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

10/21 08:00 CDT

NVR, Inc. Announces Third Quarter Results RESTON, Va., Oct. 21, 2021

RESTON, Va., Oct. 21, 2021 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its third quarter ended September 30, 2021 of $332.1 million, or $86.44 per diluted share. Net income and diluted earnings per share for the third quarter ended September 30, 2021 increased 29% and 33%, respectively, when compared to 2020 third quarter net income of $256.5 million, or $65.11 per diluted share. Consolidated revenues for the third quarter of 2021 totaled $2.40 billion, an increase of 20% from $1.99 billion in the third quarter of 2020.

For the nine months ended September 30, 2021, consolidated revenues were $6.72 billion, a 29% increase from $5.19 billion reported in 2020. Net income for the nine months ended September 30, 2021 was $902.1 million, an increase of 51% when compared to the nine months ended September 30, 2020. Diluted earnings per share for the nine months ended September 30, 2021 was $231.75, an increase of 51% from $153.03 per diluted share for 2020.

Homebuilding

New orders in the third quarter of 2021 decreased by 22% to 5,201 units, when compared to 6,681 units in the third quarter of 2020. The average sales price of new orders in the third quarter of 2021 was $442,000, an increase of 15% when compared with the third quarter of 2020. The cancellation rate in the third quarter of 2021 was 9% compared to 12% in the third quarter of 2020. Settlements in the third quarter of 2021 increased by 10% to 5,683 units, compared to 5,180 units in the third quarter of 2020. Our backlog of homes sold but not settled as of September 30, 2021 was flat on a unit basis at 12,145 units and increased on a dollar basis by 15% to $5.37 billion when compared to the respective backlog unit and dollar balances as of September 30, 2020.

Homebuilding revenues of $2.34 billion in the third quarter of 2021 increased by 22% compared to homebuilding revenues of $1.92 billion in the third quarter of 2020. Gross profit margin in the third quarter of 2021 increased to 22.2%, compared to 20.0% in the third quarter of 2020. Income before tax from the homebuilding segment totaled $395.1 million in the third quarter of 2021, an increase of 47% when compared to the third quarter of 2020.

Mortgage Banking

Mortgage closed loan production in the third quarter of 2021 totaled $1.62 billion, an increase of 17% when compared to the third quarter of 2020. Income before tax from the mortgage banking segment totaled $39.0 million in the third quarter of 2021, a decrease of 25% when compared to $51.8 million in the third quarter of 2020. This decrease was primarily attributable to a decrease in secondary marketing gains.

Effective Tax Rate

Our effective tax rate for the three and nine months ended September 30, 2021 was 23.5% and 22.5%, respectively, compared to 20.2% and 13.9% for the three and nine months ended September 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 $9.2 million and $37.8 million for the three and nine months ended September 30, 2021, respectively, and $17.8 million and $80.3 million for the three and nine months ended September 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 Nine Months Ended September 30, September 30,

2021 2020 2021 2020



Homebuilding:

Revenues $2,336,615$1,920,751$6,524,886$5,065,216

Other income 1,496 1,988 4,714 9,732

Cost of sales (1,817,939)(1,536,044)(5,117,065)(4,115,280)

Selling, general and (112,226) (105,741) (347,051) (318,610) administrative

Operating income 407,946 280,954 1,065,484 641,058

Interest expense (12,838) (11,309) (38,694) (26,689)

Homebuilding income 395,108 269,645 1,026,790 614,369



Mortgage Banking:

Mortgage banking fees59,025 69,261 195,798 127,692

Interest income 2,336 2,222 6,577 6,545

Other income 1,022 887 2,877 2,215

General and (22,959) (20,180) (67,228) (57,149) administrative

Interest expense (405) (378) (1,216) (1,009)

Mortgage banking 39,019 51,812 136,808 78,294 income



Income before taxes 434,127 321,457 1,163,598 692,663

Income tax expense (102,046) (64,991) (261,460) (96,419)



Net income $332,081 $256,466 $902,138 $596,244



Basic earnings per $93.25 $69.19 $249.30 $161.85 share



Diluted earnings per $86.44 $65.11 $231.75 $153.03 share



Basic weighted average shares 3,561 3,706 3,619 3,684 outstanding



Diluted weighted average shares 3,842 3,939 3,893 3,896 outstanding

NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)



September December 31, 30, 2021 2020

ASSETS

Homebuilding:

Cash and cash equivalents $2,681,110$2,714,720

Restricted cash 41,820 28,912

Receivables 22,525 18,299

Inventory:

Lots and housing units, covered under sales 1,697,959 1,484,936 agreements with customers

