EX-99.1 2 q22019exhibit991earnin.htm EX-99.1 Document

image1.jpg
Exhibit 99.1
NVR, INC. ANNOUNCES SECOND QUARTER RESULTS
July 19, 2019, Reston, VA—NVR, Inc. (NYSE: NVR), one of the nation’s largest homebuilding and mortgage banking companies, announced net income for its second quarter ended June 30, 2019 of $210,209,000, or $53.09 per diluted share. Net income and diluted earnings per share for the second quarter ended June 30, 2019 increased 3% and 8%, respectively, when compared to 2018 second quarter net income of $203,174,000, or $49.05 per diluted share. Consolidated revenues for the second quarter of 2019 totaled $1,800,194,000, a 1% increase from $1,787,305,000 in the second quarter of 2018.
For the six months ended June 30, 2019, consolidated revenues were $3,487,205,000, a 5% increase from $3,316,719,000 reported for 2018. Net income for the six months ended June 30, 2019 was $398,615,000, an increase of 8% when compared to the six months ended June 30, 2018. Diluted earnings per share for the six months ended June 30, 2019 was $100.61, an increase of 14% from $88.31 per diluted share for 2018.
Homebuilding
New orders in the second quarter of 2019 increased by 6% to 5,239 units, when compared to 4,964 units in the second quarter of 2018. The average sales price of new orders in the second quarter of 2019 was $358,600, a decrease of 5% when compared with the second quarter of 2018. The decrease in the average sales price is primarily due to a continued shift to smaller, lower priced products, as well as a shift to markets with lower average sales prices. Settlements increased in the second quarter of 2019 to 4,720 units, which was 2% higher than the second quarter of 2018. The Company’s backlog of homes sold but not settled as of June 30, 2019 decreased on a unit basis by 6% to 9,530 units and decreased on a dollar basis by 9% to $3,516,505,000 when compared to June 30, 2018.
Homebuilding revenues of $1,757,448,000 in the second quarter of 2019 were relatively flat compared to the second quarter of 2018. Gross profit margin in the second quarter of 2019 decreased to 18.9%, compared to 19.1% in the second quarter of 2018. Income before tax from the homebuilding segment totaled $219,650,000 in the second quarter of 2019, a decrease of 2% when compared to the second quarter of 2018.
Mortgage Banking
Mortgage closed loan production in the second quarter of 2019 totaled $1,231,039,000, an increase of 1% when compared to the second quarter of 2018. Income before tax from the mortgage banking segment totaled $25,062,000 in the second quarter of 2019, an increase of 37% when compared to $18,320,000 in the second quarter of 2018. The increase in income before tax is primarily due to a 16% increase in mortgage banking fees, resulting from an increase in secondary marketing gains and the timing of loan sales.
About NVR
NVR, Inc. operates in two business segments: homebuilding and mortgage banking. The homebuilding segment sells and builds homes under the Ryan Homes, NVHomes and Heartland Homes trade names, and operates in thirty-two metropolitan areas in fourteen states and Washington, D.C. For more information about NVR, Inc. and its brands, see www.nvrinc.com, www.ryanhomes.com, www.nvhomes.com and www.heartlandluxuryhomes.com.
Some of the statements in this release made by the Company constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other comparable terminology. All statements other than of historical facts are forward-looking statements. Forward-looking statements contained in this document may include those regarding market trends, NVR’s financial position, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or
Page 1 of 6

achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to the following: general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by NVR and NVR’s customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by NVR in its homebuilding operations; shortages of labor; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which NVR has little or no control. NVR undertakes no obligation to update such forward-looking statements except as required by law.
Page 2 of 6

NVR, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)

Three Months Ended June 30,Six Months Ended June 30,
2019201820192018
Homebuilding:
Revenues$1,757,448 $1,750,463 $3,400,654 $3,240,556 
Other income5,833 2,164 11,570 4,141 
Cost of sales(1,425,388)(1,416,797)(2,764,194)(2,628,743)
Selling, general and administrative(112,210)(106,517)(227,944)(212,064)
Operating income225,683 229,313 420,086 403,890 
Interest expense(6,033)(6,047)(12,026)(12,054)
Homebuilding income219,650 223,266 408,060 391,836 
Mortgage Banking:
Mortgage banking fees42,746 36,842 86,551 76,163 
Interest income2,737 2,915 5,570 5,008 
Other income681 641 1,220 1,165 
General and administrative(20,834)(21,796)(37,592)(41,031)
Interest expense(268)(282)(490)(557)
Mortgage banking income25,062 18,320 55,259 40,748 
Income before taxes244,712 241,586 463,319 432,584 
Income tax expense(34,503)(38,412)(64,704)(63,361)
Net income$210,209 $203,174 $398,615 $369,223 
Basic earnings per share$58.20 $55.90 $110.43 $101.03 
Diluted earnings per share$53.09 $49.05 $100.61 $88.31 
Basic weighted average shares outstanding3,612 3,635 3,610 3,655 
Diluted weighted average shares outstanding3,959 4,142 3,962 4,181 



