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Published: 2023-07-25 00:00:00 ET

EX-99.1 2 q22023ex991_earningsrelease.htm EX-99.1 Document

Exhibit 99.1

NVR, INC. ANNOUNCES SECOND QUARTER RESULTS

July 25, 2023, 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, 2023 of $404.0 million, or $116.54 per diluted share. Net income and diluted earnings per share for the second quarter ended June 30, 2023 decreased 7% and 6%, respectively, when compared to 2022 second quarter net income of $433.3 million, or $123.65 per diluted share. Consolidated revenues for the second quarter of 2023 totaled $2.34 billion, which decreased 12% from $2.66 billion in the second quarter of 2022.

For the six months ended June 30, 2023, consolidated revenues were $4.52 billion, a 10% decrease from $5.04 billion reported in 2022. Net income for the six months ended June 30, 2023 was $748.4 million, a decrease of 13% when compared to net income for the six months ended June 30, 2022 of $859.4 million. Diluted earnings per share for the six months ended June 30, 2023 was $216.52, a decrease of 10% from $240.05 per diluted share for 2022.

Homebuilding

New orders in the second quarter of 2023 increased by 27% to 5,905 units, when compared to 4,663 units in the second quarter of 2022. The average sales price of new orders in the second quarter of 2023 was $447,300, a decrease of 5% when compared with the second quarter of 2022. The cancellation rate in the second quarter of 2023 was 11% compared to 14% in the second quarter of 2022. Settlements in the second quarter of 2023 decreased by 13% to 5,085 units, compared to 5,820 units in the second quarter of 2022. The average settlement price in the second quarter of 2023 was $449,000, which was flat compared with the second quarter of 2022. Our backlog of homes sold but not settled as of June 30, 2023 decreased on a unit basis by 9% to 11,231 units and decreased on a dollar basis by 12% to $5.15 billion when compared to the respective backlog unit and dollar balances as of June 30, 2022.

Homebuilding revenues of $2.28 billion in the second quarter of 2023 decreased by 13% compared to homebuilding revenues of $2.61 billion in the second quarter of 2022. Gross profit margin in the second quarter of 2023 decreased to 24.3%, compared to 26.3% in the second quarter of 2022. Income before tax from the homebuilding segment totaled $434.7 million in the second quarter of 2023, a decrease of 20% when compared to the second quarter of 2022.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2023 totaled $1.38 billion, a decrease of 16% when compared to the second quarter of 2022. Income before tax from the mortgage banking segment totaled $36.5 million in the second quarter of 2023, an increase of 25% when compared to $29.1 million in the second quarter of 2022. This increase was primarily attributable to an increase in secondary marketing gains on sales of loans.

Effective Tax Rate

Our effective tax rate for the three and six months ended June 30, 2023 was 14.3% and 17.3%, respectively, compared to 24.5% and 24.6% for the three and six months ended June 30, 2022, respectively. The decrease in the effective tax rate in each period is primarily attributable to a higher income tax benefit recognized for excess tax benefits from stock option exercises, which totaled $55.9 million and $79.2 million for the three and six months ended June 30, 2023, respectively, and $8.7 million and $17.2 million for the three and six months ended June 30, 2022, 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-five metropolitan areas in fifteen 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: 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; the economic impact of a major epidemic or pandemic; 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,
	2023		2022		2023		2022

Homebuilding:
Revenues	$	2,283,769	$	2,610,062	$	4,415,102	$	4,919,289
Other income	34,259		3,896		67,205		5,235
Cost of sales	(1,728,146)		(1,924,727)		(3,336,056)		(3,576,092)
Selling, general and administrative	(148,543)		(132,432)		(292,161)		(261,942)
Operating income	441,339		556,799		854,090		1,086,490
Interest expense	(6,628)		(11,852)		(13,629)		(24,656)
Homebuilding income	434,711		544,947		840,461		1,061,834

Mortgage Banking:
Mortgage banking fees	54,561		48,881		101,505		118,063
Interest income	3,823		2,772		6,841		4,846
Other income	1,102		1,303		2,091		2,375
General and administrative	(22,854)		(23,486)		(45,488)		(46,394)
Interest expense	(167)		(405)		(424)		(767)
Mortgage banking income	36,465		29,065		64,525		78,123

Income before taxes	471,176		574,012		904,986		1,139,957
Income tax expense	(67,149)		(140,698)		(156,607)		(280,543)

Net income	$	404,027	$	433,314	$	748,379	$	859,414

Basic earnings per share	$	123.84	$	131.84	$	230.20	$	257.65

Diluted earnings per share	$	116.54	$	123.65	$	216.52	$	240.05

Basic weighted average shares outstanding	3,263		3,287		3,251		3,336

Diluted weighted average shares outstanding	3,467		3,504		3,456		3,580


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

	June 30, 2023		December 31, 2022
ASSETS
Homebuilding:
Cash and cash equivalents	$	2,678,709	$	2,503,424
Restricted cash	51,392		48,455
Receivables	26,757		20,842
Inventory:
Lots and housing units, covered under sales agreements with customers	1,815,169		1,554,955
Unsold lots and housing units	158,004		181,952
Land under development	24,502		27,100
Building materials and other	22,414		24,268
	2,020,089		1,788,275

