RESTON, Va.,
April 23, 2020 /PRNewswire/ -- NVR, Inc. (NYSE:
NVR), one of the nation's largest homebuilding and mortgage
banking companies, announced net income for its first quarter ended
March 31, 2020 of $175,703,000,
or $44.96 per diluted share.
Net income and diluted earnings per share for the first quarter
ended March 31, 2020 decreased 7% and 6%, respectively, when
compared to 2019 first quarter net income of $188,406,000, or $47.64 per diluted share. Consolidated
revenues for the first quarter of 2020 totaled $1,582,528,000, which decreased 6% from
$1,687,011,000 in the first quarter
of 2019.
Homebuilding
New orders in the first quarter of 2020 decreased by 2% to
5,015 units, when compared to 5,139 units in the first quarter of
2019. The average sales price of new orders in the first quarter of
2020 was $372,300, an increase of 1%
when compared with the first quarter of 2019. The
cancellation rate in the first quarter of 2020 was 21% compared to
14% in the first quarter of 2019. In March, we experienced an
increase in sales cancellations and a decrease in new orders due to
the impact of the COVID-19 pandemic. Settlements decreased in the
first quarter of 2020 to 4,230 units, which was 6% lower than the
first quarter of 2019.
Our backlog of homes sold but not settled as of
March 31, 2020 of 9,018 units and $3,441,151,000 was flat as compared to the
respective backlog unit and dollar balances as
of March 31, 2019. The backlog of homes sold but not
settled includes 1,178 units and $482,530,000 in Pennsylvania and New
York, where the state and local governments have issued
various orders that prohibit residential construction at this time.
Of the backlog in Pennsylvania and
New York, 510 units and
$203,249,000 have not started
construction as of March 31, 2020.
The remaining 668 units are in various stages of construction. Once
the government orders in Pennsylvania and New
York allow residential construction activities to resume, we
expect to complete these homes and deliver them to the buyers with
whom we are currently under contract. In light of current economic
conditions, we expect this backlog may experience a higher level of
cancellations than the rest of our backlog due to our inability to
promise a delivery date on these units.
Homebuilding revenues of $1,555,707,000 in the first quarter of 2020
decreased compared to homebuilding revenues of $1,643,206,000 in the first quarter of
2019. Gross profit margin in the first quarter of 2020
decreased to 16.8%, compared to 18.5% in the first quarter of
2019. Gross profit margin in the current year was impacted by
contract land deposit impairments of approximately $36,400,000, or 234 basis points of
revenue. Income before tax from the homebuilding segment
totaled $149,919,000 in the first
quarter of 2020, a decrease of 20% when compared to the first
quarter of 2019.
Mortgage Banking
Mortgage closed loan production in the first quarter of
2020 totaled $1,132,104,000, a
decrease of 1% when compared to the first quarter of 2019.
Income before tax from the mortgage banking segment totaled
$11,456,000 in the first quarter of
2020, a decrease of 62% when compared to $30,197,000 in the first quarter of 2019.
This decrease is due primarily to the reduction in fair value of
mortgage servicing rights as a result of the disruptions in the
mortgage market related to the COVID-19 pandemic.
Effective Tax Rate
Our effective tax rate for the three months ended
March 31, 2020 was a benefit of 8.9% as compared to an
effective tax expense rate of 13.8% for the three months ended
March 31, 2019. The effective tax rate in both periods was
favorably impacted by the recognition of an income tax benefit
related to excess tax benefits from stock option exercises totaling
$55,655,000 for three months ended
March 31, 2020, and $28,478,000,
for the three months ended March 31, 2019.
Other Matters - COVID-19
The COVID-19 pandemic has had a significant impact on all
facets of our business. Our primary focus as we face this
challenge is to do everything we can to ensure the safety and
well-being of our employees, customers and trade partners. While
residential construction has been deemed an essential business in
each of the markets we operate except Pennsylvania and New
York, the state government in every market where we operate
has instituted social distancing and other restrictions, which have
resulted in significant changes to the way we conduct
business. In all markets where we are permitted to operate,
we are operating in accordance with the guidelines issued by the
Centers for Disease Control and Prevention as well as state and
local guidelines.
