EX-99.1 2 v101034_ex99-1.htm
 
Exhibit 99.1
NVR, INC. ANNOUNCES FOURTH QUARTER RESULTS


FOR IMMEDIATE RELEASE Contact:  Dan Malzahn
  Office: (703) 956-4204

January 29, 2008, Reston, VA—NVR, Inc. (NYSE: NVR), one of the nation’s largest homebuilding and mortgage banking companies, announced that diluted earnings per share for its fourth quarter ended December 31, 2007 decreased 44% and net income decreased 50% when compared to the 2006 fourth quarter. Net income for the 2007 fourth quarter was $67,274,000, $11.72 per diluted share, compared to net income of $135,167,000, $20.86 per diluted share, for the same period of 2006. The fourth quarter 2007 results were negatively impacted by land deposit impairments of approximately $97,000,000. These impairments lowered gross margins by 690 basis points and reduced diluted earnings per share by $10.32. Consolidated revenues for the last three months of 2007 totaled $1,427,397,000, a 12% decrease from $1,627,130,000 for the comparable 2006 quarter.

Net income for the 2007 fiscal year was $333,955,000, $54.14 per diluted share, compared to net income of $587,412,000, $88.05 per diluted share for 2006, a 43% decrease in net income and a 39% decrease in diluted earnings per share. The full year results were negatively impacted by land deposit impairments of approximately $261,800,000. These impairments lowered gross margins by 519 basis points and reduced diluted earnings per share by $25.91. Consolidated revenues for 2007 totaled $5,129,342,000, a 16% decrease from the $6,134,124,000 for 2006.

Homebuilding
New orders for the fourth quarter of 2007 decreased 35% to 1,948 units, when compared to 3,002 units for the fourth quarter of 2006. New order activity slowed as the quarter progressed and activity has remained weak during January. The cancellation rate in the fourth quarter of 2007 was 32% compared to 20% in the fourth quarter of 2006 and 27% in the third quarter of 2007. The cancellation rate in the Washington, D.C. market was 46% in the quarter compared to 34% in the fourth quarter of 2006 and 44% in the third quarter of 2007. These elevated cancellation levels are largely due to the instability in the mortgage lending market, including the tightening of mortgage underwriting standards. The average sales price of new orders in the fourth quarter of 2007 declined by 13% from the fourth quarter of 2006. The average new order price declined in all regions but was primarily due to a 17% decline in the Mid-Atlantic region. These sizable declines in new order units and prices will continue to have a significant negative impact on revenues and gross margins in the coming quarters.

Settlements decreased in the fourth quarter of 2007 to 3,874 units, 3% less than the same period of 2006. Homebuilding revenues for the three months ended December 31, 2007 totaled $1,405,466,000, 12% lower than the year earlier period. Pre-tax homebuilding income totaled $92,681,000, a decrease of 54% when compared to the fourth quarter of the previous year. Gross profit margins decreased to 12.9% in the 2007 fourth quarter compared to 19.0% for the same period in 2006. The decline in gross profit margins is due to the previously mentioned land deposit impairments and continued price declines in most of our markets.

New orders for 2007 totaled 12,270 units, a 7% decrease when compared to the 13,217 units reported for 2006. Home settlements for 2007 decreased 11% to 13,513 units when compared to 15,139 units closed in 2006. Homebuilding revenues for 2007 totaled $5,048,187,000, 16% lower than 2006. Pre-tax homebuilding income decreased to $485,576,000 for the 2007 fiscal year, a decrease of 46% from the prior year. Gross profit margins decreased to 16.3% in 2007 from 22.1% in 2006. The number of homes in backlog at the end of 2007 was 5,145 units, 19% lower than the 6,388 units in backlog at the end of 2006. The dollar volume in backlog decreased 27% to $1,910,504,000 at December 31, 2007, when compared to the same time last year.

Mortgage Banking
Mortgage closed loan production of $867,106,000 for the three months ended December 31, 2007 was 19% lower than the same period last year. Pre-tax income contributed by the mortgage banking operations during the fourth quarter of 2007 decreased 14% to $15,301,000, when compared to $17,875,000 reported for the same period of 2006.

Pre-tax income from the mortgage banking segment decreased for the 2007 fiscal year to $53,929,000, a 17% decrease from the $65,133,000 reported for 2006. Mortgage production for the year decreased 18% to $3,225,324,000.

