EX-99.1 2 v120350_ex99-1.htm

Exhibit 99.1
NVR, INC. ANNOUNCES SECOND QUARTER RESULTS

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

July 22, 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 second quarter ended June 30, 2008 decreased 39% and net income decreased 43% when compared to the 2007 second quarter. Net income for the 2008 second quarter was $51,332,000, $8.64 per diluted share, compared to net income of $90,747,000, $14.14 per diluted share, for the same period of 2007. Consolidated revenues for the second quarter of 2008 totaled $955,723,000, a 27% decrease from $1,316,668,000 for the comparable 2007 quarter.

For the six months ended June 30, 2008, consolidated revenues were $1,843,654,000, 23% lower than the $2,409,857,000 reported for the same period of 2007. Net income for the six months ended June 30, 2008 was $94,798,000, a decrease of 46% when compared to the six months ended June 30, 2007. Diluted earnings per share for the six months ended June 30, 2008 was $16.10, a decrease of 41% from $27.11 per diluted share for the comparable period of 2007.

Homebuilding

New orders in the second quarter of 2008 decreased 29% to 2,670 units, when compared to 3,745 units in the second quarter of 2007. New order units and gross profit margins continue to be negatively impacted by high levels of new and existing home inventories, affordability issues, a more restrictive mortgage lending environment and declining homebuyer confidence. The cancellation rate in the quarter ended June 30, 2008 was 19% compared to 16% in the second quarter of 2007 and 22% in the first quarter of 2008.

Settlements decreased in the second quarter of 2008 to 2,750 units, 21% less than the same period of 2007. Homebuilding revenues for the three months ended June 30, 2008 totaled $941,033,000, 27% lower than the year earlier period. Income before tax from the homebuilding segment totaled $79,262,000 in the 2008 second quarter, a decrease of 42% when compared to the second quarter of the previous year. Gross profit margins decreased to 17.9% in the 2008 second quarter compared to 18.1% for the same period in 2007. Gross profit margins were impacted by land deposit impairments of approximately $5,800,000, 62 basis points, in the 2008 second quarter, and $55,000,000, 424 basis points, in the year ago period. Gross profit margins excluding the impairments were 18.5% in the 2008 second quarter compared to 22.4% for the same period in 2007. This decline in gross profit margin excluding impairments was due to continued pricing pressure in many of our markets. The Company’s backlog of homes sold but not settled at the end of the 2008 quarter decreased on a unit basis by 32% to 5,331 units and 41% on a dollar basis to $1,820,482,000 when compared to the same period last year.

Mortgage Banking

Mortgage closed loan production of $593,867,000 for the three months ended June 30, 2008 was 30% lower than the same period last year. Operating income for the mortgage banking operations during the second quarter of 2008 decreased 39% to $7,155,000, when compared to $11,719,000 reported for the same period of 2007.


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 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.

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


   
Three Months Ended June 30,
  
Six Months Ended June 30,
  
   
2008
  
2007
  
2008
  
2007
  
                   
Homebuilding:
                  
Revenues
  
$
941,033
  
$
1,297,140
  
$
1,810,902
  
$
2,372,250
  
Other income
    
3,701
    
5,251
    
10,100
    
12,216
  
Cost of sales
    
(772,369
)
  
(1,061,937
)
  
(1,499,300
)
  
(1,915,347
)
Selling, general and administrative
    
(89,871
)
  
(101,198
)
  
(174,037
)
  
(198,604
)
Operating income
    
82,494
    
139,256
    
147,665
    
270,515
  
Interest expense
    
(3,232
)
  
(3,298
)
  
(6,471
)
  
(6,620
)
Homebuilding income
    
79,262
    
135,958
    
141,194
    
263,895
  
                           
Mortgage Banking:
                          
Mortgage banking fees
    
14,690
    
19,528
    
32,752
    
37,607
  
Interest income
    
869
    
1,030
    
1,679
    
2,337
  
Other income
    
184
    
276
    
343
    
460
  
General and administrative
    
(8,408
)
  
(8,954
)
  
(16,062
)
  
(18,277
)
Interest expense
    
(180
)
  
(161
)
  
(314
)
  
(313
)
Mortgage banking income
    
7,155
    
11,719
    
18,398
    
21,814
  
                           
Income before taxes
    
86,417
    
147,677
    
159,592
    
285,709
  
                           
Income tax expense
    
(35,085
)
  
(56,930
)
  
(64,794
)
  
(110,141
)
                           
Net income
  
$
51,332
  
$
90,747
  
$
94,798
  
$
175,568
  
                           
                           
Basic earnings per share
  
$
9.58
  
$
16.19
  
$
17.92
  
$
31.16
  
                           
Diluted earnings per share
  
$
8.64
  
$
14.14
  
$
16.10
  
$
27.11
  
                           
Basic average shares outstanding
    
5,357
    
5,606
    
5,290
    
5,634
  
                           
Diluted average shares outstanding
    
5,938
    
6,420
    
5,888
    
6,477
  

 

3

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




   
June 30, 2008
  
December 31, 2007
  
   
(unaudited)
      
           
ASSETS
          
           
Homebuilding:
          
Cash and cash equivalents
  
$
867,329
  
$
660,709
  
Receivables
    
16,189
    
10,855
  
Inventory:
              
