October 21, 2021, Reston, VA—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.
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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.
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NVR, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30,
Nine Months Ended 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 administrative
(112,226)
(105,741)
(347,051)
(318,610)
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 fees
59,025
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 administrative
(22,959)
(20,180)
(67,228)
(57,149)
Interest expense
(405)
(378)
(1,216)
(1,009)
Mortgage banking income
39,019
51,812
136,808
78,294
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 share
$
93.25
$
69.19
$
249.30
$
161.85
Diluted earnings per share
$
86.44
$
65.11
$
231.75
$
153.03
Basic weighted average shares outstanding
3,561
3,706
3,619
3,684
Diluted weighted average shares outstanding
3,842
3,939
3,893
3,896
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NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
September 30, 2021
December 31, 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 agreements with customers
1,697,959
1,484,936
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 allocable to identifiable assets, net
41,580
41,580
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 allocable to identifiable assets, net
7,347
7,347
Other assets
23,238
22,654
357,664
562,625
Total assets
$
5,788,894
$
5,777,141
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NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
(unaudited)
September 30, 2021
December 31, 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 September 30, 2021 and December 31, 2020
206
206
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, 2021 and December 31, 2020
(16,710)
(16,710)
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 December 31, 2020, respectively
(9,045,413)
(7,922,678)
Total shareholders' equity
3,017,051
3,103,074
Total liabilities and shareholders' equity
$
5,788,894
$
5,777,141
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NVR, Inc.
Operating Activity
(dollars in thousands)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2021
2020
2021
2020
Units
Average Price
Units
Average Price
Units
Average Price
Units
Average Price
New orders, net of cancellations:
Mid Atlantic (1)
2,024
$
523.7
2,592
$
455.5
6,405
$
519.8
7,034
$
447.4
North East (2)
403
$
496.7
542
$
441.1
1,237
$
489.7
1,269
$
405.4
Mid East (3)
1,190
$
376.8
1,644
$
335.5
4,305
$
365.4
4,405
$
326.0
South East (4)
1,584
$
372.9
1,903
$
313.0
5,089
$
356.2
4,889
$
305.3
Total
5,201
$
442.0
6,681
$
384.2
17,036
$
429.8
17,597
$
374.5
Three Months Ended September 30,
Nine Months Ended September 30,
2021
2020
2021
2020
Units
Average Price
Units
Average Price
Units
Average Price
Units
Average Price
Settlements:
Mid Atlantic (1)
2,177
$
497.3
2,172
$
437.1
6,411
$
478.4
5,898
$
434.6
North East (2)
455
$
468.3
396
$
398.9
1,260
$
451.2
939
$
385.9
Mid East (3)
1,430
$
351.8
1,250
$
324.0
4,097
$
343.2
3,180
$
322.5
South East (4)
1,621
$
331.6
1,362
$
299.8
4,672
$
317.3
3,689
$
301.9
Total
5,683
$
411.1
5,180
$
370.8
16,440
$
396.9
13,706
$
369.5
As of September 30,
2021
2020
Units
Average Price
Units
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
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NVR, Inc.
Operating Activity (Continued)
(dollars in thousands)
(unaudited)
Three Months Ended September 30,
Nine Months Ended September 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 September 30,
Nine Months Ended September 30,
2021
2020
2021
2020
Homebuilding data:
New order cancellation rate
9.2
%
11.8
%
9.1
%
15.8
%
Lots controlled at end of period
118,600
103,200
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 at end of period
3,512,686
3,718,387
Number of shares repurchased
79,620
—
244,595
57,611
Aggregate cost of shares repurchased
$
398,488
$
—
$
1,152,855
$
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
