NVR, INC. ANNOUNCES THIRD QUARTER RESULTS

Rhea-AI Summary

NVR, Inc. (NYSE: NVR) reported its third quarter 2024 financial results. Key highlights include:

- Net income of $429.3 million, or $130.50 per diluted share, a 1% decrease in net income but a 4% increase in EPS compared to Q3 2023.
- Consolidated revenues of $2.73 billion, up 6% year-over-year.
- New orders increased by 19% to 5,650 units.
- Settlements increased by 5% to 5,908 units.
- Backlog increased 9% in units and 11% in dollar value.
- Homebuilding revenues rose 7% to $2.68 billion.
- Gross profit margin decreased to 23.4% from 24.3% in Q3 2023.
- Mortgage banking income before tax decreased 9% to $34.9 million.

The company's effective tax rate for Q3 2024 was 20.3%, up from 19.7% in Q3 2023.

Positive

• Consolidated revenues increased 6% year-over-year to $2.73 billion
• New orders increased by 19% to 5,650 units
• Settlements increased by 5% to 5,908 units
• Backlog increased 9% in units and 11% in dollar value
• Homebuilding revenues rose 7% to $2.68 billion
• Diluted earnings per share increased 4% to $130.50

Negative

• Net income decreased 1% to $429.3 million
• Gross profit margin decreased to 23.4% from 24.3% in Q3 2023
• Mortgage banking income before tax decreased 9% to $34.9 million
• Effective tax rate increased to 20.3% from 19.7% in Q3 2023
• Average sales price of new orders decreased 1% compared to Q3 2023

Insights

Financial Analyst

NVR's Q3 2024 results show resilience in a challenging market. Despite a slight 1% decrease in net income, diluted EPS increased by 4% to $130.50. Consolidated revenues grew 6% to $2.73 billion. The homebuilding segment saw a significant 19% increase in new orders, indicating strong demand. However, gross profit margin declined to 23.4% from 24.3%, primarily due to higher lot costs and closing cost assistance. The 9% increase in backlog units and 11% increase in backlog dollar value suggest a positive outlook for future revenues. The mortgage banking segment faced challenges with a 9% decrease in income before tax. Overall, NVR's performance demonstrates its ability to navigate market headwinds while maintaining growth.

Market Research Analyst

NVR's Q3 results reflect broader housing market trends. The 19% increase in new orders, despite a slight decrease in average sales price, suggests buyers are adjusting to higher interest rates. The 15% cancellation rate, up from 14% last year, indicates some persistent market uncertainty. The 9% growth in backlog units is a positive sign for future revenue streams. However, the pressure on gross margins from higher lot costs and closing cost assistance highlights ongoing challenges in the sector. The mortgage banking segment's performance decline underscores the impact of rising interest rates on the housing finance market. NVR's ability to grow revenues and maintain profitability in this environment demonstrates its strong market position and operational efficiency.

RESTON, Va., Oct. 22, 2024 /PRNewswire/ -- 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, 2024 of $429.3 million, or $130.50 per diluted share.  For the third quarter ended September 30, 2024, net income decreased 1% and diluted earnings per share increased 4%, when compared to 2023 third quarter net income of $433.2 million, or $125.26 per diluted share.  Consolidated revenues for the third quarter of 2024 totaled $2.73 billion, which increased 6% from $2.57 billion in the third quarter of 2023. 

For the nine months ended September 30, 2024, consolidated revenues were $7.68 billion, an 8% increase from $7.09 billion reported for the same period of 2023. Net income for the nine months ended September 30, 2024 was $1.22 billion, an increase of 4% when compared to net income for the nine months ended September 30, 2023 of $1.18 billion. Diluted earnings per share for the nine months ended September 30, 2024 was $367.20, an increase of 7% from $341.97 per diluted share for the same period of 2023.

Homebuilding

New orders in the third quarter of 2024 increased by 19% to 5,650 units, when compared to 4,746 units in the third quarter of 2023. The average sales price of new orders in the third quarter of 2024 was $450,700, a decrease of 1% when compared with the third quarter of 2023.  The cancellation rate in the third quarter of 2024 was 15% compared to 14% in the third quarter of 2023.  Settlements in the third quarter of 2024 increased by 5% to 5,908 units, compared to 5,606 units in the third quarter of 2023. The average settlement price in the third quarter of 2024 was $453,200, an increase of 1% when compared with the third quarter of 2023. Our backlog of homes sold but not settled as of September 30, 2024 increased on a unit basis by 9% to 11,339 units and increased on a dollar basis by 11% to $5.32 billion when compared to the respective backlog unit and dollar balances as of September 30, 2023.

