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Published: 2022-07-26 09:39:53 ET

EX-99.1 2 q22022ex991_earningsrelease.htm EX-99.1 Document

Exhibit 99.1

NVR, INC. ANNOUNCES SECOND QUARTER RESULTS

July 26, 2022, 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, 2022 of $433.3 million, or $123.65 per diluted share. Net income and diluted earnings per share for the second quarter ended June 30, 2022 increased 35% and 50%, respectively, when compared to 2021 second quarter net income of $321.3 million, or $82.45 per diluted share. Consolidated revenues for the second quarter of 2022 totaled $2.66 billion, which increased 16% from $2.28 billion in the second quarter of 2021.

For the six months ended June 30, 2022, consolidated revenues were $5.04 billion, a 16% increase from $4.33 billion reported in 2021. Net income for the six months ended June 30, 2022 was $859.4 million, an increase of 51% when compared to the six months ended June 30, 2021. Diluted earnings per share for the six months ended June 30, 2022 was $240.05, an increase of 65% from $145.53 per diluted share for 2021.

Homebuilding

New orders in the second quarter of 2022 decreased by 16% to 4,663 units, when compared to 5,521 units in the second quarter of 2021. The average sales price of new orders in the second quarter of 2022 was $471,600, an increase of 7% when compared with the second quarter of 2021. The cancellation rate in the second quarter of 2022 was 14% compared to 8% in the second quarter of 2021. Settlements in the second quarter of 2022 increased by 2% to 5,820 units, compared to 5,685 units in the second quarter of 2021. The average settlement price in the second quarter of 2022 was $448,400, an increase of 15% from the second quarter of 2021. Our backlog of homes sold but not settled as of June 30, 2022 decreased on a unit basis by 3% to 12,286 units and increased on a dollar basis by 8% to $5.82 billion when compared to the respective backlog unit and dollar balances as of June 30, 2021.

Homebuilding revenues of $2.61 billion in the second quarter of 2022 increased by 17% compared to homebuilding revenues of $2.22 billion in the second quarter of 2021. Gross profit margin in the second quarter of 2022 increased to 26.3%, compared to 22.6% in the second quarter of 2021. Gross profit margins were favorably impacted by the aforementioned increase in the average settlement price in the second quarter of 2022. Income before tax from the homebuilding segment totaled $544.9 million in the second quarter of 2022, an increase of 44% when compared to the second quarter of 2021.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2022 totaled $1.65 billion, an increase of 5% when compared to the second quarter of 2021. Income before tax from the mortgage banking segment totaled $29.1 million in the second quarter of 2022, a decrease of 26% when compared to $39.2 million in the second quarter of 2021. This decrease was primarily attributable to a decrease in secondary marketing gains.

Effective Tax Rate

Our effective tax rate for the three and six months ended June 30, 2022 was 24.5% and 24.6%, respectively, compared to 23.0% and 21.9% for the three and six months ended June 30, 2021, respectively. The increase in the effective tax rate in each period is primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled $8.7 million and $17.2 million for the three and six months ended June 30, 2022, respectively, and $11.2 million and $28.6 million for the three and six months ended June 30, 2021, respectively.

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-four 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 and related supply chain disruptions; 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,
	2022		2021		2022		2021

Homebuilding:
Revenues	$	2,610,062	$	2,224,560	$	4,919,289	$	4,188,271
Other income	3,896		1,632		5,235		3,218
Cost of sales	(1,924,727)		(1,721,673)		(3,576,092)		(3,299,126)
Selling, general and administrative	(132,432)		(113,406)		(261,942)		(234,825)
Operating income	556,799		391,113		1,086,490		657,538
Interest expense	(11,852)		(12,850)		(24,656)		(25,856)
Homebuilding income	544,947		378,263		1,061,834		631,682

Mortgage Banking:
Mortgage banking fees	48,881		59,038		118,063		136,773
Interest income	2,772		2,209		4,846		4,241
Other income	1,303		988		2,375		1,855
General and administrative	(23,486)		(22,613)		(46,394)		(44,269)
Interest expense	(405)		(420)		(767)		(811)
Mortgage banking income	29,065		39,202		78,123		97,789

Income before taxes	574,012		417,465		1,139,957		729,471
Income tax expense	(140,698)		(96,170)		(280,543)		(159,414)

Net income	$	433,314	$	321,295	$	859,414	$	570,057

Basic earnings per share	$	131.84	$	88.69	$	257.65	$	156.27

Diluted earnings per share	$	123.65	$	82.45	$	240.05	$	145.53

Basic weighted average shares outstanding	3,287		3,623		3,336		3,648

Diluted weighted average shares outstanding	3,504		3,897		3,580		3,917


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

	June 30, 2022		December 31, 2021
ASSETS
Homebuilding:
Cash and cash equivalents	$	1,483,445	$	2,545,069
Restricted cash	60,695		60,730
Receivables	29,007		18,552
Inventory:
Lots and housing units, covered under sales agreements with customers	2,138,456		1,777,862
Unsold lots and housing units	177,372		127,434
Land under development	16,274		12,147
Building materials and other	46,643		29,923
	2,378,745		1,947,366

Contract land deposits, net	524,398		497,139
Property, plant and equipment, net	57,397		56,979
Operating lease right-of-use assets	68,323		59,010
Reorganization value in excess of amounts allocable to identifiable assets, net	41,580		41,580
Other assets	233,987		229,018
	4,877,577		5,455,443
Mortgage Banking:
Cash and cash equivalents	16,158		28,398
Restricted cash	3,403		2,519
Mortgage loans held for sale, net	335,624		302,192
Property and equipment, net	3,296		3,658
Operating lease right-of-use assets	13,405		9,758
Reorganization value in excess of amounts allocable to identifiable assets, net	7,347		7,347
Other assets	30,889		25,160
	410,122		379,032
Total assets	$	5,287,699	$	5,834,475