Some of the statements in this release made by the Company constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other variations thereof or comparable terminology, or by discussion of strategies, each of which involves risks and uncertainties. All statements other than those of historical facts included herein, including those regarding market trends, NVR’s financial position, business strategy, the outcome of pending litigation, projected plans and objectives of management for future operations, are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to, general economic and business conditions (on both a national and regional level), interest rate changes, access to suitable financing by NVR and by NVR’s customers, competition, the availability and cost of land and other raw materials used by NVR in its homebuilding operations, shortages of labor, weather related slow downs, building moratoria, governmental regulation, the ability of NVR to integrate any acquired business, fluctuation and volatility of stock and other financial markets, mortgage financing availability and other factors over which NVR has little or no control. The Company has no obligation to update such forward-looking statements.

NVR, Inc.
Consolidated Statements of Income
(amounts in thousands, except per share data)
 
   
 Three Months Ended December 31,
  
  Twelve Months Ended December 31,
  
   
 2007
  
 2006
  
 2007
  
 2006
  
Homebuilding:
                      
 Revenues
  
$
1,405,466
  
$
1,600,733
  
$
5,048,187
  
$
6,036,236
  
 Other income
    
4,693
    
5,361
    
21,118
    
13,609
  
 Cost of sales
    
(1,224,313
)
  
(1,297,372
)
  
(4,227,059
)
  
(4,701,265
)
 Selling, general and administrative
    
(90,010
)
  
(103,188
)
  
(343,520
)
  
(432,319
)
 Operating income
    
95,836
    
205,534
    
498,726
    
916,261
  
 Interest expense
    
(3,155
)
  
(3,650
)
  
(13,150
)
  
(18,423
)
 Homebuilding income
    
92,681
    
201,884
    
485,576
    
897,838
  
Mortgage Banking:
                          
 Mortgage banking fees
    
21,931
    
26,397
    
81,155
    
97,888
  
 Interest income
    
1,485
    
2,468
    
4,900
    
7,704
  
 Other income
    
280
    
317
    
1,060
    
1,334
  
 General and administrative
    
(8,227
)
  
(11,121
)
  
(32,505
)
  
(38,988
)
 Interest expense
    
(168
)
  
(186
)
  
(681
)
  
(2,805
)
Mortgage banking income
    
15,301
    
17,875
    
53,929
    
65,133
  
                           
Income before taxes
    
107,982
    
219,759
    
539,505
    
962,971
  
                           
 Income tax expense
    
(40,708
)
  
(84,592
)
  
(205,550
)
  
(375,559
)
                           
Net income
  
$
67,274
  
$
135,167
  
$
333,955
  
$
587,412
  
                           
Basic earnings per share
  
$
13.10
  
$
24.43
  
$
61.61
  
$
104.08
  
                           
Diluted earnings per share
  
$
11.72
  
$
20.86
  
$
54.14
  
$
88.05
  
                           
Basic average shares outstanding
    
5,136
    
5,533
    
5,420
    
5,644
  
                           
Diluted average shares outstanding
    
5,741
    
6,481
    
6,168
    
6,672
  


NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)

   
December 31,
  
   
2007
  
2006
  
ASSETS
          
Homebuilding:
          
 Cash and cash equivalents
  
$
660,709
  
$
551,738
  
 Receivables
    
10,855
    
12,213
  
 Inventory:
              
 Lots and housing units, covered under
              
 sales agreements with customers
    
573,895
    
667,100
  
Unsold lots and housing units
    
105,838
    
58,248
  
Manufacturing materials and other
    
9,121
    
8,268
  
     
688,854
    
733,616
  
 Contract land deposits, net
    
188,528
    
402,170
  
 Assets not owned, consolidated
              
 per FIN 46R
    
180,206
    
276,419
  
 Property, plant and equipment, net
    
32,911
    
40,430
  
 Reorganization value in excess of amounts
              
allocable to identifiable assets, net
    
41,580
    
41,580
  
 Goodwill and other indefinite and definite life
              
 intangibles, net
    
11,782
    
11,936
  
 Other assets
    
252,461
    
207,468
  
               
     
2,067,886
    
2,277,570
  
Mortgage Banking:
              
 Cash and cash equivalents
    
3,500
    
4,381
  
 Mortgage loans held for sale, net
    
107,338
    
178,444
  
 Property and equipment, net
    
881
    
1,168
  
 Reorganization value in excess of amounts
              
allocable to identifiable assets, net
    
7,347
    
7,347
  
 Other assets
    
7,464
    
4,898
  
     
126,530
    
196,238
  
 Total assets
  
$
2,194,416
  
$
2,473,808
  
 

NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
 
           
   
December 31,
  
   
2007
  
 2006
  
LIABILITIES AND SHAREHOLDERS' EQUITY
           
           
Homebuilding:
           
 Accounts payable
  
$
219,048
  
$
273,936
  
 Accrued expenses and other liabilities
    
251,475
    
265,223
  
 Liabilities related to assets not owned
              
 consolidated per FIN 46R
    
164,369
    
244,805
  
 Customer deposits
    
125,315
    
165,354
  
 Other term debt
    
2,820
    
3,080
  
 Senior notes
    
200,000
    
200,000
  
     
963,027
    
1,152,398
  
Mortgage Banking:
              
 Accounts payable and other liabilities
    
18,551
    
15,784
  
 Notes payable
    
83,463
    
153,552
  
     
102,014
    
169,336
  
               
 Total liabilities
    
1,065,041
    
1,321,734
  
               
 Commitments and contingencies
              
               
 Shareholders' equity:
              
 Common stock, $0.01 par value; 60,000,000
              
 shares authorized; 20,592,640 shares issued
              
 for both 2007 and 2006
    
206
    
206
  
 Additional paid-in-capital
    
663,631
    
585,438
  
 Deferred compensation trust- 516,085
              
 and 547,911 shares of NVR, Inc.
              
 common stock for 2007
              
 and 2006, respectively
    
(75,636
)
  
(80,491
)
 Deferred compensation liability
    
75,636
    
80,491
  
 Retained earnings
    
3,529,995
    
3,196,040
  
 Less treasury stock at cost - 15,455,086
              
 and 15,075,113 shares for
              
 2007 and 2006, respectively
    
(3,064,457
)
  
(2,629,610
)
 Total shareholders' equity
    
1,129,375
    
1,152,074
  
 Total liabilities and shareholders'
              
 equity
  
$
2,194,416
  
$
2,473,808
  

 
NVR, Inc.
Operating Activity
(unaudited)
(dollars in thousands)

   
Three Months Ended December 31,
  
Twelve Months Ended December 31,
  
   
2007
  
2006
  
2007
  
2006
  
                   
Homebuilding data:
                  
New orders (units)
                  
Mid Atlantic (1)
    
910
    
1,442
    
5,695
    
6,182
  
North East (2)
    
190
    
319
    
1,212
    
1,438
  
Mid East (3)
    
540
    
755
    
3,160
    
3,244
  
South East (4)
    
308
    
486
    
2,203
    
2,353
  
Total
    
1,948
    
3,002
    
12,270
    
13,217
  
                           
Average new order price
  
$
318.4
  
$
366.7
  
$
352.0
  
$
377.4
  
                           
Settlements (units)
                          
Mid Atlantic (1)
    
1,906
    
1,980
    
6,634
    
7,491
  
North East (2)
    
329
    
485
    
1,247
    
1,682
  
Mid East (3)
    
974
    
965
    
3,321
    
3,571
  
South East (4)
    
665
    
572
    
2,311
    
2,395
  
Total
    
3,874
    
4,002
    
13,513
    
15,139
  
                           
Average settlement price
  
$
362.5
  
$
399.5
  
$
373.2
  
$
398.2
  
                           
Backlog (units)
                          
Mid Atlantic (1)
                
2,726
    
3,665
  
North East (2)
                
505
    
540
  
Mid East (3)
                
1,113
    
1,274
  
South East (4)
                
801
    
909
  
Total
                
5,145
    
6,388
  
                           
Average backlog price
              
$
371.3
  
$
412.4
  
                           
Community count (average)
    
472
    
551
    
505
    
589
  
Lots controlled at end of year
                
67,600
    
88,500
  
                           
Mortgage banking data:
                          
Loan closings
  
$
867,106
  
$
1,071,286
  
$
3,225,324
  
$
3,918,206
  
Capture rate
    
83
%
  
87
%
  
85
%
  
86
%
                           
Common stock information:
                          
Shares outstanding at end of year
                
5,137,554
    
5,517,527
  
Weighted average basic shares outstanding
    
5,136,000
    
5,533,000
    
5,420,000
    
5,644,000
  
Weighted average diluted shares outstanding
   
5,741,000
    
6,481,000
    
6,168,000
    
6,672,000
  
Number of shares repurchased
    
-
    
192,200
    
784,788
    
481,141
  
Aggregate cost of shares repurchased
  
$
0
  
$
103,778
  
$
507,472
  
$
287,064
  

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