RESTON, Va., Jan. 29 /PRNewswire-FirstCall/ -- NVR, Inc. (NYSE:NVR), one of the nation's largest homebuilding and mortgage banking companies, announced a net loss of $30,457,000 and diluted loss per share of $5.54 for its fourth quarter ended December 31, 2008 compared to net income of $67,274,000 and diluted earnings per share of $11.72 for the same period of 2007. The fourth quarter 2008 results were negatively impacted by asset impairments of approximately $121,500,000 compared to $98,000,000 in the fourth quarter of 2007. These impairments lowered fourth quarter 2008 net income by approximately $74,000,000 and lowered fourth quarter 2007 net income by approximately $60,000,000. Consolidated revenues for the fourth quarter of 2008 totaled $910,174,000, a 36% decrease from $1,427,397,000 for the comparable 2007 quarter.
For the year ended December 31, 2008, consolidated revenues were $3,693,039,000, 28% lower than the $5,129,342,000 reported for the same period of 2007. Net income for the year ended December 31, 2008 was $100,892,000, a decrease of 70% when compared to the year ended December 31, 2007. Diluted earnings per share for the year ended December 31, 2008 was $17.04, a decrease of 69% from $54.14 per diluted share for the comparable period of 2007.
Homebuilding New orders in the fourth quarter of 2008 decreased 30% to 1,357 units, when compared to 1,948 units in the fourth quarter of 2007. The cancellation rate in the quarter ended December 31, 2008 was 30% compared to 32% in the fourth quarter of 2007 and 24% in the third quarter of 2008. Settlements decreased in the fourth quarter of 2008 to 2,776 units, 28% less than the same period of 2007.
Homebuilding revenues for the quarter ended December 31, 2008 totaled $899,535,000, 36% lower than the year earlier period. Gross profit margins were 2.6% in the 2008 fourth quarter compared to 12.9% for the same period in 2007. Gross profit margins in the 2008 quarter were impacted by land deposit impairments of approximately $109,800,000, compared to approximately $98,000,000 in the year ago period. Gross profit margins excluding these land deposit impairments were 14.8% in the 2008 fourth quarter compared to 19.9% for the same period in 2007. Loss before tax from the homebuilding segment totaled $56,978,000 in the 2008 fourth quarter compared to income before tax of $92,681,000 in the 2007 fourth quarter. The homebuilding results for the 2008 fourth quarter included goodwill impairments of $11,686,000 and approximately $11,000,000 of expenses related to employee severance and office closure costs as the Company continues to down-size its operations in response to market conditions. Operating unit activity and financial performance continue to be negatively impacted by high levels of new and existing home inventories, affordability issues, a tight lending environment and low homebuyer confidence.
New orders for 2008 totaled 8,760 units, a 29% decrease when compared to the 12,270 units reported for 2007. Home settlements for 2008 decreased 21% to 10,741 units when compared to 13,513 units closed in 2007. Homebuilding revenues for 2008 totaled $3,638,702,000, 28% lower than 2007. Gross profit margins decreased to 12.6% in 2008 from 16.3% in 2007. Pre-tax homebuilding income decreased to $140,751,000 for the 2008 fiscal year, a decrease of 71% from the prior year. The number of homes in backlog at the end of 2008 was 3,164 units, 39% lower than the 5,145 units in backlog at the end of 2007. The dollar volume in backlog decreased 48% to $1,002,795,000 at December 31, 2008, when compared to the same time last year.
Mortgage Banking Mortgage closed loan production of $623,623,000 for the quarter ended December 31, 2008 was 28% lower than the same period last year. Operating income for the mortgage banking operations during the fourth quarter of 2008 decreased 72% to $4,234,000, when compared to $15,301,000 reported for the same period of 2007. Operating income in the current quarter was negatively impacted by a $2,984,000 decrease in unrealized income from the fair value measurements required under SFAS No. 157, Fair Value Measurement, and more competitive mortgage pricing.
Mortgage production for the 2008 full year decreased 27% to $2,351,341,000. Pre-tax income from the mortgage banking segment decreased for the 2008 fiscal year to $26,704,000, a 50% decrease from the $53,929,000 reported for 2007.
Other News The Company also reported that effective February 4, 2009, Mr. Dwight C. Schar, the Company's Executive Chairman, will relinquish the title of Executive Officer but will continue to serve as Chairman of the Board. Mr. Schar's revised role continues the leadership transition that separated the roles of Chairman and CEO to strengthen the operating and governance structure of the Company.
The Company repurchased $36,680,000 of the Company's 5% Senior Notes due 2010 on the open market.