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

	June 30, 2022		December 31, 2021
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable	$	417,771	$	336,560
Accrued expenses and other liabilities	388,179		435,860
Customer deposits	439,119		417,463
Operating lease liabilities	73,075		64,128
Senior notes	915,801		1,516,255
	2,233,945		2,770,266
Mortgage Banking:
Accounts payable and other liabilities	47,868		51,394
Operating lease liabilities	14,220		10,437
	62,088		61,831
Total liabilities	2,296,033		2,832,097

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, 2022 and December 31, 2021	206		206
Additional paid-in capital	2,498,123		2,378,191
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as of both June 30, 2022 and December 31, 2021	(16,710)		(16,710)
Deferred compensation liability	16,710		16,710
Retained earnings	10,907,253		10,047,839
Less treasury stock at cost – 17,271,177 and 17,107,889 shares as of June 30, 2022 and December 31, 2021, respectively	(10,413,916)		(9,423,858)
Total shareholders' equity	2,991,666		3,002,378
Total liabilities and shareholders' equity	$	5,287,699	$	5,834,475


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

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	Units	Average Price		Units	Average Price		Units	Average Price		Units	Average Price
New orders, net of cancellations:
Mid Atlantic (1)	1,860	$	535.1	2,090	$	535.4	4,167	$	531.8	4,381	$	518.1
North East (2)	441	$	503.7	394	$	499.3	901	$	513.5	834	$	486.3
Mid East (3)	1,114	$	410.5	1,320	$	375.7	2,648	$	403.6	3,115	$	361.1
South East (4)	1,248	$	420.0	1,717	$	360.3	2,874	$	421.6	3,505	$	348.7
Total	4,663	$	471.6	5,521	$	440.2	10,590	$	468.3	11,835	$	424.4


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
	Units	Average Price		Units	Average Price		Units	Average Price		Units	Average Price
Settlements:
Mid Atlantic (1)	2,292	$	527.1	2,224	$	471.4	4,472	$	525.5	4,234	$	468.7
North East (2)	472	$	503.0	433	$	446.3	820	$	503.6	805	$	441.5
Mid East (3)	1,356	$	384.2	1,404	$	340.6	2,566	$	382.8	2,667	$	338.6
South East (4)	1,700	$	378.4	1,624	$	310.7	3,176	$	369.6	3,051	$	309.8
Total	5,820	$	448.4	5,685	$	391.3	11,034	$	445.8	10,757	$	389.3


	As of June 30,
	2022			2021
	Units	Average Price		Units	Average Price
Backlog:
Mid Atlantic (1)	4,613	$	541.1	4,626	$	517.7
North East (2)	1,050	$	519.3	979	$	485.7
Mid East (3)	3,109	$	399.0	3,322	$	364.8
South East (4)	3,514	$	438.2	3,700	$	359.0
Total	12,286	$	473.9	12,627	$	428.5


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

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Average active communities:
Mid Atlantic (1)	155			153			153			156
North East (2)	38			32			36			33
Mid East (3)	121			126			125			133
South East (4)	92			109			91			110
Total	406			420			405			432


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Homebuilding data:
New order cancellation rate	14.3		%	8.3		%	12.1		%	9.0		%
Lots controlled at end of period							133,200			114,100

Mortgage banking data:
Loan closings	$	1,647,972		$	1,565,095		$	3,132,565		$	2,977,974
Capture rate	84		%	89		%	85		%	89		%

Common stock information:
Shares outstanding at end of period							3,284,153			3,579,190
Number of shares repurchased	61,078			78,452			207,132			164,975
Aggregate cost of shares repurchased	$	266,915		$	376,941		$	1,015,703		$	754,366


(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

Enhanced Investments, Inc.
329 South Oyster Bay Road #2085
Plainview, NY 11803
team@eninvs.com

Important disclosures

Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.

Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities.
Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance.
All the strategies assume investments in equity invstrumenta only and are more relevant for "agressive investment profile". Eastern European flagship strategy assumes using up to 20% leverage of total portfolio. GlobalCommodities and US Growth strategy currently assume no leverage.
Results for the Enhanced Investments strategies as compared to the performance of Illustrative Benchmarks is for informational purposes only. Our investment program does not mirror that of the Illustrative Benchmarks and the volatility may be materially different from the volatility of Illustrative Benchmarks. Reference or comparison to an Illustrative Benchmark does not imply that strategies of Enhanced Investments will be constructed in the same way as the Illustrative Benchmark or achieve returns, volatility, or other results similar to those of the Illustrative Benchmark. The S&P 500 is an unmanaged market capitalization-weighted index of 500 common stocks chosen for market size, liquidity, and industry group representation to represent U.S. equity performance.
Performance results were prepared by Enhanced Investments, and have not been compiled, reviewed or audited by an independent accountant. Performance estimates are subject to future adjustment and revision. Investors should be aware that a loss of investment is possible. Account holdings are for illustrative purposes only and are not investment recommendations. Additional information, including (i) the calculation methodology; and (ii) a list showing the contribution of each holding to the portfolio’s performance during the time period will be provided upon request.
All statements made via social media sites sponsored or maintained by Enhanced Investments and its affiliates are for informational purposes only and do not constitute a comprehensive description of Enhanced Investments' investment advisory services.
Certain investments are not suitable for all investors. Before investing, consider your investment objectives and applicable fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Information provided by Enhanced Investments is for informational and general educational purposes only and is not investment or financial advice.