RESTON, Va., Oct. 21 /PRNewswire-FirstCall/ -- NVR, Inc. (NYSE:NVR), one of the nation's largest homebuilding and mortgage banking companies, announced that diluted earnings per share and net income for its third quarter ended September 30, 2008 decreased 60% when compared to the 2007 third quarter. Net income for the 2008 third quarter was $36,551,000, $6.12 per diluted share, compared to net income of $91,113,000, $15.26 per diluted share, for the same period of 2007. Consolidated revenues for the third quarter of 2008 totaled $939,211,000, a 27% decrease from $1,292,088,000 for the comparable 2007 quarter.
For the nine months ended September 30, 2008, consolidated revenues were $2,782,865,000, 25% lower than the $3,701,945,000 reported for the same period of 2007. Net income for the nine months ended September 30, 2008 was $131,349,000, a decrease of 51% when compared to the nine months ended September 30, 2007. Diluted earnings per share for the nine months ended September 30, 2008 was $22.21, a decrease of 47% from $42.25 per diluted share for the comparable period of 2007.
Homebuilding New orders in the third quarter of 2008 decreased 25% to 2,002 units, when compared to 2,660 units in the third quarter of 2007. The cancellation rate in the quarter ended September 30, 2008 was 24% compared to 27% in the third quarter of 2007 and 19% in the second quarter of 2008. Settlements decreased in the third quarter of 2008 to 2,750 units, 21% less than the same period of 2007. The Company's backlog of homes sold but not settled at the end of the 2008 quarter decreased on a unit basis by 35% to 4,583 units and 44% on a dollar basis to $1,499,830,000 when compared to the same period last year.
Homebuilding revenues for the three months ended September 30, 2008 totaled $928,265,000, 27% lower than the year earlier period. Gross profit margins decreased to 13.2% in the 2008 third quarter compared to 14.4% for the same period in 2007. Gross profit margins were impacted by land deposit impairments of approximately $43,000,000, 461 basis points of revenue, in the 2008 third quarter, and approximately $97,000,000, 760 basis points of revenue, in the year ago period. Gross profit margins excluding the land deposit impairments were 17.8% in the 2008 third quarter compared to 22.0% for the same period in 2007. Income before tax from the homebuilding segment totaled $56,535,000 in the 2008 third quarter, a decrease of 56% when compared to the third quarter of the previous year. Operating unit activity and financial performance are being negatively impacted by high levels of new and existing home inventories, affordability issues, a tight mortgage lending environment and declining homebuyer confidence.
Mortgage Banking Mortgage closed loan production of $610,313,000 for the three months ended September 30, 2008 was 23% lower than the same period last year. Operating income for the mortgage banking operations during the third quarter of 2008 decreased 76% to $4,072,000, when compared to $16,814,000 reported for the same period of 2007. Operating income in the current quarter was negatively impacted by a $4,100,000 decrease in unrealized income from the fair value measurements required under SFAS No. 157, Fair Value Measurement, and more competitive mortgage pricing.
