Virginia | 54-1394360 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer | ☒ | Accelerated filer | ☐ | ||
Non-accelerated filer | ☐ | (Do not check if smaller reporting company) | Smaller reporting company | ☐ | |
Emerging growth company | ☐ |
Page | ||
June 30, 2018 | December 31, 2017 | |||||||
ASSETS | ||||||||
Homebuilding: | ||||||||
Cash and cash equivalents | $ | 417,341 | $ | 645,087 | ||||
Restricted cash | 22,130 | 19,438 | ||||||
Receivables | 30,179 | 20,026 | ||||||
Inventory: | ||||||||
Lots and housing units, covered under sales agreements with customers | 1,263,408 | 1,046,094 | ||||||
Unsold lots and housing units | 113,493 | 148,620 | ||||||
Land under development | 35,292 | 34,212 | ||||||
Building materials and other | 21,422 | 17,273 | ||||||
1,433,615 | 1,246,199 | |||||||
Contract land deposits, net | 361,052 | 370,429 | ||||||
Property, plant and equipment, net | 41,612 | 43,191 | ||||||
Reorganization value in excess of amounts allocable to identifiable assets, net | 41,580 | 41,580 | ||||||
Other assets | 205,760 | 198,930 | ||||||
2,553,269 | 2,584,880 | |||||||
Mortgage Banking: | ||||||||
Cash and cash equivalents | 14,209 | 21,707 | ||||||
Restricted cash | 3,672 | 2,256 | ||||||
Mortgage loans held for sale, net | 399,806 | 352,489 | ||||||
Property and equipment, net | 7,018 | 6,327 | ||||||
Reorganization value in excess of amounts allocable to identifiable assets, net | 7,347 | 7,347 | ||||||
Other assets | 24,074 | 14,273 | ||||||
456,126 | 404,399 | |||||||
Total assets | $ | 3,009,395 | $ | 2,989,279 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Homebuilding: | ||||||||
Accounts payable | $ | 290,923 | $ | 261,973 | ||||
Accrued expenses and other liabilities | 306,452 | 341,891 | ||||||
Customer deposits | 172,033 | 150,033 | ||||||
Senior notes | 597,373 | 597,066 | ||||||
1,366,781 | 1,350,963 | |||||||
Mortgage Banking: | ||||||||
Accounts payable and other liabilities | 35,043 | 32,824 | ||||||
35,043 | 32,824 | |||||||
Total liabilities | 1,401,824 | 1,383,787 | ||||||
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, 2018 and December 31, 2017 | 206 | 206 | ||||||
Additional paid-in capital | 1,721,696 | 1,644,197 | ||||||
Deferred compensation trust – 107,904 and 108,640 shares of NVR, Inc. common stock as of June 30, 2018 and December 31, 2017, respectively | (17,148 | ) | (17,383 | ) | ||||
Deferred compensation liability | 17,148 | 17,383 | ||||||
Retained earnings | 6,603,359 | 6,231,940 | ||||||
Less treasury stock at cost – 16,926,815 and 16,864,324 shares as of June 30, 2018 and December 31, 2017, respectively | (6,717,690 | ) | (6,270,851 | ) | ||||
Total shareholders' equity | 1,607,571 | 1,605,492 | ||||||
Total liabilities and shareholders' equity | $ | 3,009,395 | $ | 2,989,279 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Homebuilding: | ||||||||||||||||
Revenues | $ | 1,750,463 | $ | 1,512,714 | $ | 3,240,556 | $ | 2,760,301 | ||||||||
Other income | 2,164 | 1,447 | 4,141 | 2,549 | ||||||||||||
Cost of sales | (1,416,797 | ) | (1,218,083 | ) | (2,628,743 | ) | (2,244,100 | ) | ||||||||
Selling, general and administrative | (106,517 | ) | (99,100 | ) | (212,064 | ) | (199,004 | ) | ||||||||
Operating income | 229,313 | 196,978 | 403,890 | 319,746 | ||||||||||||
Interest expense | (6,047 | ) | (5,641 | ) | (12,054 | ) | (11,219 | ) | ||||||||
Homebuilding income | 223,266 | 191,337 | 391,836 | 308,527 | ||||||||||||
Mortgage Banking: | ||||||||||||||||
Mortgage banking fees | 36,842 | 31,778 | 76,163 | 61,283 | ||||||||||||
Interest income | 2,915 | 1,554 | 5,008 | 3,215 | ||||||||||||
Other income | 641 | 506 | 1,165 | 815 | ||||||||||||
General and administrative | (21,796 | ) | (15,934 | ) | (41,031 | ) | (32,180 | ) | ||||||||
Interest expense | (282 | ) | (273 | ) | (557 | ) | (531 | ) | ||||||||
Mortgage banking income | 18,320 | 17,631 | 40,748 | 32,602 | ||||||||||||
Income before taxes | 241,586 | 208,968 | 432,584 | 341,129 | ||||||||||||
Income tax expense | (38,412 | ) | (61,091 | ) | (63,361 | ) | (90,329 | ) | ||||||||
Net income | $ | 203,174 | $ | 147,877 | $ | 369,223 | $ | 250,800 | ||||||||
Basic earnings per share | $ | 55.90 | $ | 39.46 | $ | 101.03 | $ | 67.30 | ||||||||
Diluted earnings per share | $ | 49.05 | $ | 35.19 | $ | 88.31 | $ | 60.36 | ||||||||
Basic weighted average shares outstanding | 3,635 | 3,748 | 3,655 | 3,726 | ||||||||||||
Diluted weighted average shares outstanding | 4,142 | 4,202 | 4,181 | 4,155 |
Six Months Ended June 30, | ||||||||
2018 | 2017 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 369,223 | $ | 250,800 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 10,024 | 11,494 | ||||||
Equity-based compensation expense | 28,104 | 21,467 | ||||||
Contract land deposit impairments, net | 44 | 3,567 | ||||||
Gain on sale of loans, net | (58,891 | ) | (47,474 | ) | ||||
Mortgage loans closed | (2,223,302 | ) | (1,772,432 | ) | ||||
Mortgage loans sold and principal payments on mortgage loans held for sale | 2,229,894 | 1,936,118 | ||||||
Distribution of earnings from unconsolidated joint ventures | 2,849 | 2,643 | ||||||
Net change in assets and liabilities: | ||||||||
Increase in inventory | (187,416 | ) | (272,851 | ) | ||||
Decrease in contract land deposits | 9,333 | 17,872 | ||||||
Increase in receivables | (10,417 | ) | (1,674 | ) | ||||
Decrease in accounts payable and accrued expenses | (11,332 | ) | (3,013 | ) | ||||
Increase in customer deposits | 22,000 | 43,448 | ||||||
Other, net | (10,663 | ) | (11,757 | ) | ||||
Net cash provided by operating activities | 169,450 | 178,208 | ||||||
Cash flows from investing activities: | ||||||||
Investments in and advances to unconsolidated joint ventures | (284 | ) | (455 | ) | ||||
Distribution of capital from unconsolidated joint ventures | 6,027 | 5,238 | ||||||
Purchase of property, plant and equipment | (9,251 | ) | (9,784 | ) | ||||
Proceeds from the sale of property, plant and equipment | 425 | 472 | ||||||
Net cash used in investing activities | (3,083 | ) | (4,529 | ) | ||||
Cash flows from financing activities: | ||||||||
Purchase of treasury stock | (483,538 | ) | (159,506 | ) | ||||
Proceeds from the exercise of stock options | 86,094 | 117,966 | ||||||
Net cash used in financing activities | (397,444 | ) | (41,540 | ) | ||||
Net (decrease) increase in cash, restricted cash, and cash equivalents | (231,077 | ) | 132,139 | |||||
Cash, restricted cash, and cash equivalents, beginning of the period | 689,557 | 416,037 | ||||||
Cash, restricted cash, and cash equivalents, end of the period | $ | 458,480 | $ | 548,176 | ||||
Supplemental disclosures of cash flow information: | ||||||||
Interest paid during the period, net of interest capitalized | $ | 12,151 | $ | 11,293 | ||||
Income taxes paid during the period, net of refunds | $ | 86,269 | $ | 99,370 |
June 30, 2018 | December 31, 2017 | |||||||
Contract land deposits | $ | 388,331 | $ | 400,428 | ||||
Loss reserve on contract land deposits | (27,279 | ) | (29,999 | ) | ||||
Contract land deposits, net | 361,052 | 370,429 | ||||||
Contingent obligations in the form of letters of credit | 2,798 | 1,996 | ||||||
Specific performance obligations (1) | 1,505 | 1,505 | ||||||
Total risk of loss | $ | 365,355 | $ | 373,930 |
(1) | As of both June 30, 2018 and December 31, 2017, the Company was committed to purchase 10 finished lots under specific performance obligations. |
June 30, 2018 | December 31, 2017 | |||||||
Assets: | ||||||||
Cash | $ | 1,128 | $ | 1,069 | ||||
Other assets | 37 | 37 | ||||||
Total assets | $ | 1,165 | $ | 1,106 | ||||
Liabilities and equity: | ||||||||
Accrued expenses | $ | 484 | $ | 487 | ||||
Equity | 681 | 619 | ||||||
Total liabilities and equity | $ | 1,165 | $ | 1,106 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Interest capitalized, beginning of period | $ | 5,545 | $ | 5,564 | $ | 5,583 | $ | 5,106 | ||||||||
Interest incurred | 6,624 | 6,580 | 13,220 | 13,139 | ||||||||||||
Interest charged to interest expense | (6,329 | ) | (5,914 | ) | (12,611 | ) | (11,750 | ) | ||||||||
Interest charged to cost of sales | (452 | ) | (278 | ) | (804 | ) | (543 | ) | ||||||||
Interest capitalized, end of period | $ | 5,388 | $ | 5,952 | $ | 5,388 | $ | 5,952 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Weighted average number of shares outstanding used to calculate basic EPS | 3,635 | 3,748 | 3,655 | 3,726 | ||||||||
Dilutive securities: | ||||||||||||
Stock options and restricted share units | 507 | 454 | 526 | 429 | ||||||||
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS | 4,142 | 4,202 | 4,181 | 4,155 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Anti-dilutive securities | 349 | 9 | 349 | 15 |
2010 Plan | 2014 Plan | 2018 Plan | |||||||
Options Granted | |||||||||
Options - service-only (1) | 4 | 90 | 72 | ||||||
Options - performance-based (2) | — | 94 | 72 | ||||||
Total Options Granted | 4 | 184 | 144 | ||||||
RSUs Granted | |||||||||
RSUs - service-only (3) | 8 | — | — | ||||||
RSUs - performance-based (4) | 8 | — | — | ||||||
Total RSUs Granted | 16 | — | — | ||||||
Options | Shares | Weighted Average Per Share Exercise Price | |||||
Outstanding at December 31, 2017 | 916 | $ | 1,119.92 | ||||
Granted | 340 | 3,023.76 | |||||
Exercised | (91 | ) | 949.64 | ||||
Forfeited | (27 | ) | 1,300.09 | ||||
Outstanding at June 30, 2018 | 1,138 | $ | 1,697.50 | ||||
Exercisable at June 30, 2018 | 371 | $ | 959.65 | ||||
RSUs | |||||||
Outstanding at December 31, 2017 | 10 | ||||||
Granted | 16 | ||||||
Vested | (5 | ) | |||||
Forfeited | — | ||||||
Outstanding at June 30, 2018 | 21 | ||||||
Vested, but not issued at June 30, 2018 | — |
2018 | ||
Estimated option life (years) | 5.06 | |
Risk-free interest rate (range) | 2.19% - 2.99% | |
Expected volatility (range) | 16.57% - 18.83% | |
Expected dividend rate | —% | |
Weighted average grant date fair value per share of Options granted | $689.47 | |
Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Deferred Compensation Trust | Deferred Compensation Liability | Total | ||||||||||||||||||||||
Balance, December 31, 2017 | $ | 206 | $ | 1,644,197 | $ | 6,231,940 | $ | (6,270,851 | ) | $ | (17,383 | ) | $ | 17,383 | $ | 1,605,492 | ||||||||||||
Cumulative-effect adjustment from adoption of ASU 2014-09, net of tax | — | — | 2,196 | — | — | — | 2,196 | |||||||||||||||||||||
