RESTON, Va., Jan. 25 /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 fourth quarter ended December 31, 2006 decreased 31% and net income decreased 39% when compared to the 2005 fourth quarter. Net income for the 2006 fourth quarter was $135,167,000, $20.86 per diluted share, compared to net income of $222,537,000, $30.29 per diluted share, for the same period of 2005. The fourth quarter results were negatively impacted by land deposit impairments of approximately $60,000,000. These impairments lowered gross margins by 375 basis points and reduced diluted earnings per share by $5.65. Consolidated revenues for the last three months of 2006 totaled $1,627,130,000, a 2% decrease from $1,658,204,000 for the comparable 2005 quarter.
Net income for the 2006 fiscal year was $587,412,000, $88.05 per diluted share, compared to net income of $697,559,000, $89.61 per diluted share for 2005, a 16% decrease in net income and a 2% decrease in diluted earnings per share. The full year results were negatively impacted by land deposit impairments of approximately $174,000,000. These impairments lowered gross margins by 288 basis points and reduced diluted earnings per share by $15.88. Consolidated revenues for 2006 totaled $6,134,124,000, a 17% increase from the $5,262,347,000 for 2005.
Homebuilding New orders for the fourth quarter of 2006 decreased 17% to 3,002 units, when compared to 3,615 units for the fourth quarter of 2005. The cancellation rate in the fourth quarter of 2006 was 20% compared to 13% in the fourth quarter of 2005 and 27% in the third quarter of 2006. The cancellation rate in Washington was 34% in the quarter compared to 18% in the fourth quarter of 2005 and 39% in the third quarter of 2006. The average sales price of new orders in the fourth quarter of 2006 declined by 10% from the fourth quarter of 2005. The decline is the result of a decrease in the average sales price of new orders in the Mid Atlantic and North East markets of 17% and 12%, respectively.
Settlements decreased in the fourth quarter of 2006 to 4,002 units, 4% less than the same period of 2005. Homebuilding revenues for the three months ended December 31, 2006 totaled $1,600,733,000, 2% lower than the year earlier period. Income before tax from the homebuilding segment totaled $201,884,000, a decrease of 41% when compared to the fourth quarter of the previous year. Gross profit margins decreased to 19.0% in the 2006 fourth quarter compared to 27.6% for the same period in 2005. The decline in gross profit margins is due to the previously mentioned land impairments and continued pricing pressures in many of our markets.
New orders for 2006 totaled 13,217 units, a 10% decrease when compared to the 14,653 units reported for 2005. Home settlements for 2006 increased 10% to 15,139 units when compared to 13,787 units closed in 2005. Homebuilding revenues for 2006 totaled $6,036,236,000, 17% higher than 2005. Pre-tax homebuilding income decreased to $897,838,000 for the 2006 fiscal year, a decrease of 17% from the prior year. Gross profit margins decreased to 22.1% in 2006 from 27.8% in 2005. The number of homes in backlog at the end of 2006 was 6,388 units, 23% lower than the 8,310 units in backlog at the end of 2005. The dollar volume in backlog decreased 28% to $2,634,720,000 at December 31, 2006, when compared to the same time last year.
Mortgage Banking Mortgage closed loan production of $1,071,286,000 for the three months ended December 31, 2006 was 2% higher than the same period last year. Operating income contributed by the mortgage banking operations during the fourth quarter of 2006 decreased 8% to $17,875,000, when compared to $19,479,000 reported for the same period of 2005.
Operating income from the mortgage banking segment increased for the 2006 fiscal year to $65,133,000, a 13% increase from the $57,739,000 reported for 2005. Mortgage production for the year increased 16% to $3,918,206,000.
