RESTON, Va., Jan. 26 /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, 2005 increased 50% and net income increased 40% when compared to the 2004 fourth quarter. Net income for the 2005 fourth quarter was $222,537,000, $30.29 per diluted share, compared to net income of $158,938,000, $20.13 per diluted share, for the same period of 2004. Consolidated revenues for the last three months of 2005 totaled $1,658,204,000, a 30% increase from $1,275,034,000 for the comparable 2004 quarter.
Net income for the 2005 fiscal year was $697,559,000, $89.61 per diluted share, compared to net income of $523,204,000, $66.42 per diluted share for 2004, a 33% increase in net income and a 35% increase in earnings per share. Consolidated revenues for 2005 totaled $5,262,347,000, a 22% increase from the $4,319,722,000 for 2004.
Homebuilding New orders for the fourth quarter of 2005 increased 13% to 3,615 units, when compared to 3,194 units for the fourth quarter of 2004. The cancellation rate in the fourth quarter of 2005 was 13.3% compared to 11.4% in the fourth quarter of 2004. Settlements increased in the fourth quarter of 2005 to 4,180 units, 16% more than the same period of 2004. Homebuilding revenues for the three months ended December 31, 2005 totaled $1,630,778,000, 30% higher than the year earlier period. Income before tax from the homebuilding segment totaled $344,937,000, an increase of 38% when compared to the fourth quarter of the previous year. Gross profit margins improved to 27.6% in the 2005 fourth quarter compared to 26.0% for the same period in 2004, but declined from 28.1% in the 2005 third quarter. The year-over-year margin improvement primarily resulted from the ability in early 2005 to raise prices in certain markets that more than offset rising land and material costs.
New orders for 2005 totaled 14,653 units, an 11% increase over the 13,231 units reported for 2004. Home settlements for 2005 increased 8% to 13,787 units when compared to 12,749 units closed in 2004. Homebuilding revenues for 2005 totaled $5,177,743,000, 22% higher than 2004. Pre-tax homebuilding income rose to $1,086,680,000 for the 2005 fiscal year, an increase of 32% over the prior year. Gross profit margins increased to 27.8% in 2005 from 25.7% in 2004. The number of homes in backlog at the end of 2005 was 8,310 units, 13% higher than the 7,372 units in backlog at the end of 2004. The dollar volume in backlog increased 26% to $3,673,221,000 at December 31, 2005, when compared to the same time last year.
Mortgage Banking Mortgage closed loan production of $1,047,941,000 for the three months ended December 31, 2005 was 27% higher than the same period last year. Operating income contributed by the mortgage banking operations during the fourth quarter of 2005 increased 37% to $19,479,000, when compared to $14,176,000 reported for the same period of 2004.
Operating income from the mortgage banking segment increased for the 2005 fiscal year to $57,739,000, a 14% increase from the $50,862,000 reported for 2004. Mortgage production for the year increased 25% to $3,388,118,000.
Outlook The Company expects net income for the first quarter of 2006 to increase approximately 5% over the first quarter of 2005. The Company expects full year 2006 gross margins to be negatively impacted by pricing pressure in many of its markets; however, the Company expects full year 2006 net income to exceed 2005 results by approximately 15%. Full year net income expectations include an after tax expense of approximately $36,000,000 for the implementation of FAS 123R, Share Based Payment.
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,
2005 2004 2005 2004
Homebuilding:
Revenues $1,630,778 $1,255,714 $5,177,743 $4,247,503
Other income 2,144 653 6,301 2,655
Cost of sales (1,180,762) (929,102) (3,738,030) (3,156,286)
Selling, general and
administrative (102,249) (73,490) (345,525) (260,795)
Operating income 349,911 253,775 1,100,489 833,077
Interest expense (4,974) (3,056) (13,809) (11,934)
Homebuilding income 344,937 250,719 1,086,680 821,143 Mortgage Banking:
Mortgage banking fees 27,426 19,320 84,604 72,219
Interest income 1,738 1,312 5,014 4,249
Other income 413 309 1,435 1,075
General and administrative (9,069) (6,556) (31,555) (25,593)
Interest expense (1,029) (209) (1,759) (1,088)