Net income | — | — | 369,223 | — | — | — | 369,223 | |||||||||||||||||||||
Deferred compensation activity, net | — | — | — | — | 235 | (235 | ) | — | ||||||||||||||||||||
Purchase of common stock for treasury | — | — | — | (483,538 | ) | — | — | (483,538 | ) | |||||||||||||||||||
Equity-based compensation | — | 28,104 | — | — | — | — | 28,104 | |||||||||||||||||||||
Proceeds from Options exercised | — | 86,094 | — | — | — | — | 86,094 | |||||||||||||||||||||
Treasury stock issued upon option exercise and restricted share vesting | — | (36,699 | ) | — | 36,699 | — | — | — | ||||||||||||||||||||
Balance, June 30, 2018 | $ | 206 | $ | 1,721,696 | $ | 6,603,359 | $ | (6,717,690 | ) | $ | (17,148 | ) | $ | 17,148 | $ | 1,607,571 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Warranty reserve, beginning of period | $ | 95,606 | $ | 93,503 | $ | 94,513 | $ | 93,895 | ||||||||
Provision | 16,217 | 13,206 | 27,744 | 22,167 | ||||||||||||
Payments | (12,121 | ) | (11,315 | ) | (22,555 | ) | (20,668 | ) | ||||||||
Warranty reserve, end of period | $ | 99,702 | $ | 95,394 | $ | 99,702 | $ | 95,394 |
Mid Atlantic: | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | |
North East: | New Jersey and Eastern Pennsylvania | |
Mid East: | New York, Ohio, Western Pennsylvania, Indiana and Illinois | |
South East: | North Carolina, South Carolina, Florida and Tennessee |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Homebuilding Mid Atlantic | $ | 973,677 | $ | 872,148 | $ | 1,816,173 | $ | 1,594,416 | ||||||||
Homebuilding North East | 147,618 | 127,541 | 270,332 | 233,771 | ||||||||||||
Homebuilding Mid East | 363,288 | 313,237 | 653,525 | 556,268 | ||||||||||||
Homebuilding South East | 265,880 | 199,788 | 500,526 | 375,846 | ||||||||||||
Mortgage Banking | 36,842 | 31,778 | 76,163 | 61,283 | ||||||||||||
Total consolidated revenues | $ | 1,787,305 | $ | 1,544,492 | $ | 3,316,719 | $ | 2,821,584 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Income before taxes: | ||||||||||||||||
Homebuilding Mid Atlantic | $ | 112,221 | $ | 100,621 | $ | 203,268 | $ | 165,109 | ||||||||
Homebuilding North East | 16,777 | 14,112 | 32,481 | 23,218 | ||||||||||||
Homebuilding Mid East | 42,174 | 35,986 | 69,385 | 58,145 | ||||||||||||
Homebuilding South East | 29,203 | 22,911 | 52,440 | 37,481 | ||||||||||||
Mortgage Banking | 19,685 | 18,004 | 42,235 | 33,957 | ||||||||||||
Total segment profit before taxes | 220,060 | 191,634 | 399,809 | 317,910 | ||||||||||||
Reconciling items: | ||||||||||||||||
Contract land deposit reserve adjustment (1) | 592 | (2,064 | ) | 2,720 | (2,792 | ) | ||||||||||
Equity-based compensation expense (2) | (18,595 | ) | (10,878 | ) | (28,104 | ) | (21,467 | ) | ||||||||
Corporate capital allocation (3) | 53,954 | 49,646 | 104,653 | 95,833 | ||||||||||||
Unallocated corporate overhead | (22,503 | ) | (23,360 | ) | (53,787 | ) | (50,594 | ) | ||||||||
Consolidation adjustments and other | 14,109 | 9,614 | 19,311 | 13,427 | ||||||||||||
Corporate interest expense | (6,031 | ) | (5,624 | ) | (12,018 | ) | (11,188 | ) | ||||||||
Reconciling items sub-total | 21,526 | 17,334 | 32,775 | 23,219 | ||||||||||||
Consolidated income before taxes | $ | 241,586 | $ | 208,968 | $ | 432,584 | $ | 341,129 |
(1) | This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. |
(2) | The increase in equity-based compensation expense in the three and six month periods ended June 30, 2018 was primarily attributable to the issuance of Options and RSUs in the second quarter of 2018. See Note 7 for additional discussion of equity-based compensation. |
(3) | This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the periods presented: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Corporate capital allocation charge: | ||||||||||||||||
Homebuilding Mid Atlantic | $ | 31,501 | $ | 31,005 | $ | 61,949 | $ | 60,130 | ||||||||
Homebuilding North East | 4,580 | 4,133 | 8,760 | 7,947 | ||||||||||||
Homebuilding Mid East | 9,057 | 7,535 | 17,030 | 14,277 | ||||||||||||
Homebuilding South East | 8,816 | 6,973 | 16,914 | 13,479 | ||||||||||||
Total | $ | 53,954 | $ | 49,646 | $ | 104,653 | $ | 95,833 |
June 30, 2018 | December 31, 2017 | |||||||
Assets: | ||||||||
Homebuilding Mid Atlantic | $ | 1,139,958 | $ | 1,079,225 | ||||
Homebuilding North East | 155,089 | 143,008 | ||||||
Homebuilding Mid East | 322,718 | 263,019 | ||||||
Homebuilding South East | 315,599 | 277,705 | ||||||
Mortgage Banking | 448,779 | 397,052 | ||||||
Total segment assets | 2,382,143 | 2,160,009 | ||||||
Reconciling items: | ||||||||
Cash and cash equivalents | 417,341 | 645,087 | ||||||
Deferred taxes | 116,295 | 111,953 | ||||||
Intangible assets and goodwill | 50,066 | 50,144 | ||||||
Contract land deposit reserve | (27,279 | ) | (29,999 | ) | ||||
Consolidation adjustments and other | 70,829 | 52,085 | ||||||
Reconciling items sub-total | 627,252 | 829,270 | ||||||
Consolidated assets | $ | 3,009,395 | $ | 2,989,279 |
i) | the assumed gain/loss of the expected resultant loan sale (Level 2); |
ii) | the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and |
iii) | the value of the servicing rights associated with the loan (Level 2). |
June 30, 2018 | December 31, 2017 | |||||||
Rate lock commitments: | ||||||||
Gross assets | $ | 13,770 | $ | 5,400 | ||||
Gross liabilities | 996 | 1,832 | ||||||
Net rate lock commitments | $ | 12,774 | $ | 3,568 | ||||
Forward sales contracts: | ||||||||
Gross assets | $ | 408 | $ | 992 | ||||
Gross liabilities | 4,307 | 667 | ||||||
Net forward sales contracts | $ | (3,899 | ) | $ | 325 |
Notional or Principal Amount | Assumed Gain/(Loss) From Loan Sale | Interest Rate Movement Effect | Servicing Rights Value | Security Price Change | Total Fair Value Measurement Gain/(Loss) | |||||||||||||||||||
Rate lock commitments | $ | 857,052 | $ | 1,402 | $ | 1,683 | $ | 9,689 | $ | — | $ | 12,774 | ||||||||||||
Forward sales contracts | $ | 1,168,371 | — | — | — | (3,899 | ) | (3,899 | ) | |||||||||||||||
Mortgages held for sale | $ | 393,258 | 881 | 376 | 5,291 | — | 6,548 | |||||||||||||||||
Total fair value measurement | $ | 2,283 | $ | 2,059 | $ | 14,980 | $ | (3,899 | ) | $ | 15,423 |
• | The enactment of the Tax Cuts and Jobs Act in December 2017, which lowered the Company's federal statutory tax rate from 35% to 21%, and |
• | The retroactive reinstatement of certain expired energy tax credits under the Bipartisan Budget Act of 2018, which resulted in the Company recognizing a tax benefit of approximately $6,200 in the first quarter of 2018 related to homes settled in 2017. |
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations |
Mid Atlantic: | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | |
North East: | New Jersey and Eastern Pennsylvania | |
Mid East: | New York, Ohio, Western Pennsylvania, Indiana and Illinois | |
South East: | North Carolina, South Carolina, Florida and Tennessee |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Financial Data: | ||||||||||||||||
Revenues | $ | 1,750,463 | $ | 1,512,714 | $ | 3,240,556 | $ | 2,760,301 | ||||||||
Cost of sales | $ | 1,416,797 | $ | 1,218,083 | $ | 2,628,743 | $ | 2,244,100 | ||||||||
Gross profit margin percentage | 19.1 | % | 19.5 | % | 18.9 | % | 18.7 | % | ||||||||
Selling, general and administrative expenses | $ | 106,517 | $ | 99,100 | $ | 212,064 | $ | 199,004 | ||||||||
Operating Data: | ||||||||||||||||
New orders (units) | 4,964 | 4,678 | 10,138 | 9,102 | ||||||||||||
Average new order price | $ | 376.3 | $ | 377.0 | $ | 377.3 | $ | 384.6 | ||||||||
Settlements (units) | 4,611 | 3,917 | 8,507 | 7,173 | ||||||||||||
Average settlement price | $ | 379.6 | $ | 386.1 | $ | 380.9 | $ | 384.8 | ||||||||
Backlog (units) | 10,162 | 8,813 | ||||||||||||||
Average backlog price | $ | 380.0 | $ | 390.9 | ||||||||||||
New order cancellation rate | 13.0 | % | 12.9 | % | 13.3 | % | 14.2 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||||
Mid Atlantic | $ | 973,677 | $ | 872,148 | $ | 1,816,173 | $ | 1,594,416 | ||||||||
North East | 147,618 | 127,541 | 270,332 | 233,771 | ||||||||||||
Mid East | 363,288 | 313,237 | 653,525 | 556,268 | ||||||||||||
South East | 265,880 | 199,788 | 500,526 | 375,846 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Gross profit margin: | ||||||||||||||||
Mid Atlantic | $ | 178,415 | $ | 166,422 | $ | 335,440 | $ | 294,328 | ||||||||
North East | 28,338 | 25,187 | 54,517 | 45,234 | ||||||||||||
Mid East | 68,118 | 59,879 | 119,129 | 104,265 | ||||||||||||
South East | 52,421 | 41,364 | 96,639 | 73,381 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Gross profit margin percentage: | ||||||||||||
Mid Atlantic | 18.3 | % | 19.1 | % | 18.5 | % | 18.5 | % | ||||
North East | 19.2 | % | 19.7 | % | 20.2 | % | 19.3 | % | ||||
Mid East | 18.8 | % | 19.1 | % | 18.2 | % | 18.7 | % | ||||
South East | 19.7 | % | 20.7 | % | 19.3 | % | 19.5 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Segment profit: | ||||||||||||||||
Mid Atlantic | $ | 112,221 | $ | 100,621 | $ | 203,268 | $ | 165,109 | ||||||||
North East | 16,777 | 14,112 | 32,481 | 23,218 | ||||||||||||
Mid East | 42,174 | 35,986 | 69,385 | 58,145 | ||||||||||||
South East | 29,203 | 22,911 | 52,440 | 37,481 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | Units | Average Price | |||||||||||||||||||||
New orders, net of cancellations: | ||||||||||||||||||||||||||||
Mid Atlantic | 2,414 | $ | 427.0 | 2,263 | $ | 433.1 | 4,917 | $ | 430.4 | 4,388 | $ | 444.1 | ||||||||||||||||
North East | 365 | $ | 406.0 | 361 | $ | 396.4 | 736 | $ | 407.9 | 720 | $ | 410.3 | ||||||||||||||||
Mid East | 1,142 | $ | 328.0 | 1,145 | $ | 326.7 | 2,438 | $ | 327.2 | 2,279 | $ | 327.9 | ||||||||||||||||
South East | 1,043 | $ | 301.5 | 909 | $ | 293.1 | 2,047 | $ | 298.4 | 1,715 | $ | 296.9 | ||||||||||||||||
Total | 4,964 | $ | 376.3 | 4,678 | $ | 377.0 | 10,138 | $ | 377.3 | 9,102 | $ | 384.6 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||
Units | Average Price | Units | Average Price | Units | Average Price | Units | Average Price | |||||||||||||||||||||
Settlements: | ||||||||||||||||||||||||||||
Mid Atlantic | 2,239 | $ | 434.8 | 1,976 | $ | 441.3 | 4,165 | $ | 436.0 | 3,634 | $ | 438.7 | ||||||||||||||||
North East | 354 | $ | 417.0 | 329 | $ | 387.7 | 655 | $ | 412.7 | 597 | $ | 391.6 | ||||||||||||||||
Mid East | 1,092 | $ | 332.6 | 947 | $ | 330.7 | 1,971 | $ | 331.5 | 1,672 | $ | 332.6 | ||||||||||||||||
