RESTON, Va., July 22 /PRNewswire-FirstCall/ -- NVR, Inc. (NYSE: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, 2008 decreased 39% and net income decreased 43% when compared to the 2007 second quarter. Net income for the 2008 second quarter was $51,332,000, $8.64 per diluted share, compared to net income of $90,747,000, $14.14 per diluted share, for the same period of 2007. Consolidated revenues for the second quarter of 2008 totaled $955,723,000, a 27% decrease from $1,316,668,000 for the comparable 2007 quarter.
For the six months ended June 30, 2008, consolidated revenues were $1,843,654,000, 23% lower than the $2,409,857,000 reported for the same period of 2007. Net income for the six months ended June 30, 2008 was $94,798,000, a decrease of 46% when compared to the six months ended June 30, 2007. Diluted earnings per share for the six months ended June 30, 2008 was $16.10, a decrease of 41% from $27.11 per diluted share for the comparable period of 2007.
Homebuilding New orders in the second quarter of 2008 decreased 29% to 2,670 units, when compared to 3,745 units in the second quarter of 2007. New order units and gross profit margins continue to be negatively impacted by high levels of new and existing home inventories, affordability issues, a more restrictive mortgage lending environment and declining homebuyer confidence. The cancellation rate in the quarter ended June 30, 2008 was 19% compared to 16% in the second quarter of 2007 and 22% in the first quarter of 2008.
Settlements decreased in the second quarter of 2008 to 2,750 units, 21% less than the same period of 2007. Homebuilding revenues for the three months ended June 30, 2008 totaled $941,033,000, 27% lower than the year earlier period. Income before tax from the homebuilding segment totaled $79,262,000 in the 2008 second quarter, a decrease of 42% when compared to the second quarter of the previous year. Gross profit margins decreased to 17.9% in the 2008 second quarter compared to 18.1% for the same period in 2007. Gross profit margins were impacted by land deposit impairments of approximately $5,800,000, 62 basis points, in the 2008 second quarter, and $55,000,000, 424 basis points, in the year ago period. Gross profit margins excluding the impairments were 18.5% in the 2008 second quarter compared to 22.4% for the same period in 2007. This decline in gross profit margin excluding impairments was due to continued pricing pressure in many of our markets. The Company's backlog of homes sold but not settled at the end of the 2008 quarter decreased on a unit basis by 32% to 5,331 units and 41% on a dollar basis to $1,820,482,000 when compared to the same period last year.
Mortgage Banking Mortgage closed loan production of $593,867,000 for the three months ended June 30, 2008 was 30% lower than the same period last year. Operating income for the mortgage banking operations during the second quarter of 2008 decreased 39% to $7,155,000, when compared to $11,719,000 reported for the same period of 2007.
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 Income
(in thousands, except per share data)
(Unaudited) Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007 Homebuilding:
Revenues $941,033 $1,297,140 $1,810,902 $2,372,250
Other income 3,701 5,251 10,100 12,216
Cost of sales (772,369) (1,061,937) (1,499,300) (1,915,347)
Selling, general and
administrative (89,871) (101,198) (174,037) (198,604)
Operating income 82,494 139,256 147,665 270,515
Interest expense (3,232) (3,298) (6,471) (6,620)
Homebuilding income 79,262 135,958 141,194 263,895 Mortgage Banking:
Mortgage banking fees 14,690 19,528 32,752 37,607
Interest income 869 1,030 1,679 2,337
Other income 184 276 343 460
General and
administrative (8,408) (8,954) (16,062) (18,277)
Interest expense (180) (161) (314) (313)
Mortgage banking
