NVR, INC. ANNOUNCES FIRST QUARTER RESULTS

Rhea-AI Summary

NVR, Inc. reported strong first-quarter results with net income of $394.3 million, a 14% increase from the previous year. Consolidated revenues reached $2.33 billion, a 7% increase. Homebuilding segment saw growth in new orders, settlements, and backlog. Mortgage closed loan production increased by 11%. Effective tax rate decreased to 16.2%.

Positive

• Net income increased by 14% year-over-year to $394.3 million.
• Consolidated revenues rose by 7% to $2.33 billion.
• Homebuilding segment experienced growth in new orders, settlements, and backlog.
• Mortgage closed loan production increased by 11%.
• Effective tax rate decreased to 16.2%.

Negative

• None.

Insights

Financial Analyst

The reported 14% increase in net income is a robust indicator of NVR, Inc.'s financial health, particularly in an environment where housing demand can be volatile. The 17% rise in diluted earnings per share (EPS) suggests the company is efficiently converting revenue into profit, a positive signal for investors concerned with profitability. However, the slight decline in gross profit margin from 24.6% to 24.5% could indicate rising costs or pricing pressures which merit monitoring as they may affect future profitability. Additionally, the increase in the average sales price of new orders by 3% is in line with industry trends towards higher-priced homes due to increased material and labor costs. Investors should consider these figures in the context of the broader housing market and economic conditions.

Market Research Analyst

The modest 3% growth in new orders along with a 10% increase in settlements suggests that NVR, Inc. is maintaining momentum in its sales despite potential headwinds such as economic uncertainty or interest rate fluctuations. Noteworthy is the decrease in cancellation rates from 14% to 13%, which may reflect a healthy appetite for new homes or effective sales strategies. The backlog growth indicates a strong pipeline for future revenues but may require scrutiny of the company's ability to deliver in a timely manner amidst potential supply chain disruptions. These figures can help investors gauge the company's market position and future revenue potential.

Tax Specialist

The decrease in the effective tax rate to 16.2%, down from 20.6%, is particularly significant. It's attributed to the higher income tax benefit from stock option exercises and can vastly improve net income by reducing overall tax liabilities. While this is favorable for short-term earnings, it's important for investors to understand that such tax benefits can be irregular and not necessarily indicative of recurring savings. Moreover, such tax rate changes can have implications for future fiscal strategy and cash flow planning within the company.

RESTON, Va., April 23, 2024 /PRNewswire/ -- NVR, Inc. (NYSE: NVR), one of the nation's largest homebuilding and mortgage banking companies, announced net income for its first quarter ended March 31, 2024 of $394.3 million, or $116.41 per diluted share. Net income and diluted earnings per share for the first quarter ended March 31, 2024 increased 14% and 17%, respectively, when compared to 2023 first quarter net income of $344.4 million, or $99.89 per diluted share.  Consolidated revenues for the first quarter of 2024 totaled $2.33 billion, which increased 7% from $2.18 billion in the first quarter of 2023. 

Homebuilding

New orders in the first quarter of 2024 increased by 3% to 6,049 units, when compared to 5,888 units in the first quarter of 2023. The average sales price of new orders in the first quarter of 2024 was $454,300, an increase of 3% when compared with the first quarter of 2023. The cancellation rate in the first quarter of 2024 was 13% compared to 14% in the first quarter of 2023.  Settlements in the first quarter of 2024 increased by 10% to 5,089 units, compared to 4,639 units in the first quarter of 2023. The average settlement price in the first quarter of 2024 was $449,200, a decrease of 2% from the first quarter of 2023. Our backlog of homes sold but not settled as of March 31, 2024 increased on a unit basis by 7% to 11,189 units and increased on a dollar basis by 9% to $5.22 billion when compared to the respective backlog unit and dollar balances as of March 31, 2023.

Homebuilding revenues of $2.29 billion in the first quarter of 2024 increased by 7% compared to homebuilding revenues of $2.13 billion in the first quarter of 2023. Gross profit margin in the first quarter of 2024 decreased slightly to 24.5%, compared to 24.6% in the first quarter of 2023. Income before tax from the homebuilding segment totaled $441.7 million in the first quarter of 2024, an increase of 9% when compared to the first quarter of 2023.

Mortgage Banking

Mortgage closed loan production in the first quarter of 2024 totaled $1.38 billion, an increase of 11% when compared to the first quarter of 2023. Income before tax from the mortgage banking segment totaled $29.0 million in the first quarter of 2024, an increase of 3% when compared to $28.1 million in the first quarter of 2023. 

Effective Tax Rate

Our effective tax rate for the three months ended March 31, 2024 was 16.2% compared to 20.6% for the three months ended March 31, 2023. The decrease in the effective tax rate in the first quarter of 2024 is primarily attributable to a higher income tax benefit recognized for excess tax benefits from stock option exercises, which totaled $43.8 million and $23.2 million for the three months ended March 31, 2024 and March 31, 2023, 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-six metropolitan areas in sixteen 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 and financial results, 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 March 31,
		2024		2023
Homebuilding:
Revenues		$          2,286,177		$          2,131,333
Other income		40,866		32,946
Cost of sales		(1,726,213)		(1,607,910)
Selling, general and administrative		(152,503)		(143,618)
Operating income		448,327		412,751
Interest expense		(6,649)		(7,001)
Homebuilding income		441,678		405,750
Mortgage Banking:
Mortgage banking fees		47,286		46,944
Interest income		4,092		3,018
Other income		1,171		989
General and administrative		(23,358)		(22,634)
Interest expense		(177)		(257)
Mortgage banking income		29,014		28,060
Income before taxes		470,692		433,810
Income tax expense		(76,423)		(89,458)
Net income		$              394,269		$              344,352
Basic earnings per share		$                123.76		$                106.31
Diluted earnings per share		$                116.41		$                  99.89
Basic weighted average shares outstanding		3,186		3,239
Diluted weighted average shares outstanding		3,387		3,447