Homebuilding revenues of $2.68 billion in the third quarter of 2024 increased by 7% compared to homebuilding revenues of $2.51 billion in the third quarter of 2023.  Gross profit margin in the third quarter of 2024 decreased to 23.4%, from 24.3% in the third quarter of 2023. Gross profit margin was negatively impacted by higher lot costs and closing cost assistance. Income before tax from the homebuilding segment totaled $503.7 million in the third quarter of 2024, an increase of 1% when compared to the third quarter of 2023.

Mortgage Banking

Mortgage closed loan production in the third quarter of 2024 totaled $1.66 billion, an increase of 2% when compared to the third quarter of 2023.  Income before tax from the mortgage banking segment totaled $34.9 million in the third quarter of 2024, a decrease of 9% when compared to $38.5 million in the third quarter of 2023.  This decrease was primarily attributable to a decrease in secondary marketing gains on sales of loans.

Effective Tax Rate

Our effective tax rate for the three and nine months ended September 30, 2024 was 20.3% and 20.6%, respectively, compared to 19.7% and 18.2% for the three and nine months ended September 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 $23.1 million and $73.7 million for the three and nine months ended September 30, 2024, respectively, compared to $31.9 million and $111.0 million for the three and nine months ended September 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 September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Homebuilding:
Revenues		$          2,677,640		$          2,512,409		$          7,511,708		$          6,927,511
Other income		33,746		39,914		110,796		107,119
Cost of sales		(2,051,087)		(1,902,174)		(5,724,916)		(5,238,230)
Selling, general and administrative		(149,777)		(142,715)		(443,493)		(434,876)
Operating income		510,522		507,434		1,454,095		1,361,524
Interest expense		(6,855)		(6,628)		(20,214)		(20,257)
Homebuilding income		503,667		500,806		1,433,881		1,341,267
Mortgage Banking:
Mortgage banking fees		55,311		56,616		167,163		158,121
Interest income		4,728		5,067		13,492		11,908
Other income		1,414		1,169		3,918		3,260
General and administrative		(26,317)		(24,050)		(75,026)		(69,538)
Interest expense		(191)		(268)		(556)		(692)
Mortgage banking income		34,945		38,534		108,991		103,059
Income before taxes		538,612		539,340		1,542,872		1,444,326
Income tax expense		(109,289)		(106,183)		(318,376)		(262,790)
Net income		$              429,323		$              433,157		$          1,224,496		$          1,181,536
Basic earnings per share		$                139.65		$                132.92		$                391.37		$                363.14
Diluted earnings per share		$                130.50		$                125.26		$                367.20		$                341.97
Basic weighted average shares outstanding		3,074		3,259		3,129		3,254
Diluted weighted average shares outstanding		3,290		3,458		3,335		3,455

 

NVR, Inc. Consolidated Balance Sheets (in thousands, except share and per share data) (unaudited)
		September 30, 2024		December 31, 2023
ASSETS
Homebuilding:
Cash and cash equivalents		$              2,474,219		$              3,126,472
Restricted cash		46,474		41,483
Receivables		35,563		29,000
Inventory:
Lots and housing units, covered under sales agreements with customers		1,946,533		1,674,686
Unsold lots and housing units		223,828		214,666
Land under development		63,339		36,895
Building materials and other		23,697		23,903
		2,257,397		1,950,150
Contract land deposits, net		668,436		576,551
Property, plant and equipment, net		85,998		63,716
Operating lease right-of-use assets		74,415		70,384
Reorganization value in excess of amounts allocable to identifiable assets, net		41,580		41,580
Other assets		251,027		242,751
		5,935,109		6,142,087
Mortgage Banking:
Cash and cash equivalents		36,727		36,422
Restricted cash		11,247		11,067
Mortgage loans held for sale, net		379,232		222,560
Property and equipment, net		7,086		6,348
Operating lease right-of-use assets		21,499		23,541
Reorganization value in excess of amounts allocable to identifiable assets, net		7,347		7,347
Other assets		89,912		152,385
		553,050		459,670
Total assets		$              6,488,159		$              6,601,757

 