There is uncertainty regarding the extent and timing of
disruption to our business that may result from COVID-19 and
related governmental actions. There is also uncertainty as to
the effects of economic relief efforts on the U.S. economy,
unemployment, consumer confidence, demand for our homes and the
mortgage market, including lending standards and secondary mortgage
markets. We are unable to predict the extent to which this will
impact our operational and financial performance including the
impact of future developments such as the duration and spread of
COVID-19, corresponding governmental actions, and the impact of
such on our employees, customers and trade partners.
About NVR
NVR, Inc. operates in two business segments:
homebuilding and mortgage banking. The homebuilding segment
sells and builds homes under the Ryan Homes, NVHomes and Heartland
Homes trade names, and operates in thirty-two metropolitan areas in
fourteen states and Washington,
D.C. For more information about NVR, Inc. and its brands, see
www.nvrinc.com, www.ryanhomes.com, www.nvhomes.com and
www.heartlandluxuryhomes.com.
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, as amended. 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 comparable terminology. All
statements other than of historical facts are forward-looking
statements. Forward-looking statements contained in this
document may include those regarding market trends, NVR's financial
position, business strategy, the outcome of pending litigation,
investigations or similar contingencies, projected plans and
objectives of management for future operations. 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 the following: the impact of COVID-19 on the
economy; 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; increased regulation
in the mortgage banking industry; the ability of our mortgage
banking subsidiary to sell loans it originates into the secondary
market; 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 moratoriums;
governmental regulation; fluctuation and volatility of stock and
other financial markets; mortgage financing availability; and other
factors over which NVR has little or no control. NVR
undertakes no obligation to update such forward-looking statements
except as required by law.
NVR, Inc. Consolidated Statements of
Income
(in thousands, except per share data)
(unaudited)
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
Homebuilding:
|
|
|
|
|
|
Revenues
|
|
$
|
1,555,707
|
|
|
$
|
1,643,206
|
|
|
Other
income
|
|
5,336
|
|
|
5,737
|
|
|
Cost of
sales
|
|
(1,294,743)
|
|
|
(1,338,806)
|
|
|
Selling, general and
administrative
|
|
(110,167)
|
|
|
(115,734)
|
|
|
Operating
income
|
|
156,133
|
|
|
194,403
|
|
|
Interest
expense
|
|
(6,214)
|
|
|
(5,993)
|
|
|
Homebuilding
income
|
|
149,919
|
|
|
188,410
|
|
|
|
|
|
|
|
|
Mortgage Banking:
|
|
|
|
|
|
Mortgage banking
fees
|
|
26,821
|
|
|
43,805
|
|
|
Interest
income
|
|
2,469
|
|
|
2,833
|
|
|
Other
income
|
|
649
|
|
|
539
|
|
|
General and
administrative
|
|
(18,211)
|
|
|
(16,758)
|
|
|
Interest
expense
|
|
(272)
|
|
|
(222)
|
|
|
Mortgage banking
income
|
|
11,456
|
|
|
30,197
|
|
|
|
|
|
|
|
|
Income before taxes
|
|
161,375
|
|
|
218,607
|
|
|
Income tax benefit
(expense)
|
|
14,328
|
|
|
(30,201)
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
175,703
|
|
|
$
|
188,406
|
|
|
|
|
|
|
|
|
Basic earnings per share
|
|
$
|
47.97
|
|
|
$
|
52.23
|
|
|
|
|
|
|
|
|
Diluted earnings per share
|
|
$
|
44.96
|
|
|
$
|
47.64
|
|
|
|
|
|
|
|
|
Basic weighted average shares
outstanding
|
|
3,663
|
|
|
3,607
|
|
|
|
|
|
|
|
|
Diluted weighted average shares
outstanding
|
|
3,908
|
|
|
3,955
|
|
|
NVR, Inc.