 

NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
		March 31, 2024		December 31, 2023
ASSETS
Homebuilding:
Cash and cash equivalents		$              2,841,354		$              3,126,472
Restricted cash		44,099		41,483
Receivables		36,306		29,000
Inventory:
Lots and housing units, covered under sales agreements with customers		1,790,687		1,674,686
Unsold lots and housing units		245,262		214,666
Land under development		59,050		36,895
Building materials and other		22,035		23,903
		2,117,034		1,950,150
Contract land deposits, net		609,407		576,551
Property, plant and equipment, net		63,095		63,716
Operating lease right-of-use assets		66,716		70,384
Reorganization value in excess of amounts allocable to identifiable assets, net		41,580		41,580
Other assets		249,390		242,751
		6,068,981		6,142,087
Mortgage Banking:
Cash and cash equivalents		27,803		36,422
Restricted cash		11,537		11,067
Mortgage loans held for sale, net		332,510		222,560
Property and equipment, net		7,438		6,348
Operating lease right-of-use assets		22,008		23,541
Reorganization value in excess of amounts allocable to identifiable assets, net		7,347		7,347
Other assets		60,533		152,385
		469,176		459,670
Total assets		$              6,538,157		$              6,601,757

 

NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
(unaudited)
		March 31, 2024		December 31, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable		$                  391,591		$                  347,738
Accrued expenses and other liabilities		380,811		413,043
Customer deposits		355,331		334,441
Operating lease liabilities		72,052		75,797
Senior notes		912,554		913,027
		2,112,339		2,084,046
Mortgage Banking:
Accounts payable and other liabilities		57,400		127,511
Operating lease liabilities		24,037		25,475
		81,437		152,986
Total liabilities		2,193,776		2,237,032
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both March 31, 2024 and December 31, 2023		206		206
Additional paid-in capital		2,905,707		2,848,528
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as of both March 31, 2024 and December 31, 2023		(16,710)		(16,710)
Deferred compensation liability		16,710		16,710
Retained earnings		13,759,294		13,365,025
Less treasury stock at cost – 17,387,705 and 17,360,454 shares as of March 31, 2024 and December 31, 2023, respectively		(12,320,826)		(11,849,034)
Total shareholders' equity		4,344,381		4,364,725
Total liabilities and shareholders' equity		$              6,538,157		$              6,601,757

 

NVR, Inc.
Operating Activity
(dollars in thousands)
(unaudited)
		Three Months Ended March 31,
		2024				2023
		Units		Average Price		Units		Average Price
New orders, net of cancellations:
Mid Atlantic (1)		2,282		$         515.4		2,235		$         516.3
North East (2)		527		$         612.6		442		$         573.1
Mid East (3)		1,263		$         409.9		1,317		$         384.2
South East (4)		1,977		$         369.9		1,894		$         361.5
Total		6,049		$         454.3		5,888		$         441.2
		Three Months Ended March 31,
		2024				2023
		Units		Average Price		Units		Average Price
Settlements:
Mid Atlantic (1)		1,966		$         517.5		1,795		$         524.3
North East (2)		463		$         552.2		363		$         505.3
Mid East (3)		1,049		$         397.5		989		$         406.8
South East (4)		1,611		$         370.0		1,492		$         405.1
Total		5,089		$         449.2		4,639		$         459.4
		As of March 31,
		2024				2023
		Units		Average Price		Units		Average Price
Backlog:
Mid Atlantic (1)		4,410		$         521.0		4,132		$         530.6
North East (2)		1,092		$         628.2		964		$         580.8
Mid East (3)		2,190		$         417.7		2,181		$         390.1
South East (4)		3,497		$         377.5		3,134		$         379.3
Total		11,189		$         466.4		10,411		$         460.3

 

NVR, Inc.
Operating Activity (Continued)
(dollars in thousands)
(unaudited)
		Three Months Ended March 31,
		2024		2023
Average active communities:
Mid Atlantic (1)		157		162
North East (2)		34		37
Mid East (3)		100		113
South East (4)		136		101
Total		427		413
		Three Months Ended March 31,
		2024		2023
Homebuilding data:
New order cancellation rate		13 %		14 %
Lots controlled at end of period		143,200		129,900
Mortgage banking data:
Loan closings		$         1,378,009		$         1,237,283
Capture rate		86 %		83 %
Common stock information:
Shares outstanding at end of period		3,167,625		3,241,750
Number of shares repurchased		66,858		21,174
Aggregate cost of shares repurchased		$            496,936		$            110,048

(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, Georgia and Kentucky

 

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SOURCE NVR, INC.

FAQ

What was NVR, Inc.'s net income for the first quarter of 2024?

NVR, Inc. reported a net income of $394.3 million for the first quarter of 2024.

How much did NVR, Inc.'s consolidated revenues increase by in the first quarter of 2024?

NVR, Inc.'s consolidated revenues increased by 7% to $2.33 billion in the first quarter of 2024.

What was the percentage increase in new orders for NVR, Inc. in the first quarter of 2024 compared to the first quarter of 2023?

New orders for NVR, Inc. increased by 3% in the first quarter of 2024 compared to the first quarter of 2023.

How did the effective tax rate for NVR, Inc. change in the first quarter of 2024 compared to the first quarter of 2023?

The effective tax rate for NVR, Inc. decreased to 16.2% in the first quarter of 2024 from 20.6% in the first quarter of 2023.