,745 4,204 7,662 7,837 Average new order price $363.9 $384.7 $368.2 $386.0 Settlements (units)
Mid Atlantic (1) 1,720 2,145 3,072 3,720
North East (2) 324 454 573 756
Mid East (3) 839 1,028 1,411 1,640
South East (4) 580 670 1,107 1,167
Total 3,463 4,297 6,163 7,283 Average settlement price $374.2 $400.3 $384.4 $398.5 Backlog (units)
Mid Atlantic (1) 4,317 4,866
North East (2) 729 883
Mid East (3) 1,816 1,968
South East (4) 1,025 1,147
Total 7,887 8,864 Average backlog price $391.3 $428.5 Community count (average) 516 618 522 598
Lots controlled at end
of period 85,400 104,000 Mortgage banking data:
Loan closings $849,430 $1,123,461 $1,564,469 $1,860,243
Capture rate 86% 87% 86% 86% Common stock information:
Shares outstanding at
end of period 5,608,428 5,750,939
Weighted average basic
shares outstanding 5,606,000 5,722,000 5,634,000 5,659,000
Weighted average diluted
shares outstanding 6,420,000 6,779,000 6,477,000 6,792,000
Number of shares
repurchased 179,700 - 305,700 161,856
Aggregate cost of
shares repurchased $123,263 - $209,613 $120,817 (1) Virginia, West Virginia, Maryland, and Delaware
(2) New Jersey and eastern Pennsylvania
(3) Kentucky, Michigan, New York, Ohio and western Pennsylvania
(4) North Carolina, South Carolina and Tennessee
DATASOURCE: NVR, Inc.
CONTACT: Dan Malzahn of NVR, Inc., +1-703-956-4204 Web site: http://www.nvrinc.com/
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