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Form 8-K NVR INC For: Apr 19

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April 19, 2018 9:24 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported):  April 19, 2018
 
NVR, Inc.
(Exact name of registrant as specified in its charter)
 
 
Virginia
1-12378
54-1394360
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
 
11700 Plaza America Drive, Suite 500
Reston, Virginia 20190
(Address of principal executive offices) (Zip Code)
 
(703) 956-4000
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐





Item 2.02
 
Results of Operations and Financial Condition
On April 19, 2018, NVR, Inc. issued a press release reporting its financial results for the first quarter ended March 31, 2018. A copy of this press release is furnished herewith as Exhibit 99.1.
 
Item 9.01
 
Financial Statements and Exhibits.
 
 
 
(d)  Exhibits
 
 
 
 
 
Exhibit Number
 
Exhibit Description
 
 
 
99.1
 
 
 
 
 
 
 




SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
NVR, Inc.
 
 
 
Date: April 19, 2018
By:
/s/ Daniel D. Malzahn
 
 
Daniel D. Malzahn
 
 
Senior Vice President, Chief Financial Officer and Treasurer





a2018earningsreleaseimage.jpg
Exhibit 99.1
NVR, INC. ANNOUNCES FIRST QUARTER RESULTS
April 19, 2018, Reston, VA—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, 2018 of $166,049,000, or $39.34 per diluted share. Net income and diluted earnings per share for the first quarter ended March 31, 2018 increased 61% and 57%, respectively, when compared to 2017 first quarter net income of $102,923,000, or $25.12 per diluted share. Consolidated revenues for the first quarter of 2018 totaled $1,529,414,000, a 20% increase from $1,277,092,000 in the first quarter of 2017.
Net income and diluted earnings per share were favorably impacted by the reduction in the Company's effective tax rate in the first quarter of 2018 to 13.1% from 22.1% in the first quarter of 2017. The reduction in the effective tax rate was primarily due to the following items:
•
The enactment of the Tax Cuts and Jobs Act in December 2017, which lowered the Company's federal statutory tax rate from 35% to 21%, and
•
The retroactive reinstatement of certain expired energy tax credits under the Bipartisan Budget Act of 2018, which resulted in the Company recognizing a tax benefit of approximately $6,200,000 related to homes settled in 2017.
Additionally, the effective tax rate in both the first quarter of 2018 and 2017 was favorably impacted by the recognition of an income tax benefit related to excess tax benefits from stock option exercises totaling $19,567,000 and $19,900,000, respectively.
Homebuilding
New orders in the first quarter of 2018 increased 17% to 5,174 units, when compared to 4,424 units in the first quarter of 2017. The average sales price of new orders in the first quarter of 2018 was $378,200, a decrease of 4% when compared with the first quarter of 2017. The decrease in the average sales price of new orders is primarily attributable to a shift in new orders to lower priced markets and lower priced products. Settlements increased in the first quarter of 2018 to 3,896 units, 20% higher than the first quarter of 2017. The Company’s backlog of homes sold but not settled as of March 31, 2018 increased on a unit basis by 22% to 9,809 units and increased on a dollar basis by 17% to $3,744,523,000 when compared to March 31, 2017.
Homebuilding revenues in the first quarter of 2018 totaled $1,490,093,000, 19% higher than the year earlier period. Gross profit margin in the first quarter of 2018 increased to 18.7%, compared to 17.8% in the first quarter of 2017. Income before tax from the homebuilding segment totaled $168,570,000 in the first quarter of 2018, an increase of 44% when compared to the first quarter of 2017.
Mortgage Banking
Mortgage closed loan production in the first quarter of 2018 totaled $1,009,673,000, an increase of 20% when compared to the first quarter of 2017. Income before tax from the mortgage banking segment totaled $22,428,000 in the first quarter of 2018, an increase of 50% when compared to $14,971,000 in the first quarter of 2017.

Page 1 of 5


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-one 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: 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.

Page 2 of 5


NVR, Inc.
Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2018
 
2017
 
 
 
 
 
Homebuilding:
 
 
 
 
Revenues
 
$
1,490,093

 
$
1,247,587

Other income
 
1,977

 
1,102

Cost of sales
 
(1,211,946
)
 
(1,026,017
)
Selling, general and administrative
 
(105,547
)
 
(99,904
)
Operating income
 
174,577

 
122,768

Interest expense
 
(6,007
)
 
(5,578
)
Homebuilding income
 
168,570

 
117,190

 
 
 
 
 
Mortgage Banking:
 
 
 
 
Mortgage banking fees
 
39,321

 
29,505

Interest income
 
2,093

 
1,661

Other income
 
524

 
309

General and administrative
 
(19,235
)
 
(16,246
)
Interest expense
 
(275
)
 
(258
)
Mortgage banking income
 
22,428

 
14,971

 
 
 
 
 
Income before taxes
 
190,998

 
132,161

Income tax expense
 
(24,949
)
 
(29,238
)
 
 
 
 
 
Net income
 
$
166,049

 
$
102,923

 
 
 
 
