NVR, INC. ANNOUNCES SECOND QUARTER RESULTS

Rhea-AI Summary

NVR, Inc. (NYSE: NVR) reported its Q2 2024 financial results, showing mixed performance. Net income slightly decreased by 1% to $400.9 million, while diluted EPS increased by 4% to $120.69. Consolidated revenues grew 12% to $2.61 billion. For the first half of 2024, net income rose 6% to $795.2 million, with diluted EPS up 9% to $237.05.

In the homebuilding segment, new orders increased 3% to 6,067 units, with an average sales price of $458,800. Settlements grew 11% to 5,659 units. The backlog increased 3% in units and 6% in dollar value. Homebuilding revenues rose 12% to $2.55 billion, though gross profit margin decreased to 23.6%.

The mortgage banking segment saw closed loan production increase 11% to $1.53 billion, with income before tax up 23% to $45.0 million.

Positive

• Consolidated revenues increased 12% to $2.61 billion in Q2 2024
• Diluted EPS grew 4% to $120.69 in Q2 2024
• New home orders increased 3% to 6,067 units in Q2 2024
• Settlements rose 11% to 5,659 units in Q2 2024
• Backlog value increased 6% to $5.45 billion as of June 30, 2024
• Homebuilding revenues grew 12% to $2.55 billion in Q2 2024
• Mortgage banking income before tax increased 23% to $45.0 million in Q2 2024

Negative

• Net income decreased 1% to $400.9 million in Q2 2024
• Gross profit margin in homebuilding segment decreased to 23.6% from 24.3% in Q2 2023
• Cancellation rate increased to 13% from 11% in Q2 2023
• Effective tax rate increased to 24.9% for Q2 2024, up from 14.3% in Q2 2023

Insights

Financial Analyst

NVR, Inc.'s second-quarter results show mixed performance in different metrics. The slight decrease in net income by 1 can raise concerns about cost management and overall profitability. However, the increase in diluted earnings per share (EPS) by 4 suggests strong financial engineering, likely through share buybacks or other measures mitigating the net income drop. A 12% increase in consolidated revenues and 6% growth in six-month net income highlight overall revenue growth and improved operational efficiency. Investors should pay attention to the gross profit margin decrease from 24.3 to 23.6, which could indicate rising costs or pricing pressures.

Market Research Analyst

The homebuilding sector's performance is important for understanding NVR's future outlook. New orders and settlements both saw increases, which shows strong demand. New orders grew by 3 and settlements by 11, indicating robust market conditions despite potential economic headwinds. The average sales price of new orders and settlements staying flat suggests that the company is not heavily discounting to drive volume. However, the increased cancellation rate from 11 to 13 could be a red flag, indicating customer financial instability or dissatisfaction.

Mortgage Banking Expert

The mortgage banking segment also performed well, with closed loan production growing by 11 and income before tax increasing by 23. This segment's performance is essential because it supports the homebuilding segment by providing financing options to buyers. The increase in secondary marketing gains on sales of loans is a positive sign, indicating efficient loan portfolio management and favorable market conditions for mortgage products. However, investors should monitor interest rate trends as they could impact future profitability in this segment.

RESTON, Va., July 23, 2024 /PRNewswire/ -- 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, 2024 of $400.9 million, or $120.69 per diluted share.  For the second quarter ended June 30, 2024, net income decreased 1% and diluted earnings per share increased 4%, when compared to 2023 second quarter net income of $404.0 million, or $116.54 per diluted share.  Consolidated revenues for the second quarter of 2024 totaled $2.61 billion, which increased 12% from $2.34 billion in the second quarter of 2023. 

For the six months ended June 30, 2024, consolidated revenues were $4.95 billion, a 10% increase from $4.52 billion reported for the same period of 2023. Net income for the six months ended June 30, 2024 was $795.2 million, an increase of 6% when compared to net income for the six months ended June 30, 2023 of $748.4 million. Diluted earnings per share for the six months ended June 30, 2024 was $237.05, an increase of 9% from $216.52 per diluted share for the same period of 2023.

Homebuilding

New orders in the second quarter of 2024 increased by 3% to 6,067 units, when compared to 5,905 units in the second quarter of 2023. The average sales price of new orders in the second quarter of 2024 was $458,800, an increase of 3% when compared with the second quarter of 2023.  The cancellation rate in the second quarter of 2024 was 13% compared to 11% in the second quarter of 2023.  Settlements in the second quarter of 2024 increased by 11% to 5,659 units, compared to 5,085 units in the second quarter of 2023. The average settlement price in the second quarter of 2024 was $450,200, which remained relatively flat when compared to the second quarter of 2023. Our backlog of homes sold but not settled as of June 30, 2024 increased on a unit basis by 3% to 11,597 units and increased on a dollar basis by 6% to $5.45 billion when compared to the respective backlog unit and dollar balances as of June 30, 2023.

