RESTON, Va., Jan. 25, 2018
/PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's
largest homebuilding and mortgage banking companies, announced net
income for its fourth quarter ended December 31, 2017 of
$124,619,000, or $28.88 per diluted share. Net income and
diluted earnings per share for the fourth quarter ended
December 31, 2017 decreased 17% and 24%, respectively, when
compared to 2016 fourth quarter net income of $150,891,000, or $37.80 per diluted share. Consolidated
revenues for the fourth quarter of 2017 totaled $1,816,336,000, a 4% increase from $1,752,766,000 in the fourth quarter of 2016.
For the year ended December 31, 2017, consolidated revenues
were $6,305,840,000, an 8% increase
from $5,822,544,000 reported for
2016. Net income for the year ended December 31, 2017
was $537,521,000, an increase of 26%
when compared to the year ended December 31, 2016.
Diluted earnings per share for the year ended December 31,
2017 was $126.77, an increase of 22%
from $103.61 per diluted share for
2016.
Net income and diluted earnings per share for the fourth quarter
and year ended December 31, 2017 were
impacted by the following items:
- The enactment of the Tax Cuts and Jobs Act in December 2017, which required a remeasurement of
the Company's deferred tax assets, resulted in a charge of
$62,702,000 in the fourth quarter,
and
- The Company's January 1, 2017
adoption of Accounting Standard Update 2016-09, which resulted in
the Company recognizing an income tax benefit of $13,960,000 and $58,681,000 related to excess tax benefits from
stock option exercises during the fourth quarter and year ended
December 31, 2017,
respectively. For the fourth quarter and year ended
December 31, 2016, the excess tax benefits of $2,712,000 and $13,661,000, respectively, were recorded to
additional paid-in capital within shareholders' equity on the
consolidated balance sheet.
The following summarizes the impact of these items on income tax
expense and diluted earnings per share ("EPS") during the fourth
quarter and year ended December 31,
2017:
|
Three Months
Ended
December 31,
2017
|
|
Twelve Months
Ended
December 31,
2017
|
|
Income Tax
Expense
|
EPS
Impact
|
|
Income Tax
Expense
|
EPS
Impact
|
GAAP Income Tax
Expense
|
$
|
136,699,000
|
|
|
|
$
|
309,390,000
|
|
|
Less: Impact of
Tax Cuts and Jobs Act
|
(62,702,000)
|
|
$(14.53)
|
|
(62,702,000)
|
|
$(14.79)
|
Add: Impact
of excess tax benefits recognized
|
13,960,000
|
|
$3.24
|
|
58,681,000
|
|
$13.84
|
|
|
|
|
|
|
Adjusted Income Tax
Expense (non-GAAP measure)
|
$
|
87,957,000
|
|
|
|
$
|
305,369,000
|
|
|
|
|
|
|
|
|
The Company's effective tax rate for the fourth quarter and year
ended December 31, 2017 was 52.3% and
36.5%, respectively, compared to 34.0% and 35.7% for the fourth
quarter and year ended December 31,
2016, respectively. Excluding the impact of the
previously discussed remeasurement of the deferred tax asset and
excess tax benefits recognized during the fourth quarter and year
ended December 31, 2017, the
Company's effective tax rate would have been 33.7% and 36.1%,
respectively.
Homebuilding
New orders in the fourth quarter of 2017 increased 18% to 4,306
units, when compared to 3,645 units in the fourth quarter of 2016.
The average sales price of new orders in the fourth quarter of 2017
was $380,800, a decrease of 4% when
compared with the fourth quarter of 2016. The decrease in the
average sales price of new orders is primarily attributable to a
shift in new orders to lower priced markets and lower priced
products. Settlements increased in the fourth quarter of 2017
to 4,630 units, 5% higher than the fourth quarter of 2016.
The Company's backlog of homes sold but not settled as of
December 31, 2017 increased on a unit basis by 24% to 8,531
units and increased on a dollar basis by 21% to $3,277,888,000 when compared to December 31,
2016.
Homebuilding revenues in the fourth quarter of 2017 totaled
$1,781,494,000, 4% higher than the
year earlier period. Gross profit margin in the fourth
quarter of 2017 increased to 19.3%, compared to 17.8% in the fourth
quarter of 2016. Gross profit margin was favorably impacted
by modest improvements in pricing combined with moderating
construction costs. Income before tax from the homebuilding
segment totaled $241,800,000 in the
fourth quarter of 2017, an increase of 16% when compared to the
fourth quarter of 2016.