Page 3 of 6

NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
June 30, 2019December 31, 2018
ASSETS
Homebuilding:
Cash and cash equivalents$860,956 $688,783 
Restricted cash20,403 16,982 
Receivables28,943 18,641 
Inventory:
Lots and housing units, covered under sales agreements with customers1,199,015 1,076,904 
Unsold lots and housing units132,667 115,631 
Land under development46,725 38,857 
Building materials and other19,321 21,718 
1,397,728 1,253,110 
Contract land deposits, net409,754 396,177 
Property, plant and equipment, net48,279 42,234 
Operating lease right-of-use assets65,027 — 
Reorganization value in excess of amounts allocable to identifiable assets, net41,580 41,580 
Other assets185,727 184,004 
3,058,397 2,641,511 
Mortgage Banking:
Cash and cash equivalents21,363 23,092 
Restricted cash3,393 3,071 
Mortgage loans held for sale, net462,693 458,324 
Property and equipment, net6,240 6,510 
Operating lease right-of-use assets14,078 — 
Reorganization value in excess of amounts allocable to identifiable assets, net7,347 7,347 
Other assets29,729 26,078 
544,843 524,422 
Total assets$3,603,240 $3,165,933 


Page 4 of 6

NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
(Unaudited)
June 30, 2019December 31, 2018
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable$309,419 $244,496 
Accrued expenses and other liabilities299,466 332,871 
Customer deposits146,207 138,246 
Operating lease liabilities72,360 — 
Senior notes597,991 597,681 
1,425,443 1,313,294 
Mortgage Banking:
Accounts payable and other liabilities43,387 44,077 
Operating lease liabilities14,971 — 
58,358 44,077 
Total liabilities1,483,801 1,357,371 
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, 2019 and December 31, 2018206 206 
Additional paid-in capital1,962,156 1,820,223 
Deferred compensation trust – 107,295 and 107,340 shares of NVR, Inc. common stock as of June 30, 2019 and December 31, 2018, respectively(16,912)(16,937)
Deferred compensation liability16,912 16,937 
Retained earnings7,429,948 7,031,333 
Less treasury stock at cost – 16,911,734 and 16,977,499 shares as of June 30, 2019 and December 31, 2018, respectively(7,272,871)(7,043,200)
Total shareholders' equity2,119,439 1,808,562 
Total liabilities and shareholders' equity$3,603,240 $3,165,933 

Page 5 of 6

NVR, Inc.
Operating Activity
(dollars in thousands)
(Unaudited)
Three Months Ended June 30,Six Months Ended June 30,
2019201820192018
Homebuilding data:
New orders (units)
Mid Atlantic (1)
2,322 2,414 4,766 4,917 
North East (2)
364 365 677 736 
Mid East (3)
1,276 1,142 2,490 2,438 
South East (4)
1,277 1,043 2,445 2,047 
Total
5,239 4,964 10,378 10,138 
Average new order price
$358.6 $376.3 $362.7 $377.3 
Settlements (units)
Mid Atlantic (1)
2,326 2,239 4,469 4,165 
North East (2)
314 354 617 655 
Mid East (3)
1,097 1,092 2,127 1,971 
South East (4)
983 926 2,000 1,716 
Total
4,720 4,611 9,213 8,507 
Average settlement price
$372.3 $379.6 $369.1 $380.9 
Backlog (units)
Mid Atlantic (1)
4,445 4,976 
North East (2)
623 763 
Mid East (3)
2,169 2,365 
South East (4)
2,293 2,058 
Total
9,530 10,162 
Average backlog price
$369.0 $380.0 
New order cancellation rate
13%  13%  14%  13%  
Community count (average)
470 480 460 483 
Lots controlled at end of period
101,400 94,200 
Mortgage banking data:
Loan closings
$1,231,039 $1,214,101 $2,372,037 $2,223,774 
Capture rate
89%  87%  89%  87%  
Common stock information:
Shares outstanding at end of period
3,643,596 3,628,515 
Number of shares repurchased
29,826 42,112 111,655 158,380 
Aggregate cost of shares repurchased
$87,980 $126,296 $304,479 $483,538 

(1) Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
(2) New Jersey and Eastern Pennsylvania
(3) New York, Ohio, Western Pennsylvania, Indiana and Illinois
(4) North Carolina, South Carolina, Tennessee and Florida
Investor Relations Contact:
Curt McKay
(703) 956-4058
ir@nvrinc.com

Page 6 of 6