South East | 926 | $ | 287.1 | 665 | $ | 300.4 | 1,716 | $ | 291.7 | 1,270 | $ | 295.9 | ||||||||||||||||
Total | 4,611 | $ | 379.6 | 3,917 | $ | 386.1 | 8,507 | $ | 380.9 | 7,173 | $ | 384.8 |
As of June 30, | ||||||||||||||
2018 | 2017 | |||||||||||||
Units | Average Price | Units | Average Price | |||||||||||
Backlog: | ||||||||||||||
Mid Atlantic | 4,976 | $ | 427.1 | 4,295 | $ | 448.1 | ||||||||
North East | 763 | $ | 418.3 | 731 | $ | 424.3 | ||||||||
Mid East | 2,365 | $ | 334.7 | 2,106 | $ | 332.8 | ||||||||
South East | 2,058 | $ | 304.0 | 1,681 | $ | 303.0 | ||||||||
Total | 10,162 | $ | 380.0 | 8,813 | $ | 390.9 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
New order cancellation rate: | ||||||||||||
Mid Atlantic | 13.6 | % | 14.3 | % | 14.0 | % | 15.5 | % | ||||
North East | 9.7 | % | 12.6 | % | 10.6 | % | 13.0 | % | ||||
Mid East | 12.6 | % | 11.1 | % | 12.4 | % | 11.8 | % | ||||
South East | 13.1 | % | 11.9 | % | 13.6 | % | 14.5 | % |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
Average active communities: | ||||||||||||
Mid Atlantic | 238 | 244 | 239 | 241 | ||||||||
North East | 37 | 45 | 37 | 44 | ||||||||
Mid East | 117 | 118 | 121 | 119 | ||||||||
South East | 88 | 84 | 86 | 84 | ||||||||
Total | 480 | 491 | 483 | 488 |
June 30, 2018 | December 31, 2017 | |||||||
Sold inventory: | ||||||||
Mid Atlantic | $ | 732,664 | $ | 617,471 | ||||
North East | 109,606 | 96,412 | ||||||
Mid East | 223,061 | 173,572 | ||||||
South East | 179,530 | 151,219 | ||||||
Total (1) | $ | 1,244,861 | $ | 1,038,674 |
June 30, 2018 | December 31, 2017 | |||||||
Unsold lots and housing units inventory: | ||||||||
Mid Atlantic | $ | 78,643 | $ | 118,209 | ||||
North East | 6,624 | 6,666 | ||||||
Mid East | 8,899 | 7,112 | ||||||
South East | 17,481 | 13,511 | ||||||
Total (1) | $ | 111,647 | $ | 145,498 |
June 30, 2018 | December 31, 2017 | |||||
Total lots controlled: | ||||||
Mid Atlantic | 39,600 | 38,450 | ||||
North East | 8,400 | 7,000 | ||||
Mid East | 22,950 | 22,250 | ||||
South East | 23,250 | 21,000 | ||||
Total | 94,200 | 88,700 |
June 30, 2018 | December 31, 2017 | |||||||
Contract land deposits, net: | ||||||||
Mid Atlantic | $ | 194,780 | $ | 209,759 | ||||
North East | 28,887 | 29,851 | ||||||
Mid East | 49,847 | 49,838 | ||||||
South East | 90,336 | 82,977 | ||||||
Total | $ | 363,850 | $ | 372,425 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Contract land deposit impairments (recoveries), net: | ||||||||||||||||
Mid Atlantic | $ | 184 | $ | (16 | ) | $ | 182 | $ | 970 | |||||||
North East | 641 | — | 641 | — | ||||||||||||
Mid East | 21 | 2 | 26 | 5 | ||||||||||||
South East | 5 | — | 1,915 | — | ||||||||||||
Total | $ | 851 | $ | (14 | ) | $ | 2,764 | $ | 975 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Homebuilding consolidated gross profit: | ||||||||||||||||
Mid Atlantic | $ | 178,415 | $ | 166,422 | $ | 335,440 | $ | 294,328 | ||||||||
North East | 28,338 | 25,187 | 54,517 | 45,234 | ||||||||||||
Mid East | 68,118 | 59,879 | 119,129 | 104,265 | ||||||||||||
South East | 52,421 | 41,364 | 96,639 | 73,381 | ||||||||||||
Consolidation adjustments and other | 6,374 | 1,779 | 6,088 | (1,007 | ) | |||||||||||
Homebuilding consolidated gross profit | $ | 333,666 | $ | 294,631 | $ | 611,813 | $ | 516,201 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Homebuilding consolidated income before taxes: | ||||||||||||||||
Mid Atlantic | $ | 112,221 | $ | 100,621 | $ | 203,268 | $ | 165,109 | ||||||||
North East | 16,777 | 14,112 | 32,481 | 23,218 | ||||||||||||
Mid East | 42,174 | 35,986 | 69,385 | 58,145 | ||||||||||||
South East | 29,203 | 22,911 | 52,440 | 37,481 | ||||||||||||
Reconciling items: | ||||||||||||||||
Contract land deposit impairment reserve (1) | 592 | (2,064 | ) | 2,720 | (2,792 | ) | ||||||||||
Equity-based compensation expense (2) | (17,230 | ) | (10,505 | ) | (26,617 | ) | (20,112 | ) | ||||||||
Corporate capital allocation (3) | 53,954 | 49,646 | 104,653 | 95,833 | ||||||||||||
Unallocated corporate overhead | (22,503 | ) | (23,360 | ) | (53,787 | ) | (50,594 | ) | ||||||||
Consolidation adjustments and other | 14,109 | 9,614 | 19,311 | 13,427 | ||||||||||||
Corporate interest expense | (6,031 | ) | (5,624 | ) | (12,018 | ) | (11,188 | ) | ||||||||
Reconciling items sub-total | 22,891 | 17,707 | 34,262 | 24,574 | ||||||||||||
Homebuilding consolidated income before taxes | $ | 223,266 | $ | 191,337 | $ | 391,836 | $ | 308,527 |
(1) | This item represents changes to the contract land deposit impairment reserve which are not allocated to the reportable segments. |
(2) | The increase in equity-based compensation expense in the three and six month periods ended June 30, 2018 was primarily attributable to the issuance of Options and RSUs in the second quarter of 2018. See Note 7 in the accompanying condensed financial statements for additional discussion of equity-based compensation. |
(3) | This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and is as follows for the periods presented: |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Corporate capital allocation charge: | ||||||||||||||||
Mid Atlantic | $ | 31,501 | $ | 31,005 | $ | 61,949 | $ | 60,130 | ||||||||
North East | 4,580 | 4,133 | 8,760 | 7,947 | ||||||||||||
Mid East | 9,057 | 7,535 | 17,030 | 14,277 | ||||||||||||
South East | 8,816 | 6,973 | 16,914 | 13,479 | ||||||||||||
Total | $ | 53,954 | $ | 49,646 | $ | 104,653 | $ | 95,833 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Loan closing volume: | ||||||||||||||||
Total principal | $ | 1,214,101 | $ | 1,041,613 | $ | 2,223,774 | $ | 1,884,954 | ||||||||
Loan volume mix: | ||||||||||||||||
Adjustable rate mortgages | 10 | % | 9 | % | 9 | % | 8 | % | ||||||||
Fixed-rate mortgages | 90 | % | 91 | % | 91 | % | 92 | % | ||||||||
Operating profit: | ||||||||||||||||
Segment profit | $ | 19,685 | $ | 18,004 | $ | 42,235 | $ | 33,957 | ||||||||
Equity-based compensation expense | (1,365 | ) | (373 | ) | (1,487 | ) | (1,355 | ) | ||||||||
Mortgage banking income before tax | $ | 18,320 | $ | 17,631 | $ | 40,748 | $ | 32,602 | ||||||||
Capture rate: | 87 | % | 88 | % | 87 | % | 87 | % | ||||||||
Mortgage banking fees: | ||||||||||||||||
Net gain on sale of loans | $ | 27,571 | $ | 24,243 | $ | 58,891 | $ | 47,474 | ||||||||
Title services | 9,077 | 7,342 | 16,926 | 13,499 | ||||||||||||
Servicing fees | 194 | 193 | 346 | 310 | ||||||||||||
$ | 36,842 | $ | 31,778 | $ | 76,163 | $ | 61,283 |
• | The enactment of the Tax Cuts and Jobs Act in December 2017, which lowered our federal statutory tax rate from 35% to 21%, and |
• | The retroactive reinstatement of certain expired energy tax credits under the Bipartisan Budget Act of 2018, which resulted in us recognizing a tax benefit of approximately $6,200 in the first quarter of 2018 related to homes settled in 2017. |
Item 1. | Legal Proceedings |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
April 1 - 30, 2018 (1) | 2,000 | $ | 2,991.04 | 2,000 | $ | 298,467 | ||||||||
May 1 - 31, 2018 | 15,226 | $ | 2,966.97 | 15,226 | $ | 253,292 | ||||||||
June 1 - 30, 2018 | 24,886 | $ | 3,019.33 | 24,886 | $ | 178,153 | ||||||||
Total | 42,112 | $ | 2,999.05 | 42,112 |
Item 6. | Exhibits |
Incorporated by Reference | ||||||||||
Exhibit Number | Exhibit Description | Form | File Number | Exhibit Number | Filing Date | |||||
10.1 | ||||||||||
10.2* | S-8 | 333-224629 | 10.1 | 5/3/2018 | ||||||
10.3* | 8-K | 10.1 | 5/9/2018 | |||||||
10.4* | 8-K | 10.2 | 5/9/2018 | |||||||
10.5* | 8-K | 10.3 | 5/9/2018 | |||||||
10.6* | 8-K | 10.4 | 5/9/2018 | |||||||
10.7* | 8-K | 10.5 | 5/9/2018 | |||||||
10.8* | 8-K | 10.6 | 5/9/2018 | |||||||
31.1 | ||||||||||
31.2 | ||||||||||
32 | ||||||||||
101.INS | XBRL Instance Document | |||||||||
101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |||||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||
* Exhibit is a management contract or compensatory plan or arrangement. |
NVR, Inc. | ||
Date: July 30, 2018 | By: | /s/ Daniel D. Malzahn |
Daniel D. Malzahn | ||
Senior Vice President, Chief Financial Officer and Treasurer |
NVR MORTGAGE FINANCE, Inc., as Seller | ||
By: | /s/ Robert W. Henley | |
Name: | Robert W. Henley | |
Title: | President |
U.S. BANK NATIONAL ASSOCIATION, as Agent and as a Buyer | ||
By: | /s/ Kathleen Connor | |
Name: | Kathleen Connor | |
Title: | Senior Vice President |
Approved Investors List | ||||
Investor | S&P CP Rating | Moody's CP Rating | Related Parent Company | Product Approval |
Caliber Home Loans, Inc. | N/A | N/A | Conforming | |
Dollar Bank, FSB | N/A | N/A | Conforming/Non-conforming | |
TIAA, FSB (acquired Everbank Financial Corp in 2017) | N/A | N/A | Conforming/Non-conforming | |
Federal Home Loan Mortgage Corp. (FHMC) | N/A | N/A | Conforming | |
Federal National Mortgage Assoc. (FNMA) | N/A | N/A | Conforming | |
First National Bank | N/A | P-2 | FNB Corporation | Conforming/Non-conforming |
Government National Mortgage Assoc. (GNMA) | N/A | N/A | Conforming | |
Huntington National Bank | N/A | N/A | Huntington National Bancshares, Inc. | Conforming/Non-conforming |
Merchants Mortgage | Merchants Bank of Indiana | Conforming/Non-Conforming | ||
PennyMac Loan Services, LLC | N/A | N/A | PennyMac Mortgage Inv Trust | Conforming/Non-conforming |
Pentagon Federal Credit Union | N/A | N/A | Conforming/Non-conforming | |
Roundpoint Mortgage Servicing Corp | N/A | N/A | Conforming | |
Sandy Spring Bank | N/A | N/A | Conforming/Non-conforming | |
USDA - Rural Development | Conforming | |||
US Bank Home Mortgage | A-1 | P-1 | Conforming/Non-conforming | |
Wells Fargo Home Mortgage | A-1 | P-1 | Wells Fargo Bank, N.A. | Conforming/Non-conforming |
Approved Investors List | ||||
Housing Agencies | ||||
Delaware State Housing Authority | N/A | N/A | Conforming | |
District of Columbia Housing Finance Agency | N/A | N/A | Conforming | |
Florida Housing Finance Corporation | N/A | N/A | Conforming | |
Housing Finance Authority of Hillsborough County, FL (2) | N/A | N/A | Conforming | |
Housing Opportunities Commission | N/A | N/A | Conforming | |
Illinois Housing Development Authority | N/A | N/A | Conforming | |
Indiana Housing & Community Development Authority | N/A | N/A | Conforming | |
Maryland Community Development | N/A | N/A | Conforming | |
National Homebuyer Fund | N/A | N/A | Master Servicer - USBHM | Conforming |