New orders for the year ended December 31, 2017 increased
13% to 17,608 units, when compared to 15,583 units in 2016.
Settlements increased 7% year over year to 15,961 units in 2017
from 14,928 units in 2016. Homebuilding revenues for the year
ended December 31, 2017 totaled $6,175,521,000, which is 8% higher than
2016. Gross profit margin for the year ended
December 31, 2017 was 19.2%, compared to 17.5% in 2016.
Income before tax for the homebuilding segment for the year ended
December 31, 2017 was $776,370,000, a 29% increase when compared to
2016.
Mortgage Banking
Mortgage closed loan production in the fourth quarter of 2017
totaled $1,229,695,000, an increase
of 2% when compared to the fourth quarter of 2016. Income
before tax from the mortgage banking segment totaled $19,518,000 in the fourth quarter of 2017, a
decrease of 4% when compared to $20,399,000 in the fourth quarter of 2016.
The decrease is due to higher general and administrative costs in
the fourth quarter of 2017.
Mortgage closed loan production for the year ended
December 31, 2017 increased 7% to $4,229,507,000. Income before tax from the
mortgage banking segment for the year ended December 31, 2017
increased 16% to $70,541,000 from
$60,595,000 in 2016.
Financial Disclosure Advisory
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles ("GAAP"). This press
release references a non-GAAP financial measure, Adjusted Income
Tax Expense, which reflects the Company's income tax expense
excluding the impact of the charge associated with the enactment of
the Tax Cut and Jobs Act and the impact of the income tax benefit
recognized from excess tax benefits from stock option
exercises. These adjustments result in an Adjusted Income Tax
Expense for the current quarter and year that, in the Company's
view, facilitate a more consistent comparison to GAAP income tax
expense in the prior year.
The Company believes that the non-GAAP financial measure
included in this press release allows investors to understand and
compare results in a more consistent manner for the fourth quarters
and years ended December 31, 2017 and
2016. This non-GAAP financial measure should be considered
supplemental and not a substitute for the Company's results
reported in accordance with GAAP for the periods presented.
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 twenty-nine 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: 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)
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Homebuilding:
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
1,781,494
|
|
|
$
|
1,718,527
|
|
|
$
|
6,175,521
|
|
|
$
|
5,709,223
|
|
Other
income
|
|
2,272
|
|
|
597
|
|
|
6,536
|
|
|
2,820
|
|
Cost of
sales
|
|
(1,438,307)
|
|
|
(1,413,440)
|
|
|
(4,990,378)
|
|
|
(4,707,861)
|
|
Selling, general and
administrative
|
|
(97,662)
|
|
|
(91,534)
|
|
|
(392,272)
|
|
|
(382,459)
|
|
Operating
income
|
|
247,797
|
|
|
214,150
|
|
|
799,407
|
|
|
621,723
|
|
Interest
expense
|
|
(5,997)
|
|
|
(5,887)
|
|
|
(23,037)
|
|
|
(20,621)
|
|
Homebuilding
income
|
|
241,800
|
|
|
208,263
|
|
|
776,370
|
|
|
601,102
|
|
|
|
|
|
|
|
|
|
|
Mortgage
Banking:
|
|
|
|
|
|
|
|
|
Mortgage banking
fees
|
|
34,842
|
|
|
34,239
|
|
|
130,319
|
|
|
113,321
|
|
Interest
income
|
|
2,682
|
|
|
2,458
|
|
|
7,850
|
|
|
7,569
|
|
Other
income
|
|
650
|
|
|
512
|
|
|
2,048
|
|
|
1,652
|
|
General and
administrative
|
|
(18,338)
|
|
|
(16,516)
|
|
|
(68,528)
|
|
|
(60,861)
|
|
Interest
expense
|
|
(318)
|
|
|
(294)
|
|
|
(1,148)
|
|
|
(1,086)
|
|
Mortgage banking
income
|
|
19,518
|
|
|
20,399
|
|
|
70,541
|
|
|
60,595
|
|
|
|
|
|
|
|
|
|
|
Income before
taxes
|
|
261,318
|
|
|
228,662
|
|
|
846,911
|
|
|
661,697
|
|
Income tax
expense
|
|
(136,699)
|
|
|
(77,771)
|
|
|
(309,390)
|
|
|
(236,435)
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
124,619
|
|
|
$
|
150,891
|
|
|
$
|
537,521
|
|
|
$
|
425,262
|
|
|
|
|
|
|
|
|
|
|
Basic earnings
per share
|
|
$
|
33.39
|
|
|
$
|
40.25
|
|
|
$
|
144.00
|
|
|
$
|
110.53
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
28.88
|
|
|
$
|
37.80
|
|
|
$
|
126.77
|
|
|
$
|
103.61
|
|
|
|
|
|
|
|
|
|
|
Basic weighted
average shares outstanding
|
|
3,732
|
|
|
3,749
|
|
|
3,733
|
|
|
3,847
|
|
|
|
|
|
|
|
|
|
|
Diluted
weighted average shares outstanding
|
|
4,315
|
|
|
3,992
|
|
|
4,240
|
|
|
4,104
|
|
NVR,
Inc.