NVR, Inc. Consolidated Balance Sheets (Continued) (in thousands, except share and per share data) (unaudited)
		September 30, 2024		December 31, 2023
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable		$                  370,131		$                  347,738
Accrued expenses and other liabilities		406,319		413,043
Customer deposits		358,609		334,441
Operating lease liabilities		79,796		75,797
Senior notes		911,599		913,027
		2,126,454		2,084,046
Mortgage Banking:
Accounts payable and other liabilities		67,029		127,511
Operating lease liabilities		23,428		25,475
		90,457		152,986
Total liabilities		2,216,911		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 September 30, 2024 and December 31, 2023		206		206
Additional paid-in capital		2,989,776		2,848,528
Deferred compensation trust – 106,697 shares of NVR, Inc. common stock as of both September 30, 2024 and December 31, 2023		(16,710)		(16,710)
Deferred compensation liability		16,710		16,710
Retained earnings		14,589,521		13,365,025
Less treasury stock at cost – 17,490,540 and 17,360,454 shares as of September 30, 2024 and December 31, 2023, respectively		(13,308,255)		(11,849,034)
Total shareholders' equity		4,271,248		4,364,725
Total liabilities and shareholders' equity		$              6,488,159		$              6,601,757

 

NVR, Inc. Operating Activity (dollars in thousands) (unaudited)
		Three Months Ended September 30,								Nine Months Ended September 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)		2,206		$         514.7		1,822		$         526.2		6,785		$         522.2		6,405		$         520.2
North East (2)		536		$         616.4		448		$         561.3		1,541		$         617.2		1,353		$         563.7
Mid East (3)		1,105		$         400.2		916		$         407.2		3,630		$         404.8		3,572		$         392.4
South East (4)		1,803		$         354.1		1,560		$         372.8		5,810		$         363.9		5,209		$         366.3
Total		5,650		$         450.7		4,746		$         456.1		17,766		$         454.7		16,539		$         447.7
		Three Months Ended September 30,								Nine Months Ended September 30,
		2024				2023				2024				2023
		Units		Average Price		Units		Average Price		Units		Average Price		Units		Average Price
Settlements:
Mid Atlantic (1)		2,229		$         514.9		2,199		$         521.2		6,394		$         515.9		6,024		$         522.2
North East (2)		495		$         606.9		476		$         563.5		1,445		$         583.6		1,271		$         538.6
Mid East (3)		1,219		$         411.1		1,209		$         387.5		3,343		$         404.5		3,265		$         392.8
South East (4)		1,965		$         370.5		1,722		$         365.2		5,474		$         368.5		4,770		$         380.2
Total		5,908		$         453.2		5,606		$         448.0		16,656		$         451.0		15,330		$         451.8

 

		As of September 30,
		2024				2023
		Units		Average Price		Units		Average Price
Backlog:
Mid Atlantic (1)		4,485		$         531.4		4,073		$         531.7
North East (2)		1,124		$         646.5		967		$         587.5
Mid East (3)		2,263		$         411.5		2,160		$         401.1
South East (4)		3,467		$         369.8		3,171		$         379.3
Total		11,339		$         469.5		10,371		$         463.1

 

NVR, Inc. Operating Activity (Continued) (dollars in thousands) (unaudited)
		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Average active communities:
Mid Atlantic (1)		146		167		152		166
North East (2)		32		36		32		37
Mid East (3)		98		109		100		111
South East (4)		146		119		143		110
Total		422		431		427		424
		Three Months Ended September 30,				Nine Months Ended September 30,
		2024		2023		2024		2023
Homebuilding data:
New order cancellation rate		14.5 %		13.6 %		13.5 %		12.7 %
Lots controlled at end of period						151,800		133,900
Mortgage banking data:
Loan closings		$         1,656,507		$         1,621,599		$       4,564,597		$       4,240,529
Capture rate		86 %		89 %		86 %		86 %
Common stock information:
Shares outstanding at end of period						3,064,790		3,209,977
Number of shares repurchased		42,629		78,750		192,655		134,751
Aggregate cost of shares repurchased		$            357,450		$            484,262		$       1,493,362		$          795,387
(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's net income for Q3 2024?

NVR reported a net income of $429.3 million for the third quarter of 2024.

How did NVR's new orders perform in Q3 2024 compared to Q3 2023?

NVR's new orders in Q3 2024 increased by 19% to 5,650 units, compared to 4,746 units in Q3 2023.

What was NVR's backlog as of September 30, 2024?

NVR's backlog as of September 30, 2024, increased 9% to 11,339 units and 11% to $5.32 billion in dollar value compared to September 30, 2023.

How did NVR's homebuilding revenues change in Q3 2024?

NVR's homebuilding revenues increased by 7% to $2.68 billion in Q3 2024 compared to $2.51 billion in Q3 2023.

What was NVR's gross profit margin in Q3 2024?

NVR's gross profit margin in Q3 2024 decreased to 23.4%, down from 24.3% in Q3 2023.