New Jersey Housing Finance | N/A | N/A | Conforming | |
North Carolina Housing Finance | N/A | N/A | Conforming | |
Ohio Housing Finance Agency | N/A | N/A | Conforming | |
Pennsylvania Housing Finance | N/A | N/A | Conforming | |
Port of Greater Cincinnati | N/A | N/A | Master Servicer - USBHM | Conforming |
South Carolina Housing Finance | N/A | N/A | Conforming | |
State of New York Mortgage Agency | N/A | N/A | Conforming | |
Tennessee Housing Finance | N/A | N/A | Conforming | |
Virginia Housing Finance | N/A | N/A | Conforming | |
West Virginia Housing Finance | N/A | N/A | Conforming | |
Buyer | Committed Sum |
U.S. Bank National Association | $150,000,000 |
Maximum Aggregate Commitment | $150,000,000 |
Buyer | Incremental Committed Sum |
U.S. Bank National Association | $0 |
Maximum Incremental Commitment Amount | $0 |
1. | I have reviewed this report on Form 10-Q of NVR, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 30, 2018 | By: | /s/ Paul C. Saville |
Paul C. Saville | ||
President and Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of NVR, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: July 30, 2018 | By: | /s/ Daniel D. Malzahn |
Daniel D. Malzahn | ||
Senior Vice President, Chief Financial Officer and Treasurer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of NVR, Inc. |
Date: July 30, 2018 | By: | /s/ Paul C. Saville |
Paul C. Saville | ||
President and Chief Executive Officer | ||
By: | /s/ Daniel D. Malzahn | |
Daniel D. Malzahn | ||
Senior Vice President, Chief Financial Officer and Treasurer |
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Jul. 26, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | NVR | |
Entity Registrant Name | NVR INC | |
Entity Central Index Key | 0000906163 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 3,627,049 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value (USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 20,555,330 | 20,555,330 |
Deferred compensation trust, shares | 107,904 | 108,640 |
Treasury stock, shares | 16,926,815 | 16,864,324 |
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Interest expense | $ (6,329) | $ (5,914) | $ (12,611) | $ (11,750) |
Income before taxes | 241,586 | 208,968 | 432,584 | 341,129 |
Income tax expense | (38,412) | (61,091) | (63,361) | (90,329) |
Net income | $ 203,174 | $ 147,877 | $ 369,223 | $ 250,800 |
Basic earnings per share (USD per share) | $ 55.90 | $ 39.46 | $ 101.03 | $ 67.30 |
Diluted earnings per share (USD per share) | $ 49.05 | $ 35.19 | $ 88.31 | $ 60.36 |
Basic weighted average shares outstanding (in shares) | 3,635 | 3,748 | 3,655 | 3,726 |
Diluted weighted average shares outstanding (in shares) | 4,142 | 4,202 | 4,181 | 4,155 |
Homebuilding [Member] | ||||
Revenues | $ 1,750,463 | $ 1,512,714 | $ 3,240,556 | $ 2,760,301 |
Other income | 2,164 | 1,447 | 4,141 | 2,549 |
Cost of sales | (1,416,797) | (1,218,083) | (2,628,743) | (2,244,100) |
Selling, general and administrative | (106,517) | (99,100) | (212,064) | (199,004) |
Operating income | 229,313 | 196,978 | 403,890 | 319,746 |
Interest expense | (6,047) | (5,641) | (12,054) | (11,219) |
Income before taxes | 223,266 | 191,337 | 391,836 | 308,527 |
Mortgage Banking [Member] | ||||
Mortgage banking fees | 36,842 | 31,778 | 76,163 | 61,283 |
Interest income | 2,915 | 1,554 | 5,008 | 3,215 |
Other income | 641 | 506 | 1,165 | 815 |
General and administrative | (21,796) | (15,934) | (41,031) | (32,180) |
Interest expense | (282) | (273) | (557) | (531) |
Income before taxes | $ 18,320 | $ 17,631 | $ 40,748 | $ 32,602 |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited, condensed consolidated financial statements include the accounts of NVR, Inc. (“NVR” or the “Company”) and its subsidiaries and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 2 and 3 to the accompanying condensed consolidated financial statements). Intercompany accounts and transactions have been eliminated in consolidation. The statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Because the accompanying condensed consolidated financial statements do not include all of the information and footnotes required by GAAP, they should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. In the opinion of management, all adjustments (consisting only of normal recurring accruals except as otherwise noted herein) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain prior period amounts in the condensed consolidated statements of cash flows have been reclassified to conform to current period presentation. These reclassifications did not impact total cash from operating, investing or financing activities in the statement of cash flows. For the three and six months ended June 30, 2018 and 2017, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying condensed consolidated financial statements. Recently Adopted Accounting Pronouncements Revenue from Contracts with Customers On January 1, 2018, the Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Revenue Recognition Consistent with the Company’s previous revenue recognition practice, homebuilding revenue is recognized on the settlement date at the contract sales price, when control is transferred to our customers. Mortgage banking revenue recognition will continue to be governed by Accounting Standards Codification ("ASC") Topic 815 - Derivatives and Hedging and by ASC Topic 825 - Financial Instruments, and is not subject to Topic 606. See Note 10 for disclosure of revenue by reporting segment. The Company’s contract liabilities, consisting of deposits received from customers (“Handmoney”) on homes not settled, were $172,033 and $167,486 as of June 30, 2018 and March 31, 2018, respectively. During the second quarter of 2018, the Company recognized in revenue approximately $90,000 of the Handmoney held as of March 31, 2018. The Company’s prepaid sales compensation totaled approximately $20,100 and $19,500, as of June 30, 2018 and December 31, 2017, respectively. These amounts are included in homebuilding “Other assets” on the accompanying condensed consolidated balance sheets. Deferred Revenue Topic 606 no longer requires sellers of real estate to consider the initial and continuing involvement criteria in ASC 360-20, but instead only conclude on the collectibility of the transaction price. On January 1, 2018, the Company recorded a cumulative-effect adjustment, net of tax, of $2,196 to recognize deferred profit on home settlements, which the Company had previously determined that there was significant continuing involvement and believed to be fully collectible. Practical Expedients and Exemption At contract inception, the performance obligation to complete and settle the home with a customer has an expected duration of less than one year. As a result, the Company does not disclose the value of unsatisfied performance obligations for contracts. No other adjustments were made as a result of the adoption of Topic 606. Other recently adopted accounting pronouncements The Company adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, effective January 1, 2018. In connection with the adoption of ASU 2016-15, the Company made the election to classify distributions received from unconsolidated joint ventures using the cumulative earnings approach. This election was applied retrospectively, which reclassified a portion of distributions received from the Company's unconsolidated joint ventures between operating and investing activities on the prior year condensed consolidated statement of cash flows. The adoption of this standard did not have a material effect on the Company's condensed consolidated statements of cash flows and related disclosures. The Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, effective January 1, 2018. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. As a result, the Company's beginning-of-period and end-of-period cash balances presented in the condensed consolidated statements of cash flows were retrospectively adjusted to include restricted cash with cash and cash equivalents. The Company's cash and cash equivalents include short-term investments with original maturities of three months or less. Homebuilding restricted cash was attributable to customer deposits for certain home sales. Mortgage banking restricted cash included amounts collected from customers for loans in process and closed mortgage loans held for sale. The beginning-of-period and end-of-period cash, restricted cash, and cash equivalent balances presented on the accompanying condensed consolidated statements of cash flows include cash related to a consolidated joint venture, which is included in homebuilding "Other assets" on the Company's condensed consolidated balance sheets. The cash related to this consolidated joint venture as of June 30, 2018 and December 31, 2017 was $1,128 and $1,069, respectively, and as of June 30, 2017 and December 31, 2016 was $1,199 and $1,214, respectively. The adoption of this standard did not have a material effect on the Company's condensed consolidated statements of cash flows and related disclosures. The Company also adopted ASU 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting, effective January 1, 2018. The amendments in the standard clarify when changes in a share-based payment award must be accounted for as a modification, and will allow entities to make certain changes to share-based payment awards without accounting for them as modifications. Under the new guidance, entities will only apply modification accounting if there are substantive changes made to share-based payment awards. If a change made to a share-based payment award does not affect the fair value, vesting conditions and classification as either an equity or liability instrument, modification accounting will not need to be applied. The adoption of this standard did not have any effect on the Company's condensed consolidated financial statements and related disclosures. |
Variable Interest Entities ("VIEs") |
