NVR, Inc. Announces First Quarter Results

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Apr 21, 2010, 09:00 ET

RESTON, Va., April 21 /PRNewswire-FirstCall/ -- 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, 2010 of $32,087,000, $5.01 per diluted share. Net income and diluted earnings per share for its first quarter ended March 31, 2010 increased 78% and 66%, respectively, when compared to the 2009 first quarter. Consolidated revenues for the first three months of 2010 totaled $590,214,000, a 6% increase from $558,599,000 for the comparable 2009 quarter.

Homebuilding

New orders in the first quarter of 2010 increased 21% to 2,940 units, when compared to 2,426 units in the first quarter of 2009. The cancellation rate in the first quarter of 2010 was 9% compared to 15% in both the first and fourth quarters of 2009. Settlements increased in the first quarter of 2010 to 1,919 units, 8% greater than the same period of 2009. The Company's backlog of homes sold but not settled at the end of the 2010 quarter increased on a unit basis by 19% to 4,552 units from the same period last year. On a dollar basis, backlog grew to $1,342,000,000, an increase of 18% when compared to the same period last year.

Homebuilding revenues for the three months ended March 31, 2010 totaled $577,381,000, 5% greater than the year earlier period. Gross profit margins were 18.4% in the 2010 first quarter compared to 15.6% for the same period in 2009. Income before tax from the homebuilding segment totaled $45,769,000, an increase of 78% when compared to the first quarter of the previous year.

Mortgage Banking

Mortgage closed loan production of $418,042,000 for the three months ended March 31, 2010 was 2% lower than the same period last year. Income before tax for the mortgage banking operations during the first quarter of 2010 increased 44% to $6,962,000, when compared to $4,848,000 reported for the same period of 2009.

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 by 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 March 31,
			2010	2009
*Homebuilding:*
	Revenues		$ 577,381	$ 548,329
	Other income		2,369	2,539
	Cost of sales		(471,069)	(462,630)
	Selling, general and administrative		(60,741)	(59,694)
		Operating income	47,940	28,544
	Interest expense		(2,171)	(2,774)
		Homebuilding income	45,769	25,770

*Mortgage Banking:*
	Mortgage banking fees		12,833	10,270
	Interest income		756	584
	Other income		166	89
	General and administrative		(6,529)	(5,758)
	Interest expense		(264)	(337)
		Mortgage banking income	6,962	4,848

*Income before taxes*			52,731	30,618

		Income tax expense	(20,644)	(12,630)

*Net income*			$ 32,087	$ 17,988

*Basic earnings per share*			$ 5.29	$ 3.19

*Diluted earnings per share*			$ 5.01	$ 3.02

*Basic average shares outstanding*			6,066	5,642

*Diluted average shares outstanding*			6,399	5,958

NVR, Inc. Consolidated Balance Sheets (in thousands, except share and per share data)
				March 31, 2010	December 31, 2009
ASSETS				(unaudited)

*Homebuilding:*
	Cash and cash equivalents			$ 1,340,978	$ 1,248,689
	Marketable securities			125,000	219,535
	Receivables			8,091	7,995
	Inventory:
		Lots and housing units, covered under sales agreements with customers		430,944	337,523
		Unsold lots and housing units		62,964	73,673
		Manufacturing materials and other		6,001	7,522
				499,909	418,718

	Assets related to consolidated variable interest entities			23,829	70,430
	Contract land deposits, net			63,630	49,906
	Property, plant and equipment, net			19,065	20,215
	Reorganization value in excess of amounts allocable to identifiable assets, net			41,580	41,580
	Other assets, net			250,697	258,659
				2,372,779	2,335,727

*Mortgage Banking:*
	Cash and cash equivalents			1,314	1,461
	Mortgage loans held for sale, net			83,385	40,097
	Property and equipment, net			739	446
	Reorganization value in excess of amounts allocable to identifiable assets, net			7,347	7,347
	Other assets			10,833	10,692
				103,618	60,043

			Total assets	$ 2,476,397	$ 2,395,770

NVR, Inc. Consolidated Balance Sheets (Continued) (in thousands, except share and per share data)
			March 31, 2010	December 31, 2009
LIABILITIES AND SHAREHOLDERS' EQUITY			(unaudited)

*Homebuilding:*
	Accounts payable		$ 144,153	$ 120,464
	Accrued expenses and other liabilities		184,194	221,352
	Liabilities related to consolidated variable interest entities		-	65,915
	Customer deposits		72,261	63,591
	Other term debt		2,100	2,166
	Senior notes		133,370	133,370
			536,078	606,858

*Mortgage Banking:*
	Accounts payable and other liabilities		15,346	19,306
	Note payable		56,249	12,344
			71,595	31,650

		Total liabilities	607,673	638,508

*Commitments and contingencies*

*Shareholders' equity:*
	Common stock, $0.01 par value; 60,000,000 shares authorized; 20,559,671 shares issued as of both March 31, 2010 and December 31, 2009		206	206
	Additional paid-in-capital		870,408	830,531
	Deferred compensation trust – 245,278 and 265,278 shares of NVR, Inc. common stock as of March 31, 2010 and December 31, 2009, respectively		(39,856)	(40,799)
	Deferred compensation liability		39,856	40,799
	Retained earnings		3,855,154	3,823,067
	Less treasury stock at cost – 14,410,336 and 14,609,560 shares at March 31, 2010 and December 31, 2009, respectively		(2,857,044)	(2,896,542)
		Total shareholders’ equity	1,868,724	1,757,262
		Total liabilities and shareholders’ equity	$ 2,476,397	$ 2,395,770

NVR, Inc. Operating Activity (unaudited) (dollars in thousands)
			Three Months Ended March 31,
			2010	2009

*Homebuilding data:*
	New orders (units)
		Mid Atlantic (1)	1,391	1,203
		North East (2)	260	235
		Mid East (3)	879	701
		South East (4)	410	287
		Total	2,940	2,426

	Average new order price		$ 286.7	$ 281.9

	Settlements (units)
		Mid Atlantic (1)	935	928
		North East (2)	220	184
		Mid East (3)	565	413
		South East (4)	199	248
		Total	1,919	1,773

	Average settlement price		$ 300.8	$ 308.8

	Backlog (units)
		Mid Atlantic (1)	2,319	2,051
		North East (2)	365	354
		Mid East (3)	1,274	1,019
		South East (4)	594	393
		Total	4,552	3,817

	Average backlog price		$ 294.8	$ 298.5

	Community count (average)		358	357
	Lots controlled at end of period		48,100	44,000

*Mortgage banking data:*
	Loan closings		$ 418,042	$ 427,294
	Capture rate		90%	89%

*Common stock information:*
	Shares outstanding at end of period		6,149,335	5,726,454

(1) Virginia, West Virginia, Maryland and Delaware (2) Eastern Pennsylvania and New Jersey (3) Western Pennsylvania, Kentucky, New York, Ohio and Indiana (4) North Carolina, South Carolina, Tennessee and Florida