Contract land deposits, net	516,709		496,080
Property, plant and equipment, net	57,711		57,950
Operating lease right-of-use assets	73,469		71,081
Reorganization value in excess of amounts allocable to identifiable assets, net	41,580		41,580
Other assets	239,086		219,483
	5,705,502		5,247,170
Mortgage Banking:
Cash and cash equivalents	13,873		19,415
Restricted cash	14,083		2,974
Mortgage loans held for sale, net	438,756		316,806
Property and equipment, net	4,704		3,559
Operating lease right-of-use assets	22,814		16,011
Reorganization value in excess of amounts allocable to identifiable assets, net	7,347		7,347
Other assets	59,696		47,691
	561,273		413,803
Total assets	$	6,266,775	$	5,660,973


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

	June 30, 2023		December 31, 2022
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable	$	377,558	$	334,016
Accrued expenses and other liabilities	291,563		437,234
Customer deposits	368,763		313,804
Operating lease liabilities	78,661		75,818
Senior notes	913,963		914,888
	2,030,508		2,075,760
Mortgage Banking:
Accounts payable and other liabilities	58,667		61,396
Operating lease liabilities	24,337		16,968
	83,004		78,364
Total liabilities	2,113,512		2,154,124

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, 2023 and December 31, 2022	206		206
Additional paid-in capital	2,747,687		2,600,014
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as of both June 30, 2023 and December 31, 2022	(16,710)		(16,710)
Deferred compensation liability	16,710		16,710
Retained earnings	12,521,793		11,773,414
Less treasury stock at cost – 17,294,792 and 17,336,397 shares as of June 30, 2023 and December 31, 2022, respectively	(11,116,423)		(10,866,785)
Total shareholders' equity	4,153,263		3,506,849
Total liabilities and shareholders' equity	$	6,266,775	$	5,660,973


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

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
	Units	Average Price		Units	Average Price		Units	Average Price		Units	Average Price
New orders, net of cancellations:
Mid Atlantic (1)	2,348	$	519.2	1,860	$	535.1	4,583	$	517.8	4,167	$	531.8
North East (2)	463	$	557.0	441	$	503.7	905	$	564.9	901	$	513.5
Mid East (3)	1,339	$	390.3	1,114	$	410.5	2,656	$	387.3	2,648	$	403.6
South East (4)	1,755	$	365.7	1,248	$	420.0	3,649	$	363.5	2,874	$	421.6
Total	5,905	$	447.3	4,663	$	471.6	11,793	$	444.3	10,590	$	468.3


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
	Units	Average Price		Units	Average Price		Units	Average Price		Units	Average Price
Settlements:
Mid Atlantic (1)	2,030	$	521.3	2,292	$	527.1	3,825	$	522.7	4,472	$	525.5
North East (2)	432	$	539.2	472	$	503.0	795	$	523.7	820	$	503.6
Mid East (3)	1,067	$	385.7	1,356	$	384.2	2,056	$	395.9	2,566	$	382.8
South East (4)	1,556	$	373.0	1,700	$	378.4	3,048	$	388.7	3,176	$	369.6
Total	5,085	$	449.0	5,820	$	448.4	9,724	$	454.0	11,034	$	445.8


	As of June 30,
	2023			2022
	Units	Average Price		Units	Average Price
Backlog:
Mid Atlantic (1)	4,450	$	528.8	4,613	$	541.1
North East (2)	995	$	587.9	1,050	$	519.3
Mid East (3)	2,453	$	392.1	3,109	$	399.0
South East (4)	3,333	$	375.1	3,514	$	438.2
Total	11,231	$	458.6	12,286	$	473.9


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

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Average active communities:
Mid Atlantic (1)	169			155			166			153
North East (2)	36			38			36			36
Mid East (3)	111			121			112			125
South East (4)	110			92			106			91
Total	426			406			420			405


	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Homebuilding data:
New order cancellation rate	10.9		%	14.3		%	12.4		%	12.1		%
Lots controlled at end of period							130,400			133,200

Mortgage banking data:
Loan closings	$	1,381,647		$	1,647,972		$	2,618,930		$	3,132,565
Capture rate	86		%	84		%	85		%	85		%

Common stock information:
Shares outstanding at end of period							3,260,538			3,284,153
Number of shares repurchased	34,827			61,078			56,001			207,132
Aggregate cost of shares repurchased	$	201,077		$	266,915		$	311,125		$	1,015,703


(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, Florida and Georgia

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.