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Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | Variable Interest Entities ("VIEs") Fixed Price Finished Lot Purchase Agreements (“Lot Purchase Agreements”) NVR generally does not engage in the land development business. Instead, the Company typically acquires finished building lots at market prices from various development entities under Lot Purchase Agreements. The Lot Purchase Agreements require deposits that may be forfeited if NVR fails to perform under the Lot Purchase Agreements. The deposits required under the Lot Purchase Agreements are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots. NVR believes this lot acquisition strategy reduces the financial requirements and risks associated with direct land ownership and land development. NVR may, at its option, choose for any reason and at any time not to perform under these Lot Purchase Agreements by delivering notice of its intent not to acquire the finished lots under contract. NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained within the Lot Purchase Agreements. None of the creditors of any of the development entities with which NVR enters Lot Purchase Agreements have recourse to the general credit of NVR. NVR generally does not have any specific performance obligations to purchase a certain number or any of the lots, nor does NVR guarantee completion of the development by the developer or guarantee any of the developers’ financial or other liabilities. NVR is not involved in the design or creation of the development entities from which the Company purchases lots under Lot Purchase Agreements. The developer’s equity holders have the power to direct 100% of the operating activities of the development entity. NVR has no voting rights in any of the development entities. The sole purpose of the development entity’s activities is to generate positive cash flow returns for the equity holders. Further, NVR does not share in any of the profit or loss generated by the project’s development. The profits and losses are passed directly to the developer’s equity holders. The deposit placed by NVR pursuant to the Lot Purchase Agreement is deemed to be a variable interest in the respective development entities. Those development entities are deemed to be VIEs. Therefore, the development entities with which NVR enters into Lot Purchase Agreements, including the joint venture limited liability corporations discussed below, are evaluated for possible consolidation by NVR. An enterprise must consolidate a VIE when that enterprise has a controlling financial interest in the VIE. An enterprise is deemed to have a controlling financial interest if it has (i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and (ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE. NVR believes the activities that most significantly impact a development entity’s economic performance are the operating activities of the entity. The development entity’s equity investors bear the full risk during the development process. Unless and until a development entity completes finished building lots through the development process, the entity does not earn any revenues. The operating development activities are managed solely by the development entity’s equity investors. The development entities with which NVR contracts to buy finished lots typically select the respective projects, obtain the necessary zoning approvals, obtain the financing required with no support or guarantees from NVR, select who will purchase the finished lots and at what price, and manage the completion of the infrastructure improvements, all for the purpose of generating a cash flow return to the development entity’s equity holders and all independent of NVR. The Company possesses no more than limited protective legal rights through the Lot Purchase Agreement in the specific finished lots that it is purchasing, and NVR possesses no participative rights in the development entities. Accordingly, NVR does not have the power to direct the activities of a developer that most significantly impact the developer’s economic performance. For this reason, NVR has concluded that it is not the primary beneficiary of the development entities with which the Company enters into Lot Purchase Agreements, and therefore, NVR does not consolidate any of these VIEs. As of June 30, 2018, NVR controlled approximately 90,100 lots under Lot Purchase Agreements with third parties through deposits in cash and letters of credit totaling approximately $377,400 and $2,700, respectively. As noted above, NVR’s sole legal obligation and economic loss for failure to perform under these Lot Purchase Agreements is limited to the amount of the deposit pursuant to the liquidated damage provisions contained in the Lot Purchase Agreements. In addition, NVR has certain properties under contract with land owners that are expected to yield approximately 9,900 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with deposits in cash and letters of credit totaling approximately $10,900 and $100, respectively, as of June 30, 2018, of which approximately $2,100 is refundable if certain contractual conditions are not met. NVR generally expects to assign the raw land contracts to a land developer and simultaneously enter into a Lot Purchase Agreement with the assignee if the project is determined to be feasible. NVR’s total risk of loss related to contract land deposits as of June 30, 2018 and December 31, 2017 was as follows:
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Joint Ventures |
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Equity Method Investments and Joint Ventures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Joint Ventures | Joint Ventures On a limited basis, NVR obtains finished lots using joint venture limited liability corporations (“JVs”). The JVs are typically structured such that NVR is a non-controlling member and is at risk only for the amount the Company has invested, or has committed to invest, in addition to any deposits placed under Lot Purchase Agreements with the joint venture. NVR is not a borrower, guarantor or obligor on any debt of the JVs, as applicable. The Company enters into Lot Purchase Agreements to purchase lots from these JVs, and as a result has a variable interest in these JVs. At June 30, 2018, the Company had an aggregate investment totaling approximately $40,000 in six JVs that are expected to produce approximately 7,000 finished lots, of which approximately 3,650 lots were controlled by the Company and the remaining approximately 3,350 lots were either under contract with unrelated parties or not currently under contract. In addition, NVR had additional funding commitments totaling approximately $5,000 in the aggregate to three of the JVs at June 30, 2018. The Company has determined that it is not the primary beneficiary of five of the JVs because either NVR and the other JV partner share power or the other JV partner has the controlling financial interest. The aggregate investment in unconsolidated JVs was approximately $39,700 and $49,000 at June 30, 2018 and December 31, 2017, respectively, and is reported in the “Other assets” line item on the accompanying condensed consolidated balance sheets. For the remaining JV, NVR has concluded that it is the primary beneficiary because the Company has the controlling financial interest in the JV. The condensed balance sheets as of June 30, 2018 and December 31, 2017 of the consolidated JV were as follows:
The Company recognizes income from the JVs as a reduction to the lot cost of the lots purchased from the respective JVs when the homes are settled, based on the expected total profitability and the total number of lots expected to be produced by the respective JVs. With the Company's adoption of ASU 2016-15 effective January 1, 2018, the Company made the election to classify distributions received from unconsolidated JVs using the cumulative earnings approach. As a result, distributions received up to the amount of cumulative earnings recognized by the Company are reported as distributions of earnings and those in excess of that amount are reported as a distribution of capital. These distributions are classified within the accompanying condensed consolidated statements of cash flows as cash flows from operating activities and investing activities, respectively. See Note 1 for additional discussion regarding the Company's adoption of ASU 2016-15. |
Land Under Development |
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Jun. 30, 2018 | |
Real Estate [Abstract] | |
Land Under Development | Land Under Development On a limited basis, NVR directly acquires raw land parcels already zoned for its intended use to develop into finished lots. Land under development includes the land acquisition costs, direct improvement costs, capitalized interest where applicable, and real estate taxes. As of June 30, 2018, NVR directly owned a total of four separate raw land parcels with a carrying value of $35,292 that are expected to produce approximately 450 finished lots. The Company also has additional funding commitments of approximately $8,300 under a joint development agreement related to one parcel, a portion of which the Company expects will be offset by development credits of approximately $4,800. None of the raw parcels had any indicators of impairment as of June 30, 2018. |
Capitalized Interest |
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Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Interest | Capitalized Interest The Company capitalizes interest costs to land under development during the active development of finished lots. In addition, the Company capitalizes interest costs to its joint venture investments while the investments are considered qualified assets pursuant to ASC Topic 835-20 - Interest. Capitalized interest is transferred to sold or unsold inventory as the development of finished lots is completed, then charged to cost of sales upon the Company’s settlement of homes and the respective lots. Interest incurred in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred. The following table reflects the changes in the Company's capitalized interest during the three and six months ended June 30, 2018 and 2017:
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Earnings per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share | Earnings per Share The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2017:
The following non-qualified stock options ("Options") issued under equity incentive plans were outstanding during the three and six months ended June 30, 2018 and 2017, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.