income 7,155 11,719 18,398 21,814 Income before taxes 86,417 147,677 159,592 285,709 Income tax expense (35,085) (56,930) (64,794) (110,141) Net income $51,332 $90,747 $94,798 $175,568
Basic earnings per share $9.58 $16.19 $17.92 $31.16 Diluted earnings per share $8.64 $14.14 $16.10 $27.11 Basic average shares
outstanding 5,357 5,606 5,290 5,634 Diluted average shares
outstanding 5,938 6,420 5,888 6,477 NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) June 30, 2008 December 31, 2007
(unaudited) ASSETS Homebuilding:
Cash and cash equivalents $867,329 $660,709
Receivables 16,189 10,855
Inventory:
Lots and housing units, covered under
sales agreements with customers 549,540 573,895
Unsold lots and housing units 69,127 105,838
Manufacturing materials and other 6,970 9,121
625,637 688,854 Contract land deposits 173,123 188,528
Assets not owned, consolidated
per FIN 46R 145,141 180,206
Property, plant and equipment, net 29,077 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 11,728 11,782
Other assets 248,782 252,461
2,158,586 2,067,886 Mortgage Banking:
Cash and cash equivalents 810 3,500
Mortgage loans held for sale, net 134,714 107,338
Property and equipment, net 1,020 881
Reorganization value in excess of amounts
allocable to identifiable assets, net 7,347 7,347
Other assets 11,378 7,464
155,269 126,530 Total assets $2,313,855 $2,194,416 NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) June 30, 2008 December 31, 2007
(unaudited) LIABILITIES AND SHAREHOLDERS' EQUITY Homebuilding:
Accounts payable $191,158 $219,048
Accrued expenses and other liabilities 232,625 251,475
Liabilities related to assets not owned,
consolidated per FIN 46R 134,686 164,369
Customer deposits 108,379 125,315
Other term debt 2,703 2,820
Senior notes 200,000 200,000
869,551 963,027 Mortgage Banking:
Accounts payable and other liabilities 12,152 18,551
Notes payable 116,199 83,463
128,351 102,014 Total liabilities 997,902 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
June 30, 2008 and December 31, 2007,
respectively 206 206
Additional paid-in capital 692,152 663,631
Deferred compensation trust - 515,888
and 516,085 shares of NVR, Inc. common stock for June 30, 2008 and
December 31, 2007, respectively (75,461) (75,636)
Deferred compensation liability 75,461 75,636
Retained earnings 3,624,793 3,529,995
Less treasury stock at cost -
15,136,930 and 15,455,086 shares for
June 30, 2008 and December 31, 2007,
respectively (3,001,198) (3,064,457)
Total shareholders' equity 1,315,953 1,129,375
Total liabilities and shareholders'
equity $2,313,855 $2,194,416 NVR, Inc. Operating Activity
(unaudited)
(dollars in thousands) Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007 Homebuilding data:
New orders (units):
Mid Atlantic (1) 1,341 1,803 2,633 3,724
North East (2) 240 345 520 762
Mid East (3) 726 923 1,443 1,953
South East (4) 363 674 805 1,223
Total 2,670 3,745 5,401 7,662 Average new order price $316.4 $363.9 $318.2 $368.2 Settlements (units):
Mid Atlantic (1) 1,344 1,720 2,585 3,072
North East (2) 304 324 549 573
Mid East (3) 639 839 1,256 1,411
South East (4) 463 580 825 1,107
Total 2,750 3,463 5,215 6,163 Average settlement price $341.7 $374.2 $346.9 $384.4 Backlog (units):
Mid Atlantic (1) 2,774 4,317
North East (2) 476 729
Mid East (3) 1,300 1,816
South East (4) 781 1,025
Total 5,331 7,887 Average backlog price $341.5 $391.3 Community count (average) 435 516 439 522
Lots controlled at end
of period 60,500 85,400 Mortgage banking data:
Loan closings $593,867 $849,430 $1,117,405 $1,564,469
Capture rate 84% 86% 83% 86% Common stock information:
Shares outstanding at
end of period 5,424,257 5,608,428
Number of shares
repurchased - 179,700 - 305,700
Aggregate cost of shares
repurchased - $123,263 - $209,613
(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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