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
(amounts in thousands, except per share data) Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005 Homebuilding:
Revenues $1,600,733 $1,630,778 $6,036,236 $5,177,743
Other income 5,361 2,144 13,609 6,301
Cost of sales (1,297,372) (1,180,762) (4,701,265) (3,738,030)
Selling, general
and administrative (103,188) (102,249) (432,319) (345,525)
Operating income 205,534 349,911 916,261 1,100,489
Interest expense (3,650) (4,974) (18,423) (13,809)
Homebuilding
income 201,884 344,937 897,838 1,086,680 Mortgage Banking:
Mortgage banking
fees 26,397 27,426 97,888 84,604
Interest income 2,468 1,738 7,704 5,014
Other income 317 413 1,334 1,435
General and
administrative (11,121) (9,069) (38,988) (31,555)
Interest expense (186) (1,029) (2,805) (1,759)
Mortgage banking
income 17,875 19,479 65,133 57,739 Income before taxes 219,759 364,416 962,971 1,144,419 Income tax expense (84,592) (141,879) (375,559) (446,860) Net income $135,167 $222,537 $587,412 $697,559
Basic earnings
per share $24.43 $37.34 $104.08 $110.36 Diluted earnings
per share $20.86 $30.29 $88.05 $89.61 Basic average
shares outstanding 5,533 5,959 5,644 6,321 Diluted average
shares outstanding 6,481 7,348 6,672 7,784 NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) December 31,
2006 2005
ASSETS Homebuilding:
Cash and cash equivalents $551,738 $170,090
Receivables 12,213 40,562
Inventory:
Lots and housing units, covered under
sales agreements with customers 667,100 723,657
Unsold lots and housing units 58,248 60,419
Manufacturing materials and other 8,268 9,899
733,616 793,975 Contract land deposits, net 402,170 517,241
Assets not owned, consolidated
per FIN 46R 276,419 275,306
Property, plant and equipment, net 40,430 31,096
Reorganization value in excess of
amounts allocable to identifiable
assets, net 41,580 41,580
Goodwill and other indefinite and
definite life intangibles, net 11,936 12,061
Other assets 207,468 142,851 2,277,570 2,024,762 Mortgage Banking:
Cash and cash equivalents 4,381 7,436
Mortgage loans held for sale, net 178,444 193,932
Property and equipment, net 1,168 1,003
Reorganization value in excess of
amounts allocable to identifiable
assets, net 7,347 7,347
Other assets 4,898 3,189 196,238 212,907 Total assets $2,473,808 $2,237,669
LIABILITIES AND SHAREHOLDERS' EQUITY Homebuilding:
Accounts payable $273,936 $262,086
Accrued expenses and other
liabilities 265,223 337,257
Liabilities related to assets not
owned consolidated per FIN 46R 244,805 215,284
Customer deposits 165,354 256,837
Other term debt 3,080 3,325
Notes payable - 103,000
Senior notes 200,000 200,000
1,152,398 1,377,789 Mortgage Banking:
Accounts payable and other
liabilities 15,784 25,902
Notes payable 153,552 156,816
169,336 182,718
Total liabilities 1,321,734 1,560,507
Commitments and contingencies Shareholders' equity:
Common stock, $0.01 par value;
60,000,000 shares authorized;
20,592,640 shares issued for
both 2006 and 2005 206 206
Additional paid-in-capital 585,438 473,886
Deferred compensation trust-
547,911 and 547,697 shares of
NVR, Inc. common stock for 2006
and 2005, respectively (80,491) (76,303)
Deferred compensation liability 80,491 76,303
Retained earnings 3,196,040 2,608,628
Less treasury stock at cost -
15,075,113 and 14,964,482 shares
for 2006 and 2005, respectively (2,629,610) (2,405,558)
Total shareholders' equity 1,152,074 677,162
Total liabilities and shareholders'
equity $2,473,808 $2,237,669 NVR, Inc. Operating Activity
(unaudited)
(dollars in thousands) Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005 Homebuilding data:
New orders (units)
Mid Atlantic (1) 1,442 1,694 6,182 7,327
North East (2) 319 369 1,438 1,459
Mid East (3) 755 1,020 3,244 3,544
South East (4) 486 532 2,353 2,323
Total 3,002 3,615 13,217 14,653 Average new order
price $366.7 $407.1 $377.4 $404.6 Settlements (units)
Mid Atlantic (1) 1,980 2,017 7,491 6,735
North East (2) 485 557 1,682 1,390
Mid East (3) 965 987 3,571 3,404
South East (4) 572 619 2,395 2,258
Total 4,002 4,180 15,139 13,787 Average settlement
price $399.5 $389.6 $398.2 $374.9 Backlog (units)
Mid Atlantic (1) 3,665 4,974
North East (2) 540 784
Mid East (3) 1,274 1,601
South East (4) 909 951
Total 6,388 8,310 Average backlog
price $412.4 $442.0 Community count
(average) 551 584 589 522
Lots controlled at
end of year 88,500 106,000 Mortgage banking data:
Loan closings $1,071,286 $1,047,941 $3,918,206 $3,388,118
Capture rate 87% 87% 86% 87% Common stock information:
Shares outstanding at
end of year 5,517,527 5,628,158
Weighted average
basic shares
outstanding 5,533,000 5,959,000 5,644,000 6,321,000
Weighted average
diluted shares
outstanding 6,481,000 7,348,000 6,672,000 7,784,000
Number of shares
repurchased 192,200 625,900 481,141 1,269,050
Aggregate cost of
shares repurchased $103,778 $452,077 $287,064 $962,609 (1) Virginia, West Virginia, Maryland, and Delaware
(2) Eastern Pennsylvania and New Jersey
(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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