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Equity-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity-Based Compensation | Equity-Based Compensation The Company’s shareholders approved the NVR, Inc. 2018 Equity Incentive Plan (the "2018 Plan") at the Company’s Annual Meeting of Shareholders held on May 2, 2018. The 2018 Plan authorizes the Company to issue Options and restricted share units ("RSUs") to key management employees, including executive officers and members of our Board of Directors ("Directors"), to acquire up to an aggregate 275 shares of the Company’s common stock. Of the 275 aggregate shares available to issue, all may be granted in the form of Options and up to 40 may be granted in the form of RSUs. During the second quarter of 2018, the Company issued 332 Options and 16 RSUs under the NVR, Inc. 2010 Equity Incentive Plan (the "2010 Plan"), the NVR, Inc. 2014 Equity Incentive Plan (the "2014 Plan"), and the 2018 Plan as follows:
(1) Of the 166 service-only Options granted, 34 will vest over two years in 50% increments on December 31, 2020 and 2021; the remaining 132 Options will vest over four years in 25% increments on December 31, 2020, 2021, 2022, and 2023. Vesting for the Options is contingent solely upon continued employment or continued service as a Director. (2) Of the 166 performance-based Options granted, 34 will vest over two years in 50% increments on December 31, 2020 and 2021; the remaining 132 performance-based Options will vest over four years in 25% increments on December 31, 2020, 2021, 2022, and 2023. Vesting for the performance-based Options is contingent upon both continued employment or continued service as a Director and the Company's return on capital performance during 2018 through 2020. (3) The service-only RSUs granted will vest over two years in 50% increments on December 31, 2022 and 2023. Vesting for the RSUs is contingent solely upon continued employment. (4) The performance-based RSUs granted will vest over two years in 50% increments on December 31, 2022 and 2023. Vesting for the performance-based RSUs is contingent upon both continued employment and the Company's return on capital performance during 2018 through 2020. In addition to the above equity grant, the Company also issued 8 Options under the 2014 Plan during the six months ended June 30, 2018. The Options granted will vest annually over four years in 25% increments beginning on December 31, 2020. Vesting for 50% of the Options granted is contingent upon both continued employment and the Company's return on capital performance during 2018 through 2020, while vesting for the other 50% of the Options granted is contingent solely upon continued employment. All Options were granted at an exercise price equal to the closing price of the Company’s common stock on the day prior to the date of grant, and expire ten years from the date of grant. The following table provides additional information relative to NVR's equity-based compensation plans for the six months ended June 30, 2018:
To estimate the grant-date fair value of its Options, the Company uses the Black-Scholes option-pricing model (the “Pricing Model”). The Pricing Model estimates the per share fair value of an option on its date of grant based on the following factors: the option’s exercise price, the price of the underlying stock on the date of grant, the estimated dividend yield, a risk-free interest rate, the estimated option term, and the expected volatility. For the risk-free interest rate, the Company uses U.S. Treasury STRIPS which mature at approximately the same time as the option’s expected holding term. For expected volatility, NVR has concluded that its historical volatility over the option’s expected holding term provides the most reasonable basis for this estimate. The fair value of the Options granted during 2018 was estimated on the grant date using the Pricing Model, based on the following assumptions:
The grant date fair value per share of $3,022.99 for the RSUs granted during 2018 was the closing price of the Company's common stock on the day immediately preceding the grant date. Compensation cost for Options and RSUs is recognized on a straight-line basis over the requisite service period for the entire award (from the date of grant through the period of the last separately vesting portion of the grant). For the recognition of equity-based compensation, the Options and RSUs that are subject to a performance condition are treated as a separate award from the “service-only” Options and RSUs, and compensation expense for Options and RSUs subject to a performance condition is recognized when it becomes probable that the stated performance target will be achieved. The Company currently believes that it is probable that the performance condition will be satisfied at the target level and is recognizing compensation expense related to such Options and RSUs accordingly. Compensation cost is recognized within the income statement in the same expense line as the cash compensation paid to the respective employees. The Company recognizes forfeitures of equity-based awards as a reduction to compensation costs in the period in which they occur. Total equity-based compensation expense recognized during the three and six months ended June 30, 2018 was $18,595 and $28,104, respectively. During the three and six months ended June 30, 2017, total equity-based compensation expense recognized was $10,878 and $21,467, respectively. As of June 30, 2018, the total unrecognized compensation cost for all outstanding Options and RSUs was approximately $347,900. The unrecognized compensation cost will be recognized over each grant’s applicable vesting period, with the latest vesting date being December 31, 2023. Unrecognized compensation costs may change depending on the satisfaction of the performance-based metric, discussed above. The weighted-average period over which the unrecognized compensation will be recorded is equal to approximately 2.8 years. |
Shareholders' Equity |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders’ Equity A summary of changes in shareholders’ equity is presented below:
The Company repurchased approximately 158 shares of its common stock during the six months ended June 30, 2018. The Company settles Option exercises and vesting of RSUs by issuing shares of treasury stock. Approximately 96 shares were issued from the treasury account during the six months ended June 30, 2018 in settlement of Option exercises and vesting of RSUs. Shares are relieved from the treasury account based on the weighted average cost basis of treasury shares acquired. |
Product Warranties |
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Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties | Product Warranties The Company establishes warranty and product liability reserves (“Warranty Reserve”) to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to NVR’s homebuilding business. Liability estimates are determined based on management’s judgment, considering such factors as historical experience, the estimated current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with the Company’s general counsel and outside counsel retained to handle specific product liability cases. The following table reflects the changes in the Company’s Warranty Reserve during the three and six months ended June 30, 2018 and 2017:
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Segment Disclosures |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Disclosures | Segment Disclosures The following disclosure includes four homebuilding reportable segments that aggregate geographically the Company’s homebuilding operating segments, and the mortgage banking operations presented as one reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:
Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses and a corporate capital allocation charge. The corporate capital allocation charge is eliminated in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering the Company’s cost of capital. Certain assets are not allocated to the operating segments as those assets are neither included in the operating segment’s corporate capital allocation charge, nor in the CODM’s evaluation of the operating segment’s performance. The Company records charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of a Lot Purchase Agreement with the developer, or the restructuring of a Lot Purchase Agreement resulting in the forfeiture of the deposit. Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a corporate capital allocation charge. In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. NVR’s overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to the Company’s operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to the Company’s operating segments. External corporate interest expense primarily consists of interest charges on the Company’s 3.95% Senior Notes due 2022 (the “Senior Notes”) and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above. The following tables present segment revenues, profit and assets with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
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Fair Value |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value | Fair Value GAAP assigns a fair value hierarchy to the inputs used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs. Financial Instruments The estimated fair value of NVR’s Senior Notes was $630,000 as of both June 30, 2018 and December 31, 2017. The estimated fair value is based on recent market prices of similar transactions, which is classified as Level 2 within the fair value hierarchy. The carrying values at June 30, 2018 and December 31, 2017 were $597,373 and $597,066, respectively. Except as otherwise noted below, NVR believes that insignificant differences exist between the carrying value and the fair value of its financial instruments, which consist primarily of cash equivalents, due to their short term nature. Derivative Instruments and Mortgage Loans Held for Sale In the normal course of business, NVR’s wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”), enters into contractual commitments to extend credit to NVR’s homebuyers with fixed expiration dates. The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by NVRM. All mortgagors are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to a broker/dealer. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to broker/dealers. The forward sales contracts lock in an interest rate and price for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to broker/dealers are undesignated derivatives and, accordingly, are marked to fair value through earnings. At June 30, 2018, there were contractual commitments to extend credit to borrowers aggregating $857,052 and open forward delivery contracts aggregating $1,168,371, which hedge both the rate lock loan commitments and closed loans held for sale. The fair value of NVRM’s rate lock commitments to borrowers and the related input levels include, as applicable:
The assumed gain/loss considers the excess servicing to be received or buydown fees to be paid upon securitization of the loan. The excess servicing and buydown fees are calculated pursuant to contractual terms with investors. To calculate the effects of interest rate movements, NVRM utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount. NVRM sells all of its loans on a servicing released basis, and receives a servicing released premium upon sale. Thus, the value of the servicing rights is included in the fair value measurement and is based upon contractual terms with investors and varies depending on the loan type. NVRM assumes a fallout rate when measuring the fair value of rate lock commitments. Fallout is defined as locked loan commitments for which NVRM does not close a mortgage loan and is based on historical experience. The fair value of NVRM’s forward sales contracts to broker/dealers solely considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value. Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold. Fair value is measured using Level 2 inputs. The fair value of loans held for sale of $399,806 included on the accompanying condensed consolidated balance sheet has been increased by $6,548 from the aggregate principal balance of $393,258. As of December 31, 2017, the fair value of loans held for sale of $352,489 were increased by $1,931 from the aggregate principal balance of $350,558. The fair value measurement of NVRM's undesignated derivative instruments was as follows:
As of June 30, 2018, the net rate lock commitments are reported in mortgage banking "Other assets" and the net forward sales contracts are reported in mortgage banking "Accrued expenses and other liabilities" on the accompanying condensed consolidated balance sheets. As of December 31, 2017, both the net rate lock commitments and the net forward sales contracts are reported in mortgage banking "Other assets". The fair value measurement as of June 30, 2018 was as follows:
The total fair value measurement as of December 31, 2017 was $5,824. For the three and six months ended June 30, 2018, NVRM recorded a fair value adjustment to income of $5,585 and $9,599, respectively. For the three and six months ended June 30, 2017, NVRM recorded a fair value adjustment to income of $3,376 and $1,359, respectively. Unrealized gains/losses from the change in the fair value measurements are included in earnings as a component of mortgage banking fees in the accompanying condensed consolidated statements of income. The fair value measurement will be impacted in the future by the change in the value of the servicing rights, interest rate movements, security price fluctuations, and the volume and product mix of NVRM’s closed loans and locked loan commitments. |
Debt |
6 Months Ended |