Homebuilding revenues of $2.55 billion in the second quarter of 2024 increased by 12% compared to homebuilding revenues of $2.28 billion in the second quarter of 2023.  Gross profit margin in the second quarter of 2024 decreased to 23.6%, from 24.3% in the second quarter of 2023.  Income before tax from the homebuilding segment totaled $488.5 million in the second quarter of 2024, an increase of 12% when compared to the second quarter of 2023.

Mortgage Banking

Mortgage closed loan production in the second quarter of 2024 totaled $1.53 billion, an increase of 11% when compared to the second quarter of 2023.  Income before tax from the mortgage banking segment totaled $45.0 million in the second quarter of 2024, an increase of 23% when compared to $36.5 million in the second quarter of 2023.  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, 2024 was 24.9% and 20.8%, respectively, compared to 14.3% and 17.3% for the three and six months ended June 30, 2023, 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 $6.8 million and $50.6 million for the three and six months ended June 30, 2024, respectively, compared to $55.9 million and $79.2 million for the three and six months ended June 30, 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 June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
Homebuilding:
Revenues		$          2,547,891		$          2,283,769		$          4,834,068		$          4,415,102
Other income		36,184		34,259		77,050		67,205
Cost of sales		(1,947,616)		(1,728,146)		(3,673,829)		(3,336,056)
Selling, general and administrative		(141,213)		(148,543)		(293,716)		(292,161)
Operating income		495,246		441,339		943,573		854,090
Interest expense		(6,710)		(6,628)		(13,359)		(13,629)
Homebuilding income		488,536		434,711		930,214		840,461
Mortgage Banking:
Mortgage banking fees		64,566		54,561		111,852		101,505
Interest income		4,672		3,823		8,764		6,841
Other income		1,333		1,102		2,504		2,091
General and administrative		(25,351)		(22,854)		(48,709)		(45,488)
Interest expense		(188)		(167)		(365)		(424)
Mortgage banking income		45,032		36,465		74,046		64,525
Income before taxes		533,568		471,176		1,004,260		904,986
Income tax expense		(132,664)		(67,149)		(209,087)		(156,607)
Net income		$              400,904		$              404,027		$              795,173		$              748,379
Basic earnings per share		$                128.21		$                123.84		$                251.94		$                230.20
Diluted earnings per share		$                120.69		$                116.54		$                237.05		$                216.52
Basic weighted average shares outstanding		3,127		3,263		3,156		3,251
Diluted weighted average shares outstanding		3,322		3,467		3,355		3,456

 

NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
		June 30, 2024		December 31, 2023
ASSETS
Homebuilding:
Cash and cash equivalents		$              2,438,473		$              3,126,472
Restricted cash		46,218		41,483
Receivables		35,491		29,000
Inventory:
Lots and housing units, covered under sales agreements with customers		1,927,451		1,674,686
Unsold lots and housing units		229,319		214,666
Land under development		61,512		36,895
Building materials and other		26,137		23,903
		2,244,419		1,950,150
Contract land deposits, net		646,341		576,551
Property, plant and equipment, net		79,057		63,716
Operating lease right-of-use assets		73,345		70,384
Reorganization value in excess of amounts allocable to identifiable assets, net		41,580		41,580
Other assets		258,172		242,751
		5,863,096		6,142,087
Mortgage Banking:
Cash and cash equivalents		31,123		36,422
Restricted cash		13,132		11,067
Mortgage loans held for sale, net		392,943		222,560
Property and equipment, net		7,069		6,348
Operating lease right-of-use assets		20,758		23,541
Reorganization value in excess of amounts allocable to identifiable assets, net		7,347		7,347
Other assets		71,820		152,385
		544,192		459,670
Total assets		$              6,407,288		$              6,601,757

 

