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Published: 2021-01-28 09:55:05 ET
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EX-99.1 2 q42020ex991_earningsrelease.htm EX-99.1 Document

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Exhibit 99.1
NVR, INC. ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS

January 28, 2021, Reston, VA—NVR, Inc. (NYSE: NVR), one of the nation’s largest homebuilding and mortgage banking companies, announced net income for its fourth quarter ended December 31, 2020 of $305,004,000, or $76.93 per diluted share. Net income and diluted earnings per share for the fourth quarter ended December 31, 2020 both increased by 19% when compared to 2019 fourth quarter net income of $256,137,000, or $64.41 per diluted share. Consolidated revenues for the fourth quarter of 2020 totaled $2,344,015,000, an increase of 18% from $1,990,195,000 in the fourth quarter of 2019.
For the year ended December 31, 2020, consolidated revenues were $7,536,923,000, an increase of 2% from $7,388,664,000 reported for 2019. Net income for the year ended December 31, 2020 was $901,248,000, an increase of 3% when compared to $878,539,000 for the year ended December 31, 2019. Diluted earnings per share for the year ended December 31, 2020 was $230.11, an increase of 4% from $221.13 per diluted share in 2019.
Homebuilding
New orders in the fourth quarter of 2020 increased by 25% to 5,485 units, when compared to 4,392 units in the fourth quarter of 2019. The average sales price of new orders in the fourth quarter of 2020 was $398,100, an increase of 4% when compared with the fourth quarter of 2019. The cancellation rate in the fourth quarter of 2020 decreased to 12% compared to 16% in the fourth quarter of 2019. Settlements increased in the fourth quarter of 2020 to 6,060 units, which was 14% higher than the fourth quarter of 2019. New orders and settlements in the fourth quarter were favorably impacted by robust demand attributable to historically low mortgage rates and lower resale inventory levels. The Company’s backlog of homes sold but not settled as of December 31, 2020 increased on a unit basis by 40% to 11,549 units and increased on a dollar basis by 46% to $4,575,899,000 when compared to December 31, 2019.
Homebuilding revenues of $2,263,673,000 in the fourth quarter of 2020 increased by 16% compared to homebuilding revenues of $1,946,859,000 in the fourth quarter of 2019. Gross profit margin was 19.5% in both the fourth quarter of 2020 and the fourth quarter of 2019. Income before tax from the homebuilding segment totaled $323,591,000 in the fourth quarter of 2020, an increase of 20% when compared to the fourth quarter of 2019.
New orders for the year ended December 31, 2020 increased by 18% to 23,082 units, when compared to 19,536 units in 2019, and were favorably impacted by the robust demand discussed above. Settlements of 19,766 units for the year ended December 31, 2020 were relatively flat compared to 19,668 units settled in 2019. Homebuilding revenues for the year ended December 31, 2020 totaled $7,328,889,000, which was 2% higher than 2019. Gross profit margin was 19.0% for both the year ended December 31, 2020 and 2019. Income before tax for the homebuilding segment increased 2% for the year ended December 31, 2020 to $937,960,000, compared to $923,879,000 in 2019.
Mortgage Banking
Mortgage closed loan production in the fourth quarter of 2020 totaled $1,659,219,000, an increase of 17% when compared to the fourth quarter of 2019. Income before tax from the mortgage banking segment totaled $61,779,000 in the fourth quarter of 2020, an increase of 145% when compared to $25,257,000 in the fourth quarter of 2019. This increase is due primarily to the increase in closed loan volume and an increase in secondary marketing gains on sales of loans.
Mortgage closed loan production for the year ended December 31, 2020 increased 3% to $5,317,811,000. Income before tax from the mortgage banking segment for the year ended December 31, 2020 increased 37% to $140,073,000 from $101,916,000 in 2019.