Lots and housing units, covered under
              
sales agreements with customers
    
549,540
    
573,895
  
Unsold lots and housing units
    
69,127
    
105,838
  
 Manufacturing materials and other
    
6,970
    
9,121
  
     
625,637
    
688,854
  
               
Contract land deposits
    
173,123
    
188,528
  
Assets not owned, consolidated
             
per FIN 46R
    
145,141
    
180,206
  
Property, plant and equipment, net
    
29,077
    
32,911
  
Reorganization value in excess of amounts
              
allocable to identifiable assets, net
    
41,580
    
41,580
  
Goodwill and other indefinite and definite
              
life intangibles, net
    
11,728
    
11,782
  
Other assets
    
248,782
    
252,461
  
               
     
2,158,586
    
2,067,886
  
               
Mortgage Banking:
              
Cash and cash equivalents
    
810
    
3,500
  
Mortgage loans held for sale, net
    
134,714
    
107,338
  
Property and equipment, net
    
1,020
    
881
  
Reorganization value in excess of amounts
              
allocable to identifiable assets, net
    
7,347
    
7,347
  
Other assets
    
11,378
    
7,464
  
               
     
155,269
    
126,530
  
               
 Total assets
  
$
2,313,855
  
$
2,194,416
  







 

4


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



   
June 30, 2008
  
December 31, 2007
  
   
(unaudited)
      
           
LIABILITIES AND SHAREHOLDERS’ EQUITY
          
           
Homebuilding:
          
Accounts payable
  
$
191,158
  
$
219,048
  
Accrued expenses and other liabilities
    
232,625
    
251,475
  
Liabilities related to assets not owned,
              
consolidated per FIN 46R
    
134,686
    
164,369
  
Customer deposits
    
108,379
    
125,315
  
Other term debt
    
2,703
    
2,820
  
Senior notes
    
200,000
    
200,000
  
     
869,551
    
963,027
  
Mortgage Banking:
              
Accounts payable and other liabilities
    
12,152
    
18,551
  
Notes payable
    
116,199
    
83,463
  
     
128,351
    
102,014
  
               
Total liabilities
    
997,902
    
1,065,041
  
               
Commitments and contingencies
              
               
Shareholders’ equity:
              
Common stock, $0.01 par value; 60,000,000
              
shares authorized; 20,561,187 and 20,592,640
             
shares issued for June 30, 2008 and
             
December 31, 2007, respectively
    
206
    
206
  
Additional paid-in capital
    
692,152
    
663,631
  
Deferred compensation trust - 515,888 and
             
516,085 shares of NVR, Inc. common stock for
              
June 30, 2008 and December 31, 2007,
             
respectively
    
(75,461
)
  
(75,636
)
Deferred compensation liability
    
75,461
    
75,636
  
Retained earnings
    
3,624,793
    
3,529,995
  
Less treasury stock at cost - 15,136,930 and
             
15,455,086 shares for June 30, 2008 and
             
December 31, 2007, respectively
    
(3,001,198
)
  
(3,064,457
)
 Total shareholders’ equity
    
1,315,953
    
1,129,375
  
 Total liabilities and shareholders’
             
 equity
  
$
2,313,855
  
$
2,194,416
  


5

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

   
Three Months Ended June 30,
  
Six Months Ended June 30,
  
   
2008
  
2007
  
2008
  
2007
  
                   
Homebuilding data:
                  
New orders (units):
                  
Mid Atlantic (1)
    
1,341
    
1,803
    
2,633
    
3,724
  
North East (2)
    
240
    
345
    
520
    
762
  
Mid East (3)
    
726
    
923
    
1,443
    
1,953
  
South East (4)
    
363
    
674
    
805
    
1,223
  
Total
    
2,670
    
3,745
    
5,401
    
7,662
  
                           
Average new order price
  
$
316.4
  
$
363.9
  
$
318.2
  
$
368.2
  
                           
Settlements (units):
                          
Mid Atlantic (1)
    
1,344
    
1,720
    
2,585
    
3,072
  
North East (2)
    
304
    
324
    
549
    
573
  
Mid East (3)
    
639
    
839
    
1,256
    
1,411
  
South East (4)
    
463
    
580
    
825
    
1,107
  
Total
    
2,750
    
3,463
    
5,215
    
6,163
  
                           
Average settlement price
  
$
341.7
  
$
374.2
  
$
346.9
  
$
384.4
  
                           
Backlog (units):
                          
Mid Atlantic (1)
                
2,774
    
4,317
  
North East (2)
                
476
    
729
  
Mid East (3)
                
1,300
    
1,816
  
South East (4)
                
781
    
1,025
  
Total
                
5,331
    
7,887
  
                           
Average backlog price
              
$
341.5
  
$
391.3
  
                           
Community count (average)
    
435
    
516
    
439
    
522
  
Lots controlled at end of period
                
60,500
    
85,400
  
                           
Mortgage banking data:
                          
Loan closings
  
$
593,867
  
$
849,430
  
$
1,117,405
  
$
1,564,469
  
Capture rate
    
84
%
  
86
%
  
83
%
  
86
%
                         
Common stock information:
                          
Shares outstanding at end of period
                
5,424,257
    
5,608,428
  
Number of shares repurchased
    
-
    
179,700
    
-
    
305,700
  
Aggregate cost of shares repurchased
    
-
  
$
123,263
    
-
  
$
209,613
  

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