Unsold lots and housing units 130,427 123,197

Land under development 8,151 62,790

Building materials and other 26,988 38,159

1,863,525 1,709,082



Contract land deposits, net 453,255 387,628

Property, plant and equipment, net 55,253 57,786

Operating lease right-of-use assets 60,605 53,110

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

Other assets 211,557 203,399

5,431,230 5,214,516

Mortgage Banking:

Cash and cash equivalents 21,999 63,547

Restricted cash 2,860 2,334

Mortgage loans held for sale, net 287,525 449,760

Property and equipment, net 3,948 4,544

Operating lease right-of-use assets 10,747 12,439

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

Other assets 23,238 22,654

357,664 562,625

Total assets $5,788,894$5,777,141



NVR, Inc.

Consolidated Balance Sheets (Continued)

(in thousands, except share and per share data)

(unaudited)



September December 31, 30, 2021 2020

LIABILITIES AND SHAREHOLDERS' EQUITY

Homebuilding:

Accounts payable $329,863 $339,867

Accrued expenses and other liabilities 416,266 440,671

Customer deposits 381,594 240,758

Operating lease liabilities 66,002 59,357

Senior notes 1,516,544 1,517,395

2,710,269 2,598,048

Mortgage Banking:

Accounts payable and other liabilities 50,077 62,720

Operating lease liabilities 11,497 13,299

61,574 76,019

Total liabilities 2,771,843 2,674,067



Commitments and contingencies



Shareholders' equity:

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

Additional paid-in capital 2,349,000 2,214,426

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

Deferred compensation liability 16,710 16,710

Retained earnings 9,713,258 8,811,120

Less treasury stock at cost - 17,042,644 and 16,859,753 shares as of September 30, 2021 and (9,045,413)(7,922,678)December 31, 2020, respectively

Total shareholders' equity 3,017,051 3,103,074

Total liabilities and shareholders' equity $5,788,894$5,777,141



NVR, Inc.

Operating Activity

(dollars in thousands)

(unaudited)



Three Months Ended September 30,Nine Months Ended September 30,

2021 2020 2021 2020

UnitsAverage UnitsAverage Units Average Units Average Price Price Price Price

New orders, net of cancellations:

Mid Atlantic 2,024$523.72,592$455.56,405 $519.87,034 $447.4(1)

North East (2)403 $496.7542 $441.11,237 $489.71,269 $405.4

Mid East (3) 1,190$376.81,644$335.54,305 $365.44,405 $326.0

South East (4)1,584$372.91,903$313.05,089 $356.24,889 $305.3

Total 5,201$442.06,681$384.217,036$429.817,597$374.5





Three Months Ended September 30,Nine Months Ended September 30,

2021 2020 2021 2020

UnitsAverage UnitsAverage Units Average Units Average Price Price Price Price

Settlements:

Mid Atlantic 2,177$497.32,172$437.16,411 $478.45,898 $434.6(1)

North East (2)455 $468.3396 $398.91,260 $451.2939 $385.9

Mid East (3) 1,430$351.81,250$324.04,097 $343.23,180 $322.5

South East (4)1,621$331.61,362$299.84,672 $317.33,689 $301.9

Total 5,683$411.15,180$370.816,440$396.913,706$369.5



As of September 30,

2021 2020

Units Average PriceUnits Average Price

Backlog:

Mid Atlantic (1)4,473 $ 530.3 4,748 $ 457.7

North East (2) 927 $ 499.0 917 $ 427.8

Mid East (3) 3,082 $ 375.4 3,038 $ 333.2

South East (4) 3,663 $ 377.0 3,421 $ 315.1

Total 12,145$ 442.4 12,124$ 384.0



NVR, Inc.

Operating Activity (Continued)

(dollars in thousands)

(unaudited)



Three Months Ended Nine Months Ended September September 30, 30,

2021 2020 2021 2020

Average active communities:

Mid Atlantic (1) 151 170 154 183

North East (2) 34 41 34 41

Mid East (3) 125 135 130 138

South East (4) 104 119 108 113

Total 414 465 426 475





Three Months Ended Nine Months Ended September September 30, 30,

2021 2020 2021 2020

Homebuilding data:

New order 9.2% 11.8% 9.1 %15.8 %cancellation rate

Lots controlled at 118,600 103,200 end of period



Mortgage banking data:

Loan closings $1,615,880$ 1,382,060$4,593,854 $3,658,591

Capture rate 88 % 89 % 89 %90 %



Common stock information:

Shares outstanding 3,512,686 3,718,387 at end of period

Number of shares 79,620 - 244,595 57,611 repurchased

Aggregate cost of $398,488 $ - $1,152,855 $216,582 shares repurchased



(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.