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Effective Tax Rate
The Company's effective tax rate for the three and twelve months ended December 31, 2020 increased to 20.9% and 16.4%, respectively, compared to 13.3% and 14.4% for the three and twelve months ended December 31, 2019, respectively. The effective tax rates for the 2019 fourth quarter and full year were favorably impacted by the retroactive reinstatement of certain expired energy tax credits under The Further Consolidated Appropriations Act, which resulted in the Company recognizing a tax benefit of approximately $15,100,000 in the fourth quarter of 2019 related to homes settled in 2018 and 2019. The Company recognized energy tax credits of approximately $3,000,000 and $10,200,000 for the three and twelve months ended December 31, 2020, respectively.
Additionally, the effective tax rate in each period in 2020 and 2019 was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $11,891,000 and $92,234,000 for three and twelve months ended December 31, 2020, respectively, and $14,657,000 and $101,466,000, for the three and twelve months ended December 31, 2019, 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. We are currently able to operate in all of the markets we serve. In each of our markets, we continue to operate in accordance with the safety guidelines issued by the Centers for Disease Control and Prevention as well as state and local guidelines.
There continues to be 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.
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NVR, Inc.
Consolidated Statements of Income
(in thousands, except per share data)

Three Months Ended December 31,Twelve Months Ended December 31,
2020201920202019
(Unaudited)(Unaudited)(Unaudited)
Homebuilding:
Revenues$2,263,673 $1,946,859 $7,328,889 $7,220,844 
Other income7,206 6,513 16,938 24,779 
Cost of sales(1,822,121)(1,567,392)(5,937,401)(5,849,862)
Selling, general and administrative(112,398)(109,634)(431,008)(447,547)
Operating income336,360 276,346 977,418 948,214 
Interest expense(12,769)(6,301)(39,458)(24,335)
Homebuilding income323,591 270,045 937,960 923,879 
Mortgage Banking:
Mortgage banking fees80,342 43,336 208,034 167,820 
Interest income2,385 3,232 8,930 12,142 
Other income1,034 818 3,249 2,857 
General and administrative(21,577)(21,859)(78,726)(79,858)
Interest expense(405)(270)(1,414)(1,045)
Mortgage banking income61,779 25,257 140,073 101,916 
Income before taxes385,370 295,302 1,078,033 1,025,795 
Income tax expense(80,366)(39,165)(176,785)(147,256)
Net income$305,004 $256,137 $901,248 $878,539 
Basic earnings per share$82.08 $69.78 $244.11 $241.31 
Diluted earnings per share$76.93 $64.41 $230.11 $221.13 
Basic weighted average shares outstanding3,716 3,671 3,692 3,641 
Diluted weighted average shares outstanding3,965 3,977 3,917 3,973 

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NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
December 31, 2020December 31, 2019
ASSETS(Unaudited)
Homebuilding:
Cash and cash equivalents$2,714,720 $1,110,892 
Restricted cash28,912 17,943 
Receivables18,299 18,278 
Inventory:
Lots and housing units, covered under sales agreements with customers1,484,936 1,075,420 
Unsold lots and housing units123,197 184,352 
Land under development62,790 69,196 
Building materials and other38,159 18,320 
1,709,082 1,347,288 
Contract land deposits, net387,628 413,851 
Property, plant and equipment, net57,786 52,260 
Operating lease right-of-use assets53,110 63,825 
Reorganization value in excess of amounts allocable to identifiable assets, net41,580 41,580 
Deferred tax asset, net132,980 115,731 
Other assets70,419 60,413 
5,214,516 3,242,061 
Mortgage Banking:
Cash and cash equivalents63,547 29,412 
Restricted cash2,334 2,276 
Mortgage loans held for sale, net449,760 492,125 
Property and equipment, net4,544 5,828 
Operating lease right-of-use assets12,439 13,345 
Reorganization value in excess of amounts allocable to identifiable assets, net7,347 7,347 
Other assets22,654 17,421 
562,625 567,754 
Total assets$5,777,141 $3,809,815 