Consolidated Balance
Sheets
(in thousands, except
share and per share data)
(unaudited)
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
|
Homebuilding:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
645,087
|
|
|
$
|
375,748
|
|
Restricted
cash
|
|
19,438
|
|
|
17,561
|
|
Receivables
|
|
20,026
|
|
|
18,937
|
|
Inventory:
|
|
|
|
|
Lots and housing
units, covered under sales agreements with customers
|
|
1,046,094
|
|
|
883,868
|
|
Unsold lots and
housing units
|
|
148,620
|
|
|
145,065
|
|
Land under
development
|
|
34,212
|
|
|
46,999
|
|
Building materials
and other
|
|
17,273
|
|
|
16,168
|
|
|
|
1,246,199
|
|
|
1,092,100
|
|
|
|
|
|
|
Contract land
deposits, net
|
|
370,429
|
|
|
379,844
|
|
Property, plant and
equipment, net
|
|
43,191
|
|
|
45,915
|
|
Reorganization value
in excess of amounts allocable to identifiable assets,
net
|
|
41,580
|
|
|
41,580
|
|
Deferred tax assets,
net
|
|
111,953
|
|
|
170,652
|
|
Other
assets
|
|
86,977
|
|
|
91,009
|
|
|
|
2,584,880
|
|
|
2,233,346
|
|
Mortgage
Banking:
|
|
|
|
|
Cash and cash
equivalents
|
|
21,707
|
|
|
19,657
|
|
Restricted
cash
|
|
2,256
|
|
|
1,857
|
|
Mortgage loans held
for sale, net
|
|
352,489
|
|
|
351,958
|
|
Property and
equipment, net
|
|
6,327
|
|
|
4,903
|
|
Reorganization value
in excess of amounts allocable to identifiable assets,
net
|
|
7,347
|
|
|
7,347
|
|
Other
assets
|
|
14,273
|
|
|
24,875
|
|
|
|
404,399
|
|
|
410,597
|
|
Total
assets
|
|
$
|
2,989,279
|
|
|
$
|
2,643,943
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Homebuilding:
|
|
|
|
|
Accounts
payable
|
|
$
|
261,973
|
|
|
$
|
251,212
|
|
Accrued expenses and
other liabilities
|
|
341,891
|
|
|
337,200
|
|
Customer
deposits
|
|
150,033
|
|
|
122,236
|
|
Senior
notes
|
|
597,066
|
|
|
596,455
|
|
|
|
1,350,963
|
|
|
1,307,103
|
|
Mortgage
Banking:
|
|
|
|
|
Accounts payable and
other liabilities
|
|
32,824
|
|
|
32,399
|
|
|
|
32,824
|
|
|
32,399
|
|
Total
liabilities
|
|
1,383,787
|
|
|
1,339,502
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, $0.01
par value; 60,000,000 shares authorized; 20,555,330 shares issued
as of
both December 31, 2017 and December 31, 2016
|
|
206
|
|
|
206
|
|
Additional paid-in
capital
|
|
1,644,197
|
|
|
1,515,828
|
|
Deferred compensation
trust – 108,640 shares of NVR, Inc. common stock as of both
December 31, 2017 and December 31, 2016
|
|
(17,383)
|
|
|
(17,375)
|
|
Deferred compensation
liability
|
|
17,383
|
|
|
17,375
|
|
Retained
earnings
|
|
6,231,940
|
|
|
5,695,376
|
|
Less treasury stock
at cost – 16,864,324 and 16,862,327 shares as of December 31, 2017
and
December 31, 2016, respectively
|
|
(6,270,851)
|
|
|
(5,906,969)
|
|
Total
shareholders' equity
|
|
1,605,492
|
|
|
1,304,441
|
|
Total liabilities
and shareholders' equity
|
|
$
|
2,989,279
|
|
|
$
|
2,643,943
|
|
NVR,
Inc.