|
Consolidated Balance
Sheets
|
(in thousands, except
share and per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
ASSETS
|
|
|
|
|
Homebuilding:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,078,598
|
|
|
$
|
1,110,892
|
|
Restricted
cash
|
|
23,238
|
|
|
17,943
|
|
Receivables
|
|
27,089
|
|
|
18,278
|
|
Inventory:
|
|
|
|
|
Lots and housing
units, covered under sales agreements with customers
|
|
1,216,514
|
|
|
1,075,420
|
|
Unsold lots and
housing units
|
|
210,328
|
|
|
184,352
|
|
Land under
development
|
|
68,139
|
|
|
69,196
|
|
Building materials and
other
|
|
20,659
|
|
|
18,320
|
|
|
|
1,515,640
|
|
|
1,347,288
|
|
|
|
|
|
|
Contract land
deposits, net
|
|
369,256
|
|
|
413,851
|
|
Property, plant and
equipment, net
|
|
50,905
|
|
|
52,260
|
|
Operating lease
right-of-use assets
|
|
60,003
|
|
|
63,825
|
|
Reorganization value
in excess of amounts allocable to identifiable assets,
net
|
|
41,580
|
|
|
41,580
|
|
Other
assets
|
|
191,337
|
|
|
176,144
|
|
|
|
3,357,646
|
|
|
3,242,061
|
|
Mortgage Banking:
|
|
|
|
|
Cash and cash
equivalents
|
|
13,398
|
|
|
29,412
|
|
Restricted
cash
|
|
2,759
|
|
|
2,276
|
|
Mortgage loans held
for sale, net
|
|
430,942
|
|
|
492,125
|
|
Property and
equipment, net
|
|
5,579
|
|
|
5,828
|
|
Operating lease
right-of-use assets
|
|
15,613
|
|
|
13,345
|
|
Reorganization value
in excess of amounts allocable to identifiable assets,
net
|
|
7,347
|
|
|
7,347
|
|
Other
assets
|
|
54,239
|
|
|
17,421
|
|
|
|
529,877
|
|
|
567,754
|
|
Total assets
|
|
$
|
3,887,523
|
|
|
$
|
3,809,815
|
|
|
|
|
|
|
NVR, Inc.
|
Consolidated Balance
Sheets (Continued)
|
(in thousands, except
share and per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
LIABILITIES AND SHAREHOLDERS'
EQUITY
|
|
|
|
|
Homebuilding:
|
|
|
|
|
Accounts
payable
|
|
$
|
306,087
|
|
|
$
|
262,987
|
|
Accrued expenses and
other liabilities
|
|
274,127
|
|
|
346,035
|
|
Customer
deposits
|
|
147,161
|
|
|
131,886
|
|
Operating lease
liabilities
|
|
66,980
|
|
|
71,095
|
|
Senior
notes
|
|
598,456
|
|
|
598,301
|
|
|
|
1,392,811
|
|
|
1,410,304
|
|
Mortgage Banking:
|
|
|
|
|
Accounts payable and
other liabilities
|
|
61,141
|
|
|
43,985
|
|
Operating lease
liabilities
|
|
16,652
|
|
|
14,282
|
|
|
|
77,793
|
|
|
58,267
|
|
Total liabilities
|
|
1,470,604
|
|
|
1,468,571
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders' equity:
|
|
|
|
|
Common stock, $0.01
par value; 60,000,000 shares authorized; 20,555,330 shares issued
as of both March 31, 2020 and December 31, 2019
|
|
206
|
|
|
206
|
|
Additional paid-in
capital
|
|
2,127,315
|
|
|
2,055,407
|
|
Deferred compensation
trust – 107,295 shares of NVR, Inc. common stock as of both March
31, 2020 and December 31, 2019
|
|
(16,912)
|
|
|
(16,912)
|
|
Deferred compensation
liability
|
|
16,912
|
|
|
16,912
|
|
Retained
earnings
|
|
8,085,575
|
|
|
7,909,872
|
|
Less treasury stock at
cost – 16,881,636 and 16,922,558 shares as of March 31, 2020 and
December 31, 2019, respectively
|
|
(7,796,177)
|
|
|
(7,624,241)
|
|
Total shareholders' equity
|
|
2,416,919
|
|
|
2,341,244
|
|
Total liabilities and shareholders'
equity
|
|
$
|
3,887,523
|
|
|
$
|
3,809,815
|
|
|
|
|
|
|
NVR, Inc.