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NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
December 31, 2020December 31, 2019
LIABILITIES AND SHAREHOLDERS' EQUITY(Unaudited)
Homebuilding:
Accounts payable$339,867 $262,987 
Accrued expenses and other liabilities440,671 346,035 
Customer deposits240,758 131,886 
Operating lease liabilities59,357 71,095 
Senior notes1,517,395 598,301 
2,598,048 1,410,304 
Mortgage Banking:
Accounts payable and other liabilities62,720 43,985 
Operating lease liabilities13,299 14,282 
76,019 58,267 
Total liabilities2,674,067 1,468,571 
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both December 31, 2020 and December 31, 2019206 206 
Additional paid-in capital2,214,426 2,055,407 
Deferred compensation trust – 106,697 and 107,295 shares of NVR, Inc. common stock as of December 31, 2020 and December 31, 2019, respectively(16,710)(16,912)
Deferred compensation liability16,710 16,912 
Retained earnings8,811,120 7,909,872 
Less treasury stock at cost – 16,859,753 and 16,922,558 shares as of December 31, 2020 and December 31, 2019, respectively(7,922,678)(7,624,241)
Total shareholders' equity3,103,074 2,341,244 
Total liabilities and shareholders' equity$5,777,141 $3,809,815 


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NVR, Inc.
Operating Activity
(dollars in thousands)
(unaudited)
Three Months Ended December 31,Twelve Months Ended December 31,

2020201920202019
UnitsAverage PriceUnitsAverage PriceUnitsAverage PriceUnitsAverage Price
New orders, net of cancellations:
Mid Atlantic (1)
2,196 $474.2 1,947 $443.2 9,230 $453.8 8,799 $424.4 
North East (2)
469 $446.9 349 $425.1 1,738 $416.6 1,349 $390.8 
Mid East (3)
1,375 $346.7 997 $327.3 5,780 $330.9 4,628 $323.2 
South East (4)
1,445 $315.7 1,099 $305.9 6,334 $307.7 4,760 $302.6 
Total
5,485 $398.1 4,392 $381.1 23,082 $380.1 19,536 $368.4 
Three Months Ended December 31,Twelve Months Ended December 31,
2020201920202019
UnitsAverage PriceUnitsAverage PriceUnitsAverage PriceUnitsAverage Price
Settlements:
Mid Atlantic (1)
2,465 $448.3 2,445 $419.7 8,363 $438.6 9,335 $417.9 
North East (2)
436 $404.7 392 $382.4 1,375 $391.8 1,325 $388.5 
Mid East (3)
1,539 $324.2 1,239 $320.0 4,719 $323.1 4,621 $324.8 
South East (4)
1,620 $298.2 1,255 $298.2 5,309 $300.8 4,387 $297.1 
Total
6,060 $373.5 5,331 $365.2 19,766 $370.8 19,668 $367.1 

As of December 31, 2020As of December 31, 2019
UnitsAverage PriceUnitsAverage Price
Backlog:
Mid Atlantic (1)
4,479 $470.9 3,612 $440.1 
North East (2)
950 $447.8 587 $408.8 
Mid East (3)
2,874 $344.5 1,813 $332.0 
South East (4)
3,246 $323.7 2,221 $314.6 
Total
11,549 $396.2 8,233 $380.2 

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NVR, Inc.
Operating Activity (Continued)
(dollars in thousands)
(unaudited)
Three Months Ended December 31,Twelve Months Ended December 31,
2020201920202019
Average active communities:
Mid Atlantic (1)
162201177206
North East (2)
38364033
Mid East (3)
136143138134
South East (4)
10610711297
Total
442487467470
Three Months Ended December 31,Twelve Months Ended December 31,
2020201920202019
Homebuilding data:
New order cancellation rate
12 %16 %15 %15 %
Lots controlled at end of period
105,700 104,900 
Mortgage banking data:
Loan closings
$1,659,219 $1,418,742 $5,317,811 $5,164,725 
Capture rate
90 %91 %90 %90 %
Common stock information:
Shares outstanding at end of period
3,695,577 3,632,772 
Number of shares repurchased
38,735 91,286 96,346 220,965 
Aggregate cost of shares repurchased
$154,496 $332,875 $371,078 $698,417 


(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

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