NVR, Inc.
Consolidated Balance Sheets (Continued)
(in thousands, except share and per share data)
(unaudited)
		June 30, 2024		December 31, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable		$                  421,457		$                  347,738
Accrued expenses and other liabilities		405,338		413,043
Customer deposits		369,274		334,441
Operating lease liabilities		78,563		75,797
Senior notes		912,078		913,027
		2,186,710		2,084,046
Mortgage Banking:
Accounts payable and other liabilities		63,960		127,511
Operating lease liabilities		22,710		25,475
		86,670		152,986
Total liabilities		2,273,380		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 June 30, 2024 and December 31, 2023		206		206
Additional paid-in capital		2,935,053		2,848,528
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as of both June 30, 2024 and December 31, 2023		(16,710)		(16,710)
Deferred compensation liability		16,710		16,710
Retained earnings		14,160,198		13,365,025
Less treasury stock at cost – 17,465,064 and 17,360,454 shares as of June 30, 2024 and December 31, 2023, respectively		(12,961,549)		(11,849,034)
Total shareholders' equity		4,133,908		4,364,725
Total liabilities and shareholders' equity		$              6,407,288		$              6,601,757

 

NVR, Inc.
Operating Activity
(dollars in thousands)
(unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		Units		Average Price		Units		Average Price		Units		Average Price		Units		Average Price
New orders, net of cancellations:
Mid Atlantic (1)		2,297		$         536.2		2,348		$         519.2		4,579		$         525.9		4,583		$         517.8
North East (2)		478		$         623.4		463		$         557.0		1,005		$         617.7		905		$         564.9
Mid East (3)		1,262		$         403.7		1,339		$         390.3		2,525		$         406.8		2,656		$         387.3
South East (4)		2,030		$         366.7		1,755		$         365.7		4,007		$         368.3		3,649		$         363.5
Total		6,067		$         458.8		5,905		$         447.3		12,116		$         456.6		11,793		$         444.3
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
		Units		Average Price		Units		Average Price		Units		Average Price		Units		Average Price
Settlements:
Mid Atlantic (1)		2,199		$         515.5		2,030		$         521.3		4,165		$         516.5		3,825		$         522.7
North East (2)		487		$         589.8		432		$         539.2		950		$         571.5		795		$         523.7
Mid East (3)		1,075		$         403.7		1,067		$         385.7		2,124		$         400.6		2,056		$         395.9
South East (4)		1,898		$         365.1		1,556		$         373.0		3,509		$         367.3		3,048		$         388.7
Total		5,659		$         450.2		5,085		$         449.0		10,748		$         449.7		9,724		$         454.0

 

		As of June 30,
		2024				2023
		Units		Average Price		Units		Average Price
Backlog:
Mid Atlantic (1)		4,508		$         531.4		4,450		$         528.8
North East (2)		1,083		$         643.3		995		$         587.9
Mid East (3)		2,377		$         416.6		2,453		$         392.1
South East (4)		3,629		$         378.0		3,333		$         375.1
Total		11,597		$         470.3		11,231		$         458.6

 

NVR, Inc.
Operating Activity (Continued)
(dollars in thousands)
(unaudited)
		Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
Average active communities:
Mid Atlantic (1)		153		169		155		166
North East (2)		31		36		33		36
Mid East (3)		101		111		100		112
South East (4)		148		110		142		106
Total		433		426		430		420
		Three Months Ended June 30,				Six Months Ended June 30,
		2024		2023		2024		2023
Homebuilding data:
New order cancellation rate		12.9 %		10.9 %		13.0 %		12.4 %
Lots controlled at end of period						149,700		130,400
Mortgage banking data:
Loan closings		$         1,530,081		$         1,381,647		$       2,908,090		$       2,618,930
Capture rate		86 %		86 %		86 %		85 %
Common stock information:
Shares outstanding at end of period						3,090,266		3,260,538
Number of shares repurchased		83,168		34,827		150,026		56,001
Aggregate cost of shares repurchased		$            638,976		$            201,077		$       1,135,912		$          311,125

(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

 

View original content:https://www.prnewswire.com/news-releases/nvr-inc-announces-second-quarter-results-302203219.html

SOURCE NVR, Inc.

FAQ

What was NVR's net income for Q2 2024?

NVR's net income for Q2 2024 was $400.9 million, a slight decrease of 1% compared to Q2 2023.

How did NVR's diluted earnings per share (EPS) change in Q2 2024?

NVR's diluted EPS increased by 4% to $120.69 in Q2 2024, compared to $116.54 in Q2 2023.

What was the growth in NVR's consolidated revenues for Q2 2024?

NVR's consolidated revenues for Q2 2024 grew by 12% to $2.61 billion, up from $2.34 billion in Q2 2023.

How many new home orders did NVR receive in Q2 2024?

NVR received 6,067 new home orders in Q2 2024, an increase of 3% compared to Q2 2023.

What was the average sales price of NVR's new orders in Q2 2024?

The average sales price of NVR's new orders in Q2 2024 was $458,800, a 3% increase from Q2 2023.