|
Operating
Activity
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
P rice
|
|
New orders, net of
cancellations:
|
|
|
|
|
|
|
|
|
|
|
Mid Atlantic
(1)
|
|
2,061
|
|
|
$
|
442.2
|
|
|
2,444
|
|
|
$
|
419.1
|
|
|
North East
(2)
|
|
358
|
|
|
$
|
382.2
|
|
|
313
|
|
|
$
|
381.4
|
|
|
Mid East
(3)
|
|
1,225
|
|
|
$
|
326.2
|
|
|
1,214
|
|
|
$
|
320.3
|
|
|
South East
(4)
|
|
1,371
|
|
|
$
|
305.6
|
|
|
1,168
|
|
|
$
|
302.5
|
|
|
Total
|
|
5,015
|
|
|
$
|
372.3
|
|
|
5,139
|
|
|
$
|
367.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|
Settlements:
|
|
|
|
|
|
|
|
|
|
Mid Atlantic
(1)
|
|
1,795
|
|
|
$
|
431.2
|
|
|
2,143
|
|
|
$
|
411.2
|
|
|
North East
(2)
|
|
281
|
|
|
$
|
377.7
|
|
|
303
|
|
|
$
|
404.7
|
|
|
Mid East
(3)
|
|
985
|
|
|
$
|
325.6
|
|
|
1,030
|
|
|
$
|
328.7
|
|
|
South East
(4)
|
|
1,169
|
|
|
$
|
303.5
|
|
|
1,017
|
|
|
$
|
295.7
|
|
|
Total
|
|
4,230
|
|
|
$
|
367.8
|
|
|
4,493
|
|
|
$
|
365.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
Units
|
|
Average
Price
|
|
Units
|
|
Average
Price
|
|
Backlog:
|
|
|
|
|
|
|
|
|
|
Mid Atlantic
(1)
|
|
3,878
|
|
|
$
|
445.3
|
|
|
4,449
|
|
|
$
|
426.9
|
|
|
North East
(2)
|
|
664
|
|
|
$
|
407.6
|
|
|
573
|
|
|
$
|
391.3
|
|
|
Mid East
(3)
|
|
2,053
|
|
|
$
|
331.5
|
|
|
1,990
|
|
|
$
|
330.3
|
|
|
South East
(4)
|
|
2,423
|
|
|
$
|
314.9
|
|
|
1,999
|
|
|
$
|
307.3
|
|
|
Total
|
|
9,018
|
|
|
$
|
381.6
|
|
|
9,011
|
|
|
$
|
376.8
|
|
|
|
|
|
|
|
|
|
|
|
|
NVR, Inc.
|
Operating Activity
(Continued)
|
(dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
2019
|
|
Average active communities:
|
|
|
|
|
|
Mid Atlantic
(1)
|
|
189
|
|
211
|
|
North East
(2)
|
|
40
|
|
29
|
|
Mid East
(3)
|
|
138
|
|
125
|
|
South East
(4)
|
|
108
|
|
84
|
|
Total
|
|
475
|
|
449
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2020
|
|
2019
|
|
Homebuilding data:
|
|
|
|
|
|
New order
cancellation rate
|
|
20.8
|
%
|
|
14.1
|
%
|
|
Lots controlled at
end of period
|
|
103,600
|
|
|
98,300
|
|
|
|
|
|
|
|
|
Mortgage banking data:
|
|
|
|
|
|
Loan
closings
|
|
$
|
1,132,104
|
|
|
$
|
1,140,999
|
|
|
Capture
rate
|
|
91
|
%
|
|
88
|
%
|
|
|
|
|
|
|
|
Common stock information:
|
|
|
|
|
|
Shares outstanding at
end of period
|
|
3,673,694
|
|
|
3,590,749
|
|
|
Number of shares
repurchased
|
|
57,611
|
|
|
81,829
|
|
|
Aggregate cost of
shares repurchased
|
|
$
|
216,582
|
|
|
$
|
216,499
|
|
|
|
|
(1) Maryland,
Virginia, West Virginia, Delaware and Washington, D.C.
|
|
(2) New Jersey and
Eastern Pennsylvania
|
|
(3) New York, Ohio,
Western Pennsylvania, Indiana and Illinois
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(4) North Carolina,
South Carolina, Tennessee and Florida
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content:http://www.prnewswire.com/news-releases/nvr-inc-announces-first-quarter-results-301045802.html
SOURCE NVR, Inc.