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, the outcome of pending litigation, 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 by NVR and NVR's customers, 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, mortgage financing availability 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 Operations
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ---- Homebuilding:
Revenues $899,535 $1,405,466 $3,638,702 $5,048,187
Other income 2,030 4,693 16,386 21,118
Cost of sales (875,779) (1,224,313) (3,181,010) (4,227,059)
Selling, general
and administrative (67,906) (90,010) (308,739) (343,520)
Operating (loss)
income (42,120) 95,836 165,339 498,726
Interest expense (3,172) (3,155) (12,902) (13,150)
Goodwill and
intangible asset
impairment (11,686) - (11,686) -
Homebuilding (loss)
income (56,978) 92,681 140,751 485,576 Mortgage Banking:
Mortgage banking fees 10,639 21,931 54,337 81,155
Interest income 1,347 1,485 3,955 4,900
Other income 214 280 745 1,060
General and
administrative (7,756) (8,227) (31,579) (32,505)
Interest expense (210) (168) (754) (681)
Mortgage banking
income 4,234 15,301 26,704 53,929 (Loss) income before
taxes (52,744) 107,982 167,455 539,505 Income tax benefit
(expense) 22,287 (40,708) (66,563) (205,550) Net (loss) income $(30,457) $67,274 $100,892 $333,955
Basic (loss) earnings
per share $(5.54) $13.10 $18.76 $61.61 Diluted (loss) earnings
per share $(5.54) $11.72 $17.04 $54.14 Basic average shares
outstanding 5,497 5,136 5,379 5,420 Diluted average shares
outstanding 5,497 5,741 5,920 6,168
NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31, December 31,
2008 2007 ASSETS Homebuilding:
Cash and cash equivalents $1,146,426 $660,709
Receivables 11,594 10,855
Inventory:
Lots and housing units, covered
under sales agreements with
customers 335,238 573,895
Unsold lots and housing units 57,639 105,838
Manufacturing materials and other 7,693 9,121
400,570 688,854 Contract land deposits, net 29,073 188,528
Assets not owned, consolidated
per FIN 46R 114,930 180,206
Property, plant and
equipment, net 25,658 32,911
Reorganization value
in excess of amounts
allocable to identifiable assets, net 41,580 41,580
Goodwill and other indefinite and
definite life intangibles, net - 11,782
Other assets 242,626 252,461 2,012,457 2,067,886 Mortgage Banking:
Cash and cash equivalents 1,217 3,500
Mortgage loans held for sale, net 72,488 107,338
Property and equipment, net 759 881
Reorganization value in excess of amounts
allocable to identifiable assets, net 7,347 7,347
Other assets 8,968 7,464 90,779 126,530 Total assets $2,103,236 $2,194,416
LIABILITIES AND SHAREHOLDERS' EQUITY Homebuilding:
Accounts payable $137,285 $219,048
Accrued expenses and other liabilities 194,869 251,475
Liabilities related to assets not owned,
consolidated per FIN 46R 109,439 164,369
Customer deposits 59,623 125,315
Other term debt 2,530 2,820
Senior notes 163,320 200,000
667,066 963,027
Mortgage Banking:
Accounts payable and other liabilities 17,842 18,551
Notes payable 44,539 83,463
62,381 102,014 Total liabilities 729,447 1,065,041 Commitments and contingencies Shareholders' equity:
Common stock, $0.01 par value; 60,000,000
shares authorized; 20,561,187 and
20,592,640 shares issued for December 31,
2008 and 2007 respectively 206 206
Additional paid-in capital 722,265 663,631
Deferred compensation trust - 514,470 and
516,085 shares of NVR, Inc. common stock
for December 31, 2008 and 2007,
respectively (74,978) (75,636)
Deferred compensation liability 74,978 75,636
Retained earnings 3,630,887 3,529,995
Less treasury stock at cost - 15,028,335
and 15,455,086 shares for December 31,
2008 and 2007, respectively (2,979,569) (3,064,457)
Total shareholders' equity 1,373,789 1,129,375
Total liabilities and shareholders'
equity $2,103,236 $2,194,416 NVR, Inc. Operating Activity
(unaudited)
(dollars in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2008 2007 2008 2007
---- ---- ---- ---- Homebuilding data:
New orders (units):
Mid Atlantic (1) 692 910 4,290 5,695
North East (2) 159 190 884 1,212
Mid East (3) 360 540 2,380 3,160
South East (4) 146 308 1,206 2,203
Total 1,357 1,948 8,760 12,270 Average new order price $296.0 $318.4 $311.3 $352.0 Settlements (units):
Mid Atlantic (1) 1,389 1,906 5,240 6,634
North East (2) 273 329 1,086 1,247
Mid East (3) 750 974 2,762 3,321
South East (4) 364 665 1,653 2,311
Total 2,776 3,874 10,741 13,513 Average settlement price $323.6 $362.5 $338.4 $373.2 Backlog (units):
Mid Atlantic (1) 1,776 2,726
North East (2) 303 505
Mid East (3) 731 1,113
South East (4) 354 801
Total 3,164 5,145 Average backlog price $316.9 $371.3 Community count (average) 397 472 427 505
Lots controlled at end of
year 45,000 67,600 Mortgage banking data:
Loan closings $623,623 $867,106 $2,351,341 $3,225,324
Capture rate 89% 83% 85% 85% Common stock information:
Shares outstanding at end
of year 5,532,852 5,137,554
Number of shares
repurchased - - - 784,788
Aggregate cost of shares
repurchased - - - $507,472
(1) Virginia, West Virginia, Maryland, and Delaware
(2) Eastern Pennsylvania and New Jersey
(3) Western Pennsylvania, Kentucky, New York and Ohio
(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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