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Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Senior Notes As of June 30, 2018, the Company had Senior Notes outstanding with a principal balance of $600,000. The Senior Notes mature on September 15, 2022 and bear interest at 3.95%, payable semi-annually in arrears on March 15 and September 15. The Senior Notes were issued at a discount to yield 3.97% and have been reflected net of the unamortized discount and unamortized debt issuance costs in the accompanying condensed consolidated balance sheet. Credit Agreement NVR has an unsecured Credit Agreement (the “Credit Agreement”), which provides for aggregate revolving loan commitments of $200,000 (the “Facility”). Under the Credit Agreement, the Company may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit, of which approximately $8,500 was outstanding at June 30, 2018, and a $25,000 sublimit for a swing line commitment. The Credit Agreement termination date is July 15, 2021. There was no debt outstanding under the Facility at June 30, 2018. Repurchase Agreement NVRM provides for its mortgage origination and other operating activities using cash generated from its operations, borrowings from its parent company, NVR, as well as a revolving mortgage repurchase agreement (the “Repurchase Agreement”), which is non-recourse to NVR. The Repurchase Agreement provides for loan purchases up to $150,000, subject to certain sub-limits. Amounts outstanding under the Repurchase Agreement are collateralized by the Company’s mortgage loans held for sale. In July 2018, NVRM entered into the Tenth Amendment (the "Amendment") to its Repurchase Agreement, filed herewith as Exhibit 10.1. The Amendment removed the $50,000 incremental commitment that was available under the prior Repurchase Agreement. All other terms and conditions under the Repurchase Agreement remained materially consistent. The Repurchase Agreement expires on July 24, 2019. At June 30, 2018, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. There was no debt outstanding under the Repurchase Agreement at June 30, 2018. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company and its subsidiaries are involved in various litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on the financial position, results of operations or cash flows of the Company. Legal costs incurred in connection with outstanding litigation are expensed as incurred. |
Income Taxes |
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Jun. 30, 2018 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Income Taxes | Income Taxes The Company’s effective tax rate for the three and six months ended June 30, 2018 was 15.9% and 14.6%, respectively. For the three and six months ended June 30, 2017, the Company's effective tax rate was 29.2% and 26.5%, respectively. The reduction in the effective tax rate was primarily due to the following items:
Additionally, the effective tax rate for the three and six months ended June 30, 2018 and 2017 was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises. This income tax benefit was $26,456 and $46,022 for the three and six months ended June 30, 2018, respectively, and was $16,464 and $36,364 for the three and six months ended June 30, 2017, respectively. |
Recent Accounting Pronouncements |
6 Months Ended |
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Jun. 30, 2018 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on-balance sheet with a liability equal to the present value of lease payments over the lease term and a right-of-use asset for the right to use the underlying asset over the lease term. Lessees will recognize expenses on their income statements in a manner similar to current GAAP. The standard also requires additional disclosures of key information about leasing arrangements. The standard is effective for the Company as of January 1, 2019. Based on its current portfolio of leases, the Company believes that adoption of this standard will result in the recognition of less than $100,000 of right-of-use assets and corresponding liabilities on its balance sheet, predominately related to real estate leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes the way impairment of financial assets is recognized. The standard will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The standard’s provisions will be applied as a cumulative-effect adjustment to beginning retained earnings as of the effective date. The standard is effective for the Company as of January 1, 2020. Early adoption is permitted for annual and interim periods beginning January 1, 2019. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard’s objective is to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. Under the amendments in the standard, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would then be recognized, not to exceed the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on January 1, 2020, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. |
Basis of Presentation (Policies) |
6 Months Ended |
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Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements | Recently Adopted Accounting Pronouncements Revenue from Contracts with Customers On January 1, 2018, the Company adopted Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606), using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Revenue Recognition Consistent with the Company’s previous revenue recognition practice, homebuilding revenue is recognized on the settlement date at the contract sales price, when control is transferred to our customers. Mortgage banking revenue recognition will continue to be governed by Accounting Standards Codification ("ASC") Topic 815 - Derivatives and Hedging and by ASC Topic 825 - Financial Instruments, and is not subject to Topic 606. See Note 10 for disclosure of revenue by reporting segment. The Company’s contract liabilities, consisting of deposits received from customers (“Handmoney”) on homes not settled, were $172,033 and $167,486 as of June 30, 2018 and March 31, 2018, respectively. During the second quarter of 2018, the Company recognized in revenue approximately $90,000 of the Handmoney held as of March 31, 2018. The Company’s prepaid sales compensation totaled approximately $20,100 and $19,500, as of June 30, 2018 and December 31, 2017, respectively. These amounts are included in homebuilding “Other assets” on the accompanying condensed consolidated balance sheets. Deferred Revenue Topic 606 no longer requires sellers of real estate to consider the initial and continuing involvement criteria in ASC 360-20, but instead only conclude on the collectibility of the transaction price. On January 1, 2018, the Company recorded a cumulative-effect adjustment, net of tax, of $2,196 to recognize deferred profit on home settlements, which the Company had previously determined that there was significant continuing involvement and believed to be fully collectible. Practical Expedients and Exemption At contract inception, the performance obligation to complete and settle the home with a customer has an expected duration of less than one year. As a result, the Company does not disclose the value of unsatisfied performance obligations for contracts. No other adjustments were made as a result of the adoption of Topic 606. Other recently adopted accounting pronouncements The Company adopted ASU 2016-15, Classification of Certain Cash Receipts and Cash Payments, effective January 1, 2018. In connection with the adoption of ASU 2016-15, the Company made the election to classify distributions received from unconsolidated joint ventures using the cumulative earnings approach. This election was applied retrospectively, which reclassified a portion of distributions received from the Company's unconsolidated joint ventures between operating and investing activities on the prior year condensed consolidated statement of cash flows. The adoption of this standard did not have a material effect on the Company's condensed consolidated statements of cash flows and related disclosures. The Company adopted ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash, effective January 1, 2018. The amendments in the standard require that the statement of cash flows explain the change during the period in the total of cash, cash equivalents and restricted cash or restricted cash equivalents. As a result, the Company's beginning-of-period and end-of-period cash balances presented in the condensed consolidated statements of cash flows were retrospectively adjusted to include restricted cash with cash and cash equivalents. The Company's cash and cash equivalents include short-term investments with original maturities of three months or less. Homebuilding restricted cash was attributable to customer deposits for certain home sales. Mortgage banking restricted cash included amounts collected from customers for loans in process and closed mortgage loans held for sale. The beginning-of-period and end-of-period cash, restricted cash, and cash equivalent balances presented on the accompanying condensed consolidated statements of cash flows include cash related to a consolidated joint venture, which is included in homebuilding "Other assets" on the Company's condensed consolidated balance sheets. The cash related to this consolidated joint venture as of June 30, 2018 and December 31, 2017 was $1,128 and $1,069, respectively, and as of June 30, 2017 and December 31, 2016 was $1,199 and $1,214, respectively. The adoption of this standard did not have a material effect on the Company's condensed consolidated statements of cash flows and related disclosures. The Company also adopted ASU 2017-09, Compensation – Stock Compensation (Topic 718), Scope of Modification Accounting, effective January 1, 2018. The amendments in the standard clarify when changes in a share-based payment award must be accounted for as a modification, and will allow entities to make certain changes to share-based payment awards without accounting for them as modifications. Under the new guidance, entities will only apply modification accounting if there are substantive changes made to share-based payment awards. If a change made to a share-based payment award does not affect the fair value, vesting conditions and classification as either an equity or liability instrument, modification accounting will not need to be applied. The adoption of this standard did not have any effect on the Company's condensed consolidated financial statements and related disclosures. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the "FASB") issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize most leases on-balance sheet with a liability equal to the present value of lease payments over the lease term and a right-of-use asset for the right to use the underlying asset over the lease term. Lessees will recognize expenses on their income statements in a manner similar to current GAAP. The standard also requires additional disclosures of key information about leasing arrangements. The standard is effective for the Company as of January 1, 2019. Based on its current portfolio of leases, the Company believes that adoption of this standard will result in the recognition of less than $100,000 of right-of-use assets and corresponding liabilities on its balance sheet, predominately related to real estate leases. In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), which significantly changes the way impairment of financial assets is recognized. The standard will require immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets, which will generally result in earlier recognition of allowances for credit losses on loans and other financial instruments. The standard’s provisions will be applied as a cumulative-effect adjustment to beginning retained earnings as of the effective date. The standard is effective for the Company as of January 1, 2020. Early adoption is permitted for annual and interim periods beginning January 1, 2019. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. The standard’s objective is to simplify the subsequent measurement of goodwill by eliminating the second step from the goodwill impairment test. Under the amendments in the standard, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, an impairment charge would then be recognized, not to exceed the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on January 1, 2020, and early adoption is permitted. The Company does not believe that the adoption of this standard will have a material effect on its consolidated financial statements and related disclosures. |
Variable Interest Entities ("VIEs") (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Total Risk of Loss Related to Contract Land Deposits | NVR’s total risk of loss related to contract land deposits as of June 30, 2018 and December 31, 2017 was as follows:
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Joint Ventures (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Consolidated Joint Venture [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity Method Investments [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Balance Sheets | The condensed balance sheets as of June 30, 2018 and December 31, 2017 of the consolidated JV were as follows:
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Capitalized Interest (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Interest Costs Incurred, Capitalized, Expensed and Charged to Cost of Sales | The following table reflects the changes in the Company's capitalized interest during the three and six months ended June 30, 2018 and 2017:
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Earnings per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings Per Share | The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the three and six months ended June 30, 2018 and 2017:
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Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following non-qualified stock options ("Options") issued under equity incentive plans were outstanding during the three and six months ended June 30, 2018 and 2017, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.