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 Nine Months Ended
September 30, September 30,
2008 2007 2008 2007 Homebuilding:
Revenues $928,265 $1,270,471 $2,739,167 $3,642,721
Other income 4,256 4,209 14,356 16,425
Cost of sales (805,931) (1,087,399) (2,305,231) (3,002,746)
Selling, general and
administrative (66,796) (54,906) (240,833) (253,510)
Operating income 59,794 132,375 207,459 402,890
Interest expense (3,259) (3,375) (9,730) (9,995)
Homebuilding income 56,535 129,000 197,729 392,895 Mortgage Banking:
Mortgage banking fees 10,946 21,617 43,698 59,224
Interest income 929 1,078 2,608 3,415
Other income 188 320 531 780
General and
administrative (7,761) (6,001) (23,823) (24,278)
Interest expense (230) (200) (544) (513)
Mortgage banking income 4,072 16,814 22,470 38,628 Income before taxes 60,607 145,814 220,199 431,523 Income tax expense (24,056) (54,701) (88,850) (164,842) Net income $36,551 $91,113 $131,349 $266,681
Basic earnings per share $6.72 $17.25 $24.60 $48.35 Diluted earnings per
share $6.12 $15.26 $22.21 $42.25 Basic average shares
outstanding 5,438 5,283 5,340 5,516 Diluted average shares
outstanding 5,968 5,969 5,915 6,312
NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) September 30, December 31,
2008 2007
(unaudited) - ASSETS Homebuilding:
Cash and cash equivalents $963,313 $660,709
Receivables 10,444 10,855
Inventory:
Lots and housing units, covered under
sales agreements with customers 536,895 573,895
Unsold lots and housing units 67,570 105,838
Manufacturing materials and other 6,555 9,121
611,020 688,854 Contract land deposits 130,575 188,528
Assets not owned, consolidated
per FIN 46R 127,074 180,206
Property, plant and equipment, net 26,834 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 11,707 11,782
Other assets 253,785 252,461
2,176,332 2,067,886 Mortgage Banking:
Cash and cash equivalents 1,728 3,500
Mortgage loans held for sale, net 113,839 107,338
Property and equipment, net 903 881
Reorganization value in excess of amounts
allocable to identifiable assets, net 7,347 7,347
Other assets 8,003 7,464 131,820 126,530 Total assets $2,308,152 $2,194,416 September 30, December 31,
2008 2007
(unaudited) -
LIABILITIES AND SHAREHOLDERS' EQUITY Homebuilding:
Accounts payable $181,403 $219,048
Accrued expenses and other liabilities 235,564 251,475
Liabilities related to assets not owned,
consolidated per FIN 46R 118,323 164,369
Customer deposits 93,117 125,315
Other term debt 2,630 2,820
Senior notes 200,000 200,000
831,037 963,027
Mortgage Banking:
Accounts payable and other liabilities 13,858 18,551
Notes payable 90,782 83,463
104,640 102,014 Total liabilities 935,677 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 September 30, 2008 and
December 31, 2007, respectively 206 206
Additional paid-in capital 706,560 663,631
Deferred compensation trust -- 515,950 and
516,085 shares of NVR, Inc. common stock for
September 30, 2008 and December 31, 2007,
respectively (75,495) (75,636)
Deferred compensation liability 75,495 75,636
Retained earnings 3,661,344 3,529,995
Less treasury stock at cost -- 15,108,940 and
15,455,086 shares for September 30, 2008 and
December 31, 2007, respectively (2,995,635) (3,064,457)
Total shareholders' equity 1,372,475 1,129,375
Total liabilities and shareholders'
equity $2,308,152 $2,194,416
NVR, Inc. Operating Activity
(unaudited)
(dollars in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007 Homebuilding data:
New orders (units):
Mid Atlantic (1) 965 1,061 3,598 4,785
North East (2) 205 260 725 1,022
Mid East (3) 577 667 2,020 2,620
South East (4) 255 672 1,060 1,895
Total 2,002 2,660 7,403 10,322 Average new order
price $302.9 $330.1 $314.1 $358.4 Settlements (units):
Mid Atlantic (1) 1,266 1,656 3,851 4,728
North East (2) 264 345 813 918
Mid East (3) 756 936 2,012 2,347
South East (4) 464 539 1,289 1,646
Total 2,750 3,476 7,965 9,639 Average settlement
price $337.1 $365.1 $343.5 $377.5 Backlog (units):
Mid Atlantic (1) 2,473 3,722
North East (2) 417 644
Mid East (3) 1,121 1,547
South East (4) 572 1,158
Total 4,583 7,071 Average backlog price $327.3 $381.2 Community count
(average) 426 506 437 517
Lots controlled at
end of period 58,300 79,700 Mortgage banking
data:
Loan closings $610,313 $793,749 $1,727,718 $2,358,218
Capture rate 86% 84% 84% 85% Common stock
information:
Shares outstanding at
end of period
5,452,247 5,135,600
Number of shares
repurchased - 479,088 - 784,788
Aggregate cost of
shares repurchased - $297,859 - $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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