PR Newswire | Jul 21, 2021 09:01AM EDT

07/21 08:00 CDT

NVR, Inc. Announces Second Quarter Results RESTON, Va., July 21, 2021

RESTON, Va., July 21, 2021 /PRNewswire/ -- NVR, Inc.(NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its second quarter ended June 30, 2021 of $321.3 million, or $82.45 per diluted share. Net income and diluted earnings per share for the second quarter ended June 30, 2021 increased 96% and 94%, respectively, when compared to 2020 second quarter net income of $164.1 million, or $42.50 per diluted share. Consolidated revenues for the second quarter of 2021 totaled $2.28 billion, an increase of 41% from $1.62 billion in the second quarter of 2020.

For the six months ended June 30, 2021, consolidated revenues were $4.33 billion, a 35% increase from $3.20 billion reported in 2020. Net income for the six months ended June 30, 2021 was $570.1 million, an increase of 68% when compared to the six months ended June 30, 2020. Diluted earnings per share for the six months ended June 30, 2021 was $145.53, an increase of 66% from $87.56 per diluted share for 2020.

Homebuilding

New orders in the second quarter of 2021 decreased by 6% to 5,521 units, when compared to 5,901 units in the second quarter of 2020. The average sales price of new orders in the second quarter of 2021 was $440,200, an increase of 20% when compared with the second quarter of 2020. The cancellation rate in the second quarter of 2021 was 8% compared to 16% in the second quarter of 2020. Settlements in the second quarter of 2021 increased by 32% to 5,685 units, compared to 4,296 units in the second quarter of 2020. Our backlog of homes sold but not settled as of June 30, 2021 increased on a unit basis by 19% to 12,627 units and increased on a dollar basis by 35% to $5.41 billion when compared to the respective backlog unit and dollar balances as of June 30, 2020.

Homebuilding revenues of $2.22 billion in the second quarter of 2021 increased by 40% compared to homebuilding revenues of $1.59 billion in the second quarter of 2020. Gross profit margin in the second quarter of 2021 increased to 22.6%, compared to 19.2% in the second quarter of 2020. Income before tax from the homebuilding segment totaled $378.3 million in the second quarter of 2021, an increase of 94% when compared to the second quarter of 2020.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2021 totaled $1.57 billion, an increase of 37% when compared to the second quarter of 2020. Income before tax from the mortgage banking segment totaled $39.2 million in the second quarter of 2021, an increase of 161% when compared to $15.0 million in the second quarter of 2020. This increase was primarily attributable to increased mortgage volume in the second quarter of 2021, coupled with income in the second quarter of 2020 being adversely impacted by disruptions in the mortgage markets related to the COVID-19 pandemic, which resulted in a reduction in fair value of mortgage servicing rights.

Effective Tax Rate

Our effective tax rate for the three and six months ended June 30, 2021 was 23.0% and 21.9%, respectively, compared to 21.8% and 8.5% for the three and six months ended June 30, 2020, respectively. The effective tax rates in each period were favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $11.2 million and $28.6 million for the three and six months ended June 30, 2021, respectively, and $6.9 million and $62.5 million for the three and six months ended June 30, 2020, respectively.

Other Matters - COVID-19

The COVID-19 pandemic has had a significant impact on all facets of our business. Our primary focus as we face this challenge is to do everything we can to ensure the safety and well-being of our employees, customers and trade partners. In each of our markets, we continue to operate in accordance with the guidelines issued by the Centers for Disease Control and Prevention as well as state and local health department guidelines, which has resulted in significant changes to the way we conduct business.

Although current demand for new homes is strong, there remains uncertainty regarding the extent and timing of disruption to our business that may result from COVID-19 and related governmental actions. There is also uncertainty as to the effects of economic relief efforts on the U.S. economy, unemployment, consumer confidence, demand for our homes and the mortgage market, including lending standards and secondary mortgage markets. We are unable to predict the extent to which this will impact our operational and financial performance including the impact of future developments such as the duration and spread of COVID-19, corresponding governmental actions, and the impact of such on our employees, customers and trade partners.

About NVR

NVR, Inc. operates in two business segments: homebuilding and mortgage banking. The homebuilding segment sells and builds homes under the Ryan Homes, NVHomes and Heartland Homes trade names, and operates in thirty-three metropolitan areas in fourteen states and Washington, D.C. For more information about NVR, Inc. and its brands, see www.nvrinc.com, www.ryanhomes.com, www.nvhomes.com and www.heartlandluxuryhomes.com.

Some of the statements in this release made by the Company constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "will," "should" or "anticipates" or the negative thereof or other comparable terminology. All statements other than of historical facts are forward-looking statements. Forward-looking statements contained in this document may include those regarding market trends, NVR's financial position, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance of NVR to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to the following: the impact of COVID-19 on the economy; general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by NVR and NVR's customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by NVR in its homebuilding operations; shortages of labor; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which NVR has little or no control. NVR undertakes no obligation to update such forward-looking statements except as required by law.