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Equity-Based Compensation (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Equity-Based Compensation Plans with Grants Outstanding | During the second quarter of 2018, the Company issued 332 Options and 16 RSUs under the NVR, Inc. 2010 Equity Incentive Plan (the "2010 Plan"), the NVR, Inc. 2014 Equity Incentive Plan (the "2014 Plan"), and the 2018 Plan as follows:
(1) Of the 166 service-only Options granted, 34 will vest over two years in 50% increments on December 31, 2020 and 2021; the remaining 132 Options will vest over four years in 25% increments on December 31, 2020, 2021, 2022, and 2023. Vesting for the Options is contingent solely upon continued employment or continued service as a Director. (2) Of the 166 performance-based Options granted, 34 will vest over two years in 50% increments on December 31, 2020 and 2021; the remaining 132 performance-based Options will vest over four years in 25% increments on December 31, 2020, 2021, 2022, and 2023. Vesting for the performance-based Options is contingent upon both continued employment or continued service as a Director and the Company's return on capital performance during 2018 through 2020. (3) The service-only RSUs granted will vest over two years in 50% increments on December 31, 2022 and 2023. Vesting for the RSUs is contingent solely upon continued employment. (4) The performance-based RSUs granted will vest over two years in 50% increments on December 31, 2022 and 2023. Vesting for the performance-based RSUs is contingent upon both continued employment and the Company's return on capital performance during 2018 through 2020. |
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Equity-Based Compensations Plans | The following table provides additional information relative to NVR's equity-based compensation plans for the six months ended June 30, 2018:
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Black-Scholes Option-Pricing Model Assumptions | The fair value of the Options granted during 2018 was estimated on the grant date using the Pricing Model, based on the following assumptions:
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Shareholders' Equity (Tables) |
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Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Shareholders' Equity | A summary of changes in shareholders’ equity is presented below:
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Product Warranties (Tables) |
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Product Warranties Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Changes in Product Warranties Reserve | The following table reflects the changes in the Company’s Warranty Reserve during the three and six months ended June 30, 2018 and 2017:
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Segment Disclosures (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | The following tables present segment revenues, profit and assets with reconciliations to the amounts reported for the consolidated enterprise, where applicable:
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Profit before Taxes |
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Assets |
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Fair Value (Tables) |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Undesignated Derivative Instruments | The fair value measurement of NVRM's undesignated derivative instruments was as follows:
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Fair Value Measurement | The fair value measurement as of June 30, 2018 was as follows:
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Variable Interest Entities ("VIEs") - Additional Information (Detail) $ in Thousands |
Jun. 30, 2018
USD ($)
lot
|
Dec. 31, 2017
USD ($)
|
---|---|---|
Variable Interest Entity [Line Items] | ||
Contract land deposits in cash | $ 388,331 | $ 400,428 |
Variable Interest Entities [Member] | ||
Variable Interest Entity [Line Items] | ||
Maximum range of deposits required under the purchase agreements | 10.00% | |
Power of developers equity holders to direct operating activities of development entity | 100.00% | |
Lots controlled by NVR | lot | 90,100 | |
Contract land deposits in cash under lot purchase Agreements | $ 377,400 | |
Letters of credit related to lots | $ 2,700 | |
Contract on Raw Ground with Landowners [Member] | ||
Variable Interest Entity [Line Items] | ||
Lots controlled by NVR | lot | 9,900 | |
Contract land deposits in cash | $ 10,900 | |
Letters of credit related to land contract | 100 | |
Refundable deposits and letters of credit | $ 2,100 |
Variable Interest Entities ("VIEs") - Total Risk of Loss Related to Contract Land Deposits (Detail) $ in Thousands |
Jun. 30, 2018
USD ($)
lot
|
Dec. 31, 2017
USD ($)
lot
|
---|---|---|
Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure [Abstract] | ||
Contract land deposits | $ 388,331 | $ 400,428 |
Loss reserve on contract land deposits | (27,279) | (29,999) |
Contract land deposits, net | 361,052 | 370,429 |
Contingent obligations in the form of letters of credit | 2,798 | 1,996 |
Specific performance obligations | 1,505 | 1,505 |
Total risk of loss | $ 365,355 | $ 373,930 |
Finished lots committed to purchase under specific performance obligations | lot | 10 | 10 |
Joint Ventures - Additional Information (Detail) $ in Thousands |
Jun. 30, 2018
USD ($)
joint_venture
lot
|
Dec. 31, 2017
USD ($)
|
---|---|---|
Joint Ventures [Line Items] | ||
Aggregate investment | $ | $ 40,000 | |
Number of joint ventures | joint_venture | 6 | |
Expected production of finished lots | lot | 7,000 | |
Total lots controlled by company under the joint venture | lot | 3,650 | |
Total lots either under contract with unrelated parties or not under the current contract | lot | 3,350 | |
Additional funding commitments in the aggregate | $ | $ 5,000 | |
Number of joint ventures with additional funding commitment | joint_venture | 3 | |
Number of joint ventures NVR is not primary beneficiary | joint_venture | 5 | |
Other Assets [Member] | ||
Joint Ventures [Line Items] | ||
Aggregate investment | $ | $ 39,700 | $ 49,000 |
Joint Ventures - Condensed Balance Sheets (Detail) - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Liabilities and equity: | ||
Equity | $ 1,607,571 | $ 1,605,492 |
Total liabilities and shareholders' equity | 3,009,395 | 2,989,279 |
Consolidated Joint Venture [Member] | ||
Assets: | ||
Cash | 1,128 | 1,069 |
Other assets | 37 | 37 |
Assets related to consolidated variable interest entity | 1,165 | 1,106 |
Liabilities and equity: | ||
Accrued expenses | 484 | 487 |
Equity | 681 | 619 |
Total liabilities and shareholders' equity | $ 1,165 | $ 1,106 |
Land Under Development - Additional Information (Detail) $ in Thousands |
Jun. 30, 2018
USD ($)
parcel
lot
|
---|---|
Real Estate [Abstract] | |
Number of raw parcels of land owned | parcel | 4 |
Carrying value of raw parcels of land | $ 35,292 |
Number of finished lots expected to be developed from raw parcels of land | lot | 450 |
Aggregate additional funding commitments related to raw land property under joint development | $ 8,300 |
Expected development credits that will offset the aggregate additional funding commitments related to raw land property development | $ 4,800 |
Capitalized Interest - Summary of Interest Costs Incurred, Capitalized, Expensed and Charged to Cost of Sales (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Capitalized Interest Costs, Including Allowance for Funds Used During Construction [Roll Forward] | ||||
Interest capitalized, beginning of period | $ 5,545 | $ 5,564 | $ 5,583 | $ 5,106 |
Interest incurred | 6,624 | 6,580 | 13,220 | 13,139 |
Interest expense | (6,329) | (5,914) | (12,611) | (11,750) |
Interest charged to cost of sales | (452) | (278) | (804) | (543) |
Interest capitalized, end of period | $ 5,388 | $ 5,952 | $ 5,388 | $ 5,952 |
Earnings Per Share - Weighted Average Shares and Share Equivalents Used to Calculate Basic and Diluted Earnings Per Share (Detail) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Weighted average number of shares outstanding used to calculate basic EPS (in shares) | 3,635 | 3,748 | 3,655 | 3,726 |
Dilutive securities: | ||||
Stock options and restricted share units (in shares) | 507 | 454 | 526 | 429 |
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS (in shares) | 4,142 | 4,202 | 4,181 | 4,155 |
Earnings Per Share - Summary of Antidilutive Securities Excluded from Computation of Earnings Per Share (Detail) - shares shares in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Earnings Per Share [Abstract] | ||||
Anti-dilutive securities (in shares) | 349 | 9 | 349 | 15 |
Equity-Based Compensation Black-Scholes Option-Pricing Model Assumptions (Details) |
6 Months Ended |
---|---|
Jun. 30, 2018
$ / shares
| |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Expected option life | 5 years 22 days |
Risk free interest rate, minimum | 2.19% |
Risk free interest rate, maximum | 2.99% |
Expected volatility rate, minimum | 16.57% |
Expected volatility rate, maximum | 18.83% |
Expected dividend rate | 0.00% |
Weighted average grant date fair value per share of Options granted | $ 689.47 |
Shareholders' Equity - Additional Information (Detail) shares in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2018
shares
| |
Equity [Abstract] | |
Common stock repurchased (in shares) | 158 |
Reissued shares during the period, shares (in shares) | 96 |
Product Warranties Product Warranties - Schedule of Product Warranties Reserves (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | ||||
Warranty reserve, beginning of period | $ 95,606 | $ 93,503 | $ 94,513 | $ 93,895 |
Provision | 16,217 | 13,206 | 27,744 | 22,167 |
Payments | (12,121) | (11,315) | (22,555) | (20,668) |
Warranty reserve, end of period | $ 99,702 | $ 95,394 | $ 99,702 | $ 95,394 |
Segment Disclosures - Additional Information (Detail) |
6 Months Ended |
---|---|
Jun. 30, 2018
segment
| |
Senior Notes due 2022 [Member] | |
Segment Reporting Information [Line Items] | |
Senior notes interest rate | 3.95% |
Senior notes maturity | Sep. 15, 2022 |
Homebuilding [Member] | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 4 |
Mortgage Banking [Member] | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | 1 |
Fair Value - Undesignated Derivative Instruments (Detail) - Other Assets [Member] - Mortgage Banking [Member] - Level 2 [Member] - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Rate Lock Commitments [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Gross assets | $ 13,770 | $ 5,400 |
Gross liabilities | 996 | 1,832 |
Net rate lock commitments and forward sales contracts | 12,774 | 3,568 |
Forward Sales Contracts [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Gross assets | 408 | 992 |
Gross liabilities | 4,307 | 667 |
Net rate lock commitments and forward sales contracts | $ (3,899) | $ 325 |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Tax [Line Items] | ||||
Effective tax rate | 15.90% | 29.20% | 14.60% | 26.50% |
Income tax expense (benefit) | $ 38,412 | $ 61,091 | $ 63,361 | $ 90,329 |
Excess tax benefit recognized | $ 26,456 | $ 16,464 | 46,022 | $ 36,364 |
Energy Tax Credit Carryforward | ||||
Income Tax [Line Items] | ||||
Income tax expense (benefit) | $ 6,200 |
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jan. 01, 2019 |
Dec. 31, 2017 |
---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative-effect adjustment | $ 2,196 | |
Forecast | Accounting Standards Update 2016-02 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Cumulative-effect adjustment | $ 100,000 |
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