Operating
Activity
(dollars in
thousands)
(Unaudited)
|
|
|
|
Three Months Ended
December 31,
|
|
Twelve Months
Ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Homebuilding
data:
|
|
|
|
|
|
|
|
|
New orders
(units)
|
|
|
|
|
|
|
|
|
Mid
Atlantic (1)
|
|
2,153
|
|
|
1,828
|
|
|
8,654
|
|
|
7,916
|
|
North
East (2)
|
|
296
|
|
|
354
|
|
|
1,362
|
|
|
1,314
|
|
Mid East
(3)
|
|
953
|
|
|
830
|
|
|
4,171
|
|
|
3,659
|
|
South
East (4)
|
|
904
|
|
|
633
|
|
|
3,421
|
|
|
2,694
|
|
Total
|
|
4,306
|
|
|
3,645
|
|
|
17,608
|
|
|
15,583
|
|
|
|
|
|
|
|
|
|
|
Average new order
price
|
|
$
|
380.8
|
|
|
$
|
395.2
|
|
|
$
|
383.2
|
|
|
$
|
386.4
|
|
|
|
|
|
|
|
|
|
|
Settlements
(units)
|
|
|
|
|
|
|
|
|
Mid
Atlantic (1)
|
|
2,289
|
|
|
2,311
|
|
|
7,971
|
|
|
7,512
|
|
North
East (2)
|
|
358
|
|
|
350
|
|
|
1,288
|
|
|
1,246
|
|
Mid East
(3)
|
|
1,079
|
|
|
950
|
|
|
3,772
|
|
|
3,658
|
|
South
East (4)
|
|
904
|
|
|
808
|
|
|
2,930
|
|
|
2,512
|
|
Total
|
|
4,630
|
|
|
4,419
|
|
|
15,961
|
|
|
14,928
|
|
|
|
|
|
|
|
|
|
|
Average settlement
price
|
|
$
|
384.7
|
|
|
$
|
388.8
|
|
|
$
|
386.9
|
|
|
$
|
381.2
|
|
|
|
|
|
|
|
|
|
|
Backlog
(units)
|
|
|
|
|
|
|
|
|
Mid
Atlantic (1)
|
|
|
|
|
|
4,224
|
|
|
3,541
|
|
North
East (2)
|
|
|
|
|
|
682
|
|
|
608
|
|
Mid East
(3)
|
|
|
|
|
|
1,898
|
|
|
1,499
|
|
South
East (4)
|
|
|
|
|
|
1,727
|
|
|
1,236
|
|
Total
|
|
|
|
|
|
8,531
|
|
|
6,884
|
|
|
|
|
|
|
|
|
|
|
Average backlog
price
|
|
|
|
|
|
$
|
384.2
|
|
|
$
|
392.8
|
|
|
|
|
|
|
|
|
|
|
New order
cancellation rate
|
|
14
|
%
|
|
17
|
%
|
|
14
|
%
|
|
15
|
%
|
Community count
(average)
|
|
484
|
|
|
495
|
|
|
485
|
|
|
485
|
|
Lots controlled at
end of period
|
|
|
|
|
|
88,700
|
|
|
78,000
|
|
|
|
|
|
|
|
|
|
|
Mortgage banking
data:
|
|
|
|
|
|
|
|
|
Loan
closings
|
|
$
|
1,229,695
|
|
|
$
|
1,201,164
|
|
|
$
|
4,229,507
|
|
|
$
|
3,952,575
|
|
Capture
rate
|
|
88
|
%
|
|
89
|
%
|
|
88
|
%
|
|
88
|
%
|
|
|
|
|
|
|
|
|
|
Common stock
information:
|
|
|
|
|
|
|
|
|
Shares outstanding at
end of period
|
|
|
|
|
|
3,691,006
|
|
|
3,693,003
|
|
Number of shares
repurchased
|
|
56,128
|
|
|
101,982
|
|
|
166,520
|
|
|
280,288
|
|
Aggregate cost of
shares repurchased
|
|
$
|
191,967
|
|
|
$
|
163,608
|
|
|
$
|
422,166
|
|
|
$
|
455,351
|
|
(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
|
(4)
|
North Carolina, South
Carolina, Tennessee and Florida
|
View original
content:http://www.prnewswire.com/news-releases/nvr-inc-announces-fourth-quarter-and-full-year-results-300587929.html
SOURCE NVR, Inc.