NVR, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

(unaudited)



Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020



Homebuilding:

Revenues $2,224,560 $1,588,758 $4,188,271$3,144,465

Other income 1,632 2,408 3,218 7,744

Cost of sales (1,721,673) (1,284,493) (3,299,126)(2,579,236)

Selling, general and administrative (113,406) (102,702) (234,825) (212,869)

Operating income 391,113 203,971 657,538 360,104

Interest expense (12,850) (9,166) (25,856) (15,380)

Homebuilding income 378,263 194,805 631,682 344,724



Mortgage Banking:

Mortgage banking fees 59,038 31,610 136,773 58,431

Interest income 2,209 1,854 4,241 4,323

Other income 988 679 1,855 1,328

General and administrative (22,613) (18,758) (44,269) (36,969)

Interest expense (420) (359) (811) (631)

Mortgage banking income 39,202 15,026 97,789 26,482



Income before taxes 417,465 209,831 729,471 371,206

Income tax (expense) benefit (96,170) (45,756) (159,414) (31,428)



Net income $321,295 $164,075 $570,057 $339,778



Basic earnings per share $88.69 $44.56 $156.27 $92.52



Diluted earnings per share $82.45 $42.50 $145.53 $87.56



Basic weighted average shares outstanding 3,623 3,682 3,648 3,673



Diluted weighted average shares outstanding3,897 3,861 3,917 3,881

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)



June 30, 2021December 31, 2020

ASSETS

Homebuilding:

Cash and cash equivalents $2,597,565 $2,714,720

Restricted cash 42,543 28,912

Receivables 24,484 18,299

Inventory:

Lots and housing units, covered under sales agreements with customers 1,792,293 1,484,936

Unsold lots and housing units 131,668 123,197

Land under development 7,794 62,790

Building materials and other 41,618 38,159

1,973,373 1,709,082



Contract land deposits, net 425,301 387,628

Property, plant and equipment, net 54,379 57,786

Operating lease right-of-use assets 61,740 53,110

Reorganization value in excess of amounts allocable to identifiable assets, net41,580 41,580

Other assets 215,168 203,399

5,436,133 5,214,516

Mortgage Banking:

Cash and cash equivalents 20,757 63,547

Restricted cash 3,688 2,334

Mortgage loans held for sale, net 344,680 449,760

Property and equipment, net 4,236 4,544

Operating lease right-of-use assets 11,627 12,439

Reorganization value in excess of amounts allocable to identifiable assets, net7,347 7,347

Other assets 25,968 22,654

418,303 562,625

Total assets $5,854,436 $5,777,141



NVR, Inc.

Consolidated Balance Sheets (Continued)

(in thousands, except share and per share data)

(unaudited)



June 30, 2021December 31, 2020

LIABILITIES AND SHAREHOLDERS' EQUITY

Homebuilding:

Accounts payable $380,957 $339,867

Accrued expenses and other liabilities 419,454 440,671

Customer deposits 365,443 240,758

Operating lease liabilities 67,413 59,357

Senior notes 1,516,830 1,517,395

2,750,097 2,598,048

Mortgage Banking:

Accounts payable and other liabilities 49,605 62,720

Operating lease liabilities 12,446 13,299

62,051 76,019

Total liabilities 2,812,148 2,674,067



Commitments and contingencies



Shareholders' equity:

Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares 206 206 issued as of both June 30, 2021 and December 31, 2020

Additional paid-in capital 2,314,564 2,214,426

Deferred compensation trust - 106,697 shares of NVR, Inc. common stock as of (16,710) (16,710) both June 30, 2021 and December 31, 2020

Deferred compensation liability 16,710 16,710

Retained earnings 9,381,177 8,811,120

Less treasury stock at cost - 16,976,140 and 16,859,753 shares as of June 30, 2021 (8,653,659) (7,922,678) and December 31, 2020, respectively

Total shareholders' equity 3,042,288 3,103,074

Total liabilities and shareholders' equity $5,854,436 $5,777,141



NVR, Inc.

Operating Activity

(dollars in thousands)

(unaudited)



Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

UnitsAverage UnitsAverage Units Average Units Average Price Price Price Price

New orders, net of cancellations:

Mid Atlantic (1) 2,090$535.4 2,381$443.0 4,381 $518.1 4,442 $442.6

North East (2) 394 $499.3 369 $375.7 834 $486.3 727 $378.9

Mid East (3) 1,320$375.7 1,536$315.6 3,115 $361.1 2,761 $320.3

South East (4) 1,717$360.3 1,615$296.1 3,505 $348.7 2,986 $300.5

Total 5,521$440.2 5,901$365.4 11,835$424.4 10,916$368.6





Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

UnitsAverage UnitsAverage Units Average Units Average Price Price Price Price

Settlements:

Mid Atlantic (1) 2,224$471.4 1,931$434.9 4,234 $468.7 3,726 $433.1

North East (2) 433 $446.3 262 $374.9 805 $441.5 543 $376.3

Mid East (3) 1,404$340.6 945 $317.4 2,667 $338.6 1,930 $321.6

South East (4) 1,624$310.7 1,158$302.9 3,051 $309.8 2,327 $303.2

Total 5,685$391.3 4,296$369.8 10,757$389.3 8,526 $368.8



As of June 30,

2021 2020

Units Average Units Average Price Price

Backlog:

Mid Atlantic (1)4,626 $517.74,328 $448.7

North East (2) 979 $485.7771 $403.5

Mid East (3) 3,322 $364.82,644 $327.5

South East (4) 3,700 $359.02,880 $309.2

Total 12,627$428.510,623$377.5



NVR, Inc.

Operating Activity (Continued)

(dollars in thousands)

(unaudited)



Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Average active communities:

Mid Atlantic (1) 153 188 156 189

North East (2) 32 41 33 40

Mid East (3) 126 141 133 139

South East (4) 109 114 110 111

Total 420 484 432 479





Three Months Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Homebuilding data:

New order cancellation rate 8.3 % 15.7 % 9.0 % 18.1 %

Lots controlled at end of period 114,100 102,000



Mortgage banking data:

Loan closings $1,565,095 $1,144,428 $2,977,974 $2,276,531

Capture rate 89 % 89 % 89 % 90 %



Common stock information:

Shares outstanding at end of period 3,579,190 3,689,088

Number of shares repurchased 78,452 - 164,975 57,611

Aggregate cost of shares repurchased$376,941 $- $754,366 $216,582





(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

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SOURCE NVR, Inc.