 
Basic earnings per share
 
$
45.19

 
$
27.78

 
 
 
 
 
Diluted earnings per share
 
$
39.34

 
$
25.12

 
 
 
 
 
Basic weighted average shares outstanding
 
3,675

 
3,705

 
 
 
 
 
Diluted weighted average shares outstanding
 
4,220

 
4,097



Page 3 of 5


NVR, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share data)
(Unaudited)
 
 
March 31, 2018
 
December 31, 2017
ASSETS
 
 
 
 
Homebuilding:
 
 
 
 
Cash and cash equivalents
 
$
414,763

 
$
645,087

Restricted cash
 
20,767

 
19,438

Receivables
 
22,374

 
20,026

Inventory:
 
 
 
 
Lots and housing units, covered under sales agreements with customers
 
1,170,604

 
1,046,094

Unsold lots and housing units
 
124,312

 
148,620

Land under development
 
33,078

 
34,212

Building materials and other
 
16,398

 
17,273

 
 
1,344,392

 
1,246,199

 
 
 
 
 
Contract land deposits, net
 
361,891

 
370,429

Property, plant and equipment, net
 
41,326

 
43,191

Reorganization value in excess of amounts allocable to identifiable assets, net
 
41,580

 
41,580

Other assets
 
204,329

 
198,930

 
 
2,451,422

 
2,584,880

Mortgage Banking:
 
 
 
 
Cash and cash equivalents
 
10,803

 
21,707

Restricted cash
 
3,230

 
2,256

Mortgage loans held for sale, net
 
344,023

 
352,489

Property and equipment, net
 
6,237

 
6,327

Reorganization value in excess of amounts allocable to identifiable assets, net
 
7,347

 
7,347

Other assets
 
23,003

 
14,273

 
 
394,643

 
404,399

Total assets
 
$
2,846,065

 
$
2,989,279

 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
Homebuilding:
 
 
 
 
Accounts payable
 
$
265,155

 
$
261,973

Accrued expenses and other liabilities
 
314,897

 
341,891

Customer deposits
 
167,486

 
150,033

Senior notes
 
597,220

 
597,066

 
 
1,344,758

 
1,350,963

Mortgage Banking:
 
 
 
 
Accounts payable and other liabilities
 
34,499

 
32,824

 
 
34,499

 
32,824

Total liabilities
 
1,379,257

 
1,383,787

 
 
 
 
 
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, 2018 and December 31, 2017
 
206

 
206

Additional paid-in capital
 
1,678,100

 
1,644,197

Deferred compensation trust – 108,642 and 108,640 shares of NVR, Inc. common stock as of March 31, 2018 and December 31, 2017, respectively
 
(17,389
)
 
(17,383
)
Deferred compensation liability
 
17,389

 
17,383

Retained earnings
 
6,400,185

 
6,231,940

Less treasury stock at cost – 16,936,586 and 16,864,324 shares as of March 31, 2018 and December 31, 2017, respectively
 
(6,611,683
)
 
(6,270,851
)
Total shareholders' equity
 
1,466,808

 
1,605,492

Total liabilities and shareholders' equity
 
$
2,846,065

 
$
2,989,279


Page 4 of 5


NVR, Inc.
Operating Activity
(dollars in thousands)
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2018
 
2017
Homebuilding data:
 
 
 
 
New orders (units)
 
 
 
 
Mid Atlantic (1)
 
2,503

 
2,125

North East (2)
 
371

 
359

Mid East (3)
 
1,296

 
1,134

South East (4)
 
1,004

 
806

Total
 
5,174

 
4,424

 
 
 
 
 
Average new order price
 
$
378.2

 
$
392.6

 
 
 
 
 
Settlements (units)
 
 
 
 
Mid Atlantic (1)
 
1,926

 
1,658

North East (2)
 
301

 
268

Mid East (3)
 
879

 
725

South East (4)
 
790

 
605

Total
 
3,896

 
3,256

 
 
 
 
 
Average settlement price
 
$
382.4

 
$
383.1

 
 
 
 
 
Backlog (units)
 
 
 
 
Mid Atlantic (1)
 
4,801

 
4,008

North East (2)
 
752

 
699

Mid East (3)
 
2,315

 
1,908

South East (4)
 
1,941

 
1,437

Total
 
9,809

 
8,052

 
 
 
 
 
Average backlog price
 
$
381.7

 
$
396.6

 
 
 
 
 
New order cancellation rate
 
14
%
 
16
%
Community count (average)
 
485

 
486

Lots controlled at end of period
 
91,300

 
79,100

 
 
 
 
 
Mortgage banking data:
 
 
 
 
Loan closings
 
$
1,009,673

 
$
843,341

Capture rate
 
86
%
 
86
%
 
 
 
 
 
Common stock information:
 
 
 
 
Shares outstanding at end of period
 
3,618,744

 
3,735,638

Number of shares repurchased
 
116,268

 
50,922

Aggregate cost of shares repurchased
 
$
357,242

 
$
85,547

(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
Investor Relations Contact:
Curt McKay
(703) 956-4058

Page 5 of 5

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