Mortgage banking income 19,479 14,176 57,739 50,862 Income before taxes 364,416 264,895 1,144,419 872,005 Income tax expense (141,879) (105,957) (446,860) (348,801) Net income $ 222,537 $ 158,938 $ 697,559 $ 523,204 Basic earnings per share $ 37.34 $ 24.65 $ 110.36 $ 80.83 Diluted earnings per share $ 30.29 $ 20.13 $ 89.61 $ 66.42 Basic average shares
outstanding 5,959 6,449 6,321 6,473 Diluted average shares
outstanding 7,348 7,894 7,784 7,877 NVR, Inc. Consolidated Balance Sheets
(in thousands, except share and per share data) December 31,
2005 2004
ASSETS Homebuilding:
Cash and cash equivalents $170,090 $362,458
Receivables 40,562 14,020
Inventory:
Lots and housing units, covered under
sales agreements with customers 723,657 538,770
Unsold lots and housing units 60,419 40,052
Manufacturing materials and other 9,899 9,718
793,975 588,540 Contract land deposits 549,160 384,959
Assets not owned, consolidated per FIN 46 275,306 89,924
Property, plant and equipment, net 31,096 25,330
Reorganization value in excess of amounts
allocable to identifiable assets, net 41,580 41,580
Goodwill and other indefinite and definite life
intangibles, net 12,061 6,379 Other assets 142,851 109,778
2,056,681 1,622,968 Mortgage Banking:
Cash and cash equivalents 7,436 4,907
Mortgage loans held for sale, net 193,932 138,595
Property and equipment, net 1,003 996
Reorganization value in excess of amounts
allocable to identifiable assets, net 7,347 7,347
Other assets 3,189 3,154
212,907 154,999 Total assets $2,269,588 $1,777,967
LIABILITIES AND SHAREHOLDERS' EQUITY Homebuilding:
Accounts payable $262,086 $215,002
Accrued expenses and other
liabilities 369,176 234,815
Liabilities related to assets
not owned, consolidated per FIN 46 215,284 63,568
Customer deposits 256,837 203,835
Other term debt 3,325 4,077
Notes payable 103,000 -
Senior notes 200,000 200,000
1,409,708 921,297 Mortgage Banking:
Accounts payable and other liabilities 25,902 11,949
Notes payable 156,816 9,726
182,718 21,675 Total liabilities 1,592,426 942,972 Commitments and contingencies Shareholders' equity:
Common stock, $0.01 par value;
60,000,000 shares authorized;
20,592,640 and 20,597,709
shares issued for 2005 and 2004,
respectively 206 206 Additional paid-in-capital 473,886 406,705
Deferred compensation trust- 547,697
and 549,029 shares of NVR, Inc. common stock for 2005
and 2004, respectively (76,303) (76,366)
Deferred compensation liability 76,303 76,366
Retained earnings 2,608,628 1,911,069
Less treasury stock at cost --
14,964,482 and 14,023,631 shares
for 2005 and 2004, respectively (2,405,558) (1,482,985)
Total shareholders' equity 677,162 834,995
Total liabilities and shareholders'
equity $2,269,588 $1,777,967 NVR, Inc. Operating Activity
(unaudited)
(dollars in thousands) Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004 Homebuilding data:
New orders (units)
Washington (1) 978 905 3,859 3,812
Baltimore (2) 347 352 1,808 1,446
North (3) 1,582 1,295 6,062 5,335
South (4) 708 642 2,924 2,638
Total 3,615 3,194 14,653 13,231 Average new order
price $407.1 $381.7 $404.6 $364.1 Settlements (units)
Washington (1) 1,093 1,126 3,663 3,523
Baltimore (2) 505 408 1,551 1,587
North (3) 1,855 1,356 5,744 5,211
South (4) 727 707 2,829 2,428
Total 4,180 3,597 13,787 12,749 Average settlement
price $389.6 $348.3 $374.9 $332.2 Backlog (units)
Washington (1) 2,749 2,553
Baltimore (2) 1,073 816
North (3) 3,067 2,749
South (4) 1,421 1,254
Total 8,310 7,372 Average backlog
price $442.0 $394.2 Community count
(average) 584 471 522 450 Lots controlled at end
of year 106,000 83,500 Mortgage banking data:
Loan closings $1,047,941 $824,859 $3,388,118 $2,716,630 Capture rate 87% 86% 87% 84% Common stock
information:
Shares outstanding at
end of year 5,628,158 6,574,078
Weighted average
basic shares
outstanding 5,959,000 6,449,000 6,321,000 6,473,000 Weighted average diluted
shares outstanding 7,348,000 7,894,000 7,784,000 7,877,000
Number of shares
repurchased 625,900 59,505 1,269,050 674,694
Aggregate cost of
shares repurchased $452,077 $31,887 $962,609 $307,603
(1) Washington, D.C. metropolitan area and adjacent counties in Maryland,
Virginia and West Virginia
(2) Baltimore, MD metropolitan area and adjacent counties in Pennsylvania
(3) Delaware, Maryland Eastern Shore, New Jersey, New York, Ohio,
Pennsylvania, Michigan, and Kentucky
(4) North Carolina, South Carolina, Tennessee and Richmond, VA
First Call Analyst: FCMN Contact: DATASOURCE: NVR, Inc.
CONTACT: Dan Malzahn of NVR, Inc., +1-703-956-4204 Web site: http://www.nvrinc.com/
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