RESTON, Va., July 22, 2020 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its second quarter ended June 30, 2020 of $164,075,000, or $42.50 per diluted share.  Net income and diluted earnings per share for the second quarter ended June 30, 2020 decreased 22% and 20%, respectively, when compared to 2019 second quarter net income of $210,209,000, or $53.09 per diluted share.  Consolidated revenues for the second quarter of 2020 totaled $1,620,368,000, which decreased 10% from $1,800,194,000 in the second quarter of 2019.

For the six months ended June 30, 2020, consolidated revenues were $3,202,896,000, an 8% decrease from $3,487,205,000 reported for 2019.  Net income for the six months ended June 30, 2020 was $339,778,000, a decrease of 15% when compared to the six months ended June 30, 2019.  Diluted earnings per share for the six months ended June 30, 2020 was $87.56, a decrease of 13% from $100.61 per diluted share for 2019.

Homebuilding

New orders in the second quarter of 2020 increased by 13% to 5,901 units, when compared to 5,239 units in the second quarter of 2019. The average sales price of new orders in the second quarter of 2020 was $365,400, an increase of 2% when compared with the second quarter of 2019.  The cancellation rate in the second quarter of 2020 increased to 16% compared to 13% in the second quarter of 2019.  Settlements decreased in the second quarter of 2020 to 4,296 units, which was 9% lower than the second quarter of 2019.  Our backlog of homes sold but not settled as of June 30, 2020 increased on both a unit and dollar basis by 11% and 14%, respectively, to 10,623 units and $4,009,695,000 compared to the respective backlog unit and dollar balances as of June 30, 2019.

Homebuilding revenues of $1,588,758,000 in the second quarter of 2020 decreased 10% compared to homebuilding revenues of $1,757,448,000 in the second quarter of 2019.  Gross profit margin in the second quarter of 2020 increased to 19.2%, compared to 18.9% in the second quarter of 2019.  Income before tax from the homebuilding segment totaled $194,805,000 in the second quarter of 2020, a decrease of 11% when compared to the second quarter of 2019.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2020 totaled $1,144,428,000, a decrease of 7% when compared to the second quarter of 2019.  Income before tax from the mortgage banking segment totaled $15,026,000 in the second quarter of 2020, a decrease of 40% when compared to $25,062,000 in the second quarter of 2019.  This decrease is due primarily to the reduction in secondary marketing gains on the sales of loans as a result of the disruption in the mortgage market related to the COVID-19 pandemic.

Effective Tax Rate

Our effective tax rate for the three and six months ended June 30, 2020 was 21.8% and 8.5%, respectively, compared to 14.1% and 14.0% for the three and six months ended June 30, 2019, respectively. The effective tax rate in each period was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $6,854,000 and $62,509,000 for the three and six months ended June 30, 2020, respectively, and $30,727,000 and $59,205,000, for the three and six months ended June 30, 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. We are currently able to operate in all of the markets we serve. In each of our markets, we continue to operate in accordance with the safety 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 June 30,


Six Months Ended June 30,



2020


2019


2020


2019










Homebuilding:









Revenues


$

1,588,758



$

1,757,448



$

3,144,465



$

3,400,654


Other income


2,408



5,833



7,744



11,570


Cost of sales


(1,284,493)



(1,425,388)



(2,579,236)



(2,764,194)


Selling, general and administrative


(102,702)



(112,210)



(212,869)



(227,944)


Operating income


203,971



225,683



360,104



420,086


Interest expense


(9,166)



(6,033)



(15,380)



(12,026)


Homebuilding income


194,805



219,650



344,724



408,060











Mortgage Banking:









Mortgage banking fees


31,610



42,746



58,431



86,551


Interest income


1,854



2,737



4,323



5,570


Other income


679



681



1,328



1,220


General and administrative


(18,758)



(20,834)



(36,969)



(37,592)


Interest expense


(359)



(268)



(631)



(490)


Mortgage banking income


15,026



25,062



26,482



55,259











Income before taxes


209,831



244,712



371,206



463,319


Income tax expense


(45,756)



(34,503)



(31,428)



(64,704)











Net income


$

164,075



$

210,209



$

339,778



$

398,615











Basic earnings per share


$

44.56



$

58.20



$

92.52



$

110.43











Diluted earnings per share


$

42.50



$

53.09



$

87.56



$

100.61











Basic weighted average shares outstanding


3,682



3,612



3,673



3,610











Diluted weighted average shares outstanding


3,861



3,959



3,881



3,962


 

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)








June 30, 2020


December 31, 2019

ASSETS





Homebuilding:





Cash and cash equivalents


$

1,982,890



$

1,110,892


Restricted cash


24,650



17,943


Receivables


20,801



18,278


Inventory:





Lots and housing units, covered under sales agreements with customers


1,340,444



1,075,420


Unsold lots and housing units


172,394



184,352


Land under development


69,323



69,196


Building materials and other


20,379



18,320




1,602,540



1,347,288







Contract land deposits, net


360,978



413,851


Property, plant and equipment, net


50,459



52,260


Operating lease right-of-use assets


57,701



63,825


Reorganization value in excess of amounts allocable to identifiable assets, net


41,580



41,580


Other assets


196,498



176,144




4,338,097



3,242,061


Mortgage Banking:





Cash and cash equivalents


17,986



29,412


Restricted cash


2,199



2,276


Mortgage loans held for sale, net


325,208



492,125


Property and equipment, net


5,258



5,828


Operating lease right-of-use assets


14,226



13,345


Reorganization value in excess of amounts allocable to identifiable assets, net


7,347



7,347


Other assets


19,699



17,421




391,923



567,754


Total assets


$

4,730,020



$

3,809,815







 

NVR, Inc.

Consolidated Balance Sheets (Continued)

(in thousands, except share and per share data)

(unaudited)








June 30, 2020


December 31, 2019

LIABILITIES AND SHAREHOLDERS' EQUITY





Homebuilding:





Accounts payable


$

294,254



$

262,987


Accrued expenses and other liabilities


349,113



346,035


Customer deposits


158,016



131,886


Operating lease liabilities


64,540



71,095


Senior notes


1,193,962



598,301




2,059,885



1,410,304


Mortgage Banking:





Accounts payable and other liabilities


42,500



43,985


Operating lease liabilities


15,223



14,282




57,723



58,267


Total liabilities


2,117,608



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 June 30, 2020 and December 31, 2019


206



206


Additional paid-in capital


2,151,623



2,055,407


Deferred compensation trust – 106,697 and 107,295 shares of NVR, Inc. common stock as of June 30, 2020 and December 31, 2019, respectively


(16,710)



(16,912)


Deferred compensation liability


16,710



16,912


Retained earnings


8,249,650



7,909,872


Less treasury stock at cost – 16,866,242 and 16,922,558 shares as of June 30, 2020 and December 31, 2019, respectively


(7,789,067)



(7,624,241)


Total shareholders' equity


2,612,412



2,341,244


Total liabilities and shareholders' equity


$

4,730,020



$

3,809,815







 

NVR, Inc.

Operating Activity

(dollars in thousands)

(unaudited)




















Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019



Units


Average
Price


Units


Average
Price


Units


Average
Price


Units


Average
Price

New orders, net of cancellations:

















Mid Atlantic (1)


2,381


$

443.0



2,322


$

411.3



4,442



$

442.6



4,766



$

415.3


North East (2)


369


$

375.7



364


$

376.5



727



$

378.9



677



$

378.8


Mid East (3)


1,536


$

315.6



1,276


$

317.9



2,761



$

320.3



2,490



$

319.0


South East (4)


1,615


$

296.1



1,277


$

298.4



2,986



$

300.5



2,445



$

300.3


Total


5,901


$

365.4



5,239


$

358.6



10,916



$

368.6



10,378



$

362.7






































Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019



Units


Average
Price


Units


Average
Price


Units


Average
Price


Units


Average
Price

Settlements:

















Mid Atlantic (1)


1,931


$

434.9



2,326


$

422.2



3,726



$

433.1



4,469



$

416.9


North East (2)


262


$

374.9



314


$

387.7



543



$

376.3



617



$

396.1


Mid East (3)


945


$

317.4



1,097


$

328.0



1,930



$

321.6



2,127



$

328.3


South East (4)


1,158


$

302.9



983


$

298.8



2,327



$

303.2



2,000



$

297.2


Total


4,296


$

369.8



4,720


$

372.3



8,526



$

368.8



9,213



$

369.1



















 



As of June 30,




2020


2019




Units


Average
Price


Units


Average
Price


Backlog:










Mid Atlantic (1)


4,328


$

448.7



4,445


$

421.2



North East (2)


771


$

403.5



623


$

384.4



Mid East (3)


2,644


$

327.5



2,169


$

324.2



South East (4)


2,880


$

309.2



2,293


$

306.0



Total


10,623


$

377.5



9,530


$

369.0













 

NVR, Inc.

Operating Activity (Continued)

(dollars in thousands)

(unaudited)












Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019

Average active communities:









Mid Atlantic (1)


188


211


189


211

North East (2)


41


34


40


32

Mid East (3)


141


131


139


128

South East (4)


114


94


111


89

Total


484


470


479


460





















Three Months Ended June 30,


Six Months Ended June 30,



2020


2019


2020


2019

Homebuilding data:









New order cancellation rate


15.7

%


13.1

%


18.1

%


13.6

%

Lots controlled at end of period






102,000


101,400










Mortgage banking data:









Loan closings


$

1,144,428



$

1,231,039



$

2,276,531



$

2,372,037


Capture rate


89

%


89

%


90

%


89

%










Common stock information:









Shares outstanding at end of period






3,689,088



3,643,596


Number of shares repurchased




29,826



57,611



111,655


Aggregate cost of shares repurchased


$



$

87,980



$

216,582



$

304,479




(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

 

Cision View original content:http://www.prnewswire.com/news-releases/nvr-inc-announces-second-quarter-results-301097535.html

SOURCE NVR, Inc.

Copyright 2020 PR Newswire

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