Part I [Business](index=4&type=section&id=Item%201.%20Business) NVR is a major US homebuilder that minimizes risk through a pre-sold construction model and a conservative lot acquisition strategy - NVR's primary business is the construction and sale of single-family homes, townhomes, and condominiums, which are mainly built on a **pre-sold basis**[13](index=13&type=chunk) - The company operates under three main trade names: **Ryan Homes**, **NVHomes**, and **Heartland Homes**[14](index=14&type=chunk) - A key business strategy is to avoid direct land development by acquiring finished lots through **Lot Purchase Agreements**, which require forfeitable deposits, thereby minimizing financial risk[15](index=15&type=chunk)[16](index=16&type=chunk) - NVR operates a mortgage banking subsidiary, NVRM, which originates loans almost exclusively for its homebuilding customers and sells all closed loans into the secondary market[18](index=18&type=chunk)[31](index=31&type=chunk) Homebuilding Segments and Geographic Regions | Segment | Geographic Regions | | :--- | :--- | | **Mid Atlantic** | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | | **North East** | New Jersey and Eastern Pennsylvania | | **Mid East** | New York, Ohio, Western Pennsylvania, Indiana and Illinois | | **South East** | North Carolina, South Carolina, Florida and Tennessee | Backlog and Cancellation Rates (2017-2019) | Metric | 2019 | 2018 | 2017 | | :--- | :--- | :--- | :--- | | **Backlog (Units)** | 8,233 | 8,365 | 8,531 | | **Backlog (Value)** | ~$3.1 billion | ~$3.2 billion | N/A | | **Cancellation Rate** | 14.6% | 14.5% | 14.0% | [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from economic downturns, interest rate changes, mortgage market disruptions, and supply chain issues - The business is highly sensitive to economic conditions such as employment levels, consumer confidence, and **interest rates**, which can significantly impact demand for new homes[42](index=42&type=chunk)[43](index=43&type=chunk) - A significant portion of revenue is concentrated in the Washington, D.C. and Baltimore, MD metropolitan areas, accounting for approximately **27%** and **11%** of 2019 homebuilding revenues, respectively[48](index=48&type=chunk) - The mortgage banking business depends on selling originated loans into the secondary market; disruptions could impair this ability[50](index=50&type=chunk)[51](index=51&type=chunk) - The company's lot acquisition strategy involves forfeitable deposits, and adverse market changes could lead to financial losses[52](index=52&type=chunk) - The homebuilding and mortgage industries are highly competitive and subject to extensive government regulations that can increase costs[59](index=59&type=chunk)[62](index=62&type=chunk)[64](index=64&type=chunk) [Unresolved Staff Comments](index=11&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[76](index=76&type=chunk) [Properties](index=11&type=section&id=Item%202.%20Properties) NVR leases its corporate office and most production facilities, with plant utilization at 49% of capacity in 2019 - Corporate offices are leased in Reston, Virginia, with the current lease expiring in April 2026[77](index=77&type=chunk) - The company operates seven leased production facilities and owns one facility; total plant utilization was **49%** in 2019, down from 52% in 2018[78](index=78&type=chunk) [Legal Proceedings](index=12&type=section&id=Item%203.%20Legal%20Proceedings) Ongoing litigation is not expected to materially impact the company's financial condition - Management does not expect ongoing litigation to have a material adverse effect on the company's financial condition[80](index=80&type=chunk) [Mine Safety Disclosures](index=12&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[81](index=81&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=12&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NVR's stock trades on the NYSE, the company does not pay dividends, and it actively repurchased shares in Q4 2019 - The company's common stock trades on the NYSE under the symbol "**NVR**"[83](index=83&type=chunk) - NVR has never paid a cash dividend and does not intend to in the future[84](index=84&type=chunk) Common Stock Repurchases (Q4 2019) | Period | Total Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares Remaining for Purchase | | :--- | :--- | :--- | :--- | | Oct 1-31, 2019 | 17,432 | $3,625.92 | $286,809,000 | | Nov 1-30, 2019 | 42,088 | $3,556.51 | $437,122,000 | | Dec 1-31, 2019 | 31,766 | $3,777.03 | $317,141,000 | | **Total Q4** | **91,286** | **$3,646.51** | **N/A** | Comparison of 5-Year Cumulative Total Return | Index | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **NVR, Inc.** | $100 | $129 | $131 | $275 | $191 | $299 | | **S&P 500** | $100 | $101 | $114 | $138 | $132 | $174 | | **Dow Jones US Home Construction** | $100 | $110 | $103 | $181 | $124 | $183 | [Selected Financial Data](index=14&type=section&id=Item%206.%20Selected%20Financial%20Data) The company demonstrates consistent five-year growth in revenues, net income, and earnings per share Selected Consolidated Financial Data (2015-2019, in thousands except per share data) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :--- | :--- | :--- | :--- | :--- | :--- | | **Homebuilding Revenues** | $7,220,844 | $7,004,304 | $6,175,521 | $5,709,223 | $5,065,200 | | **Net Income** | $878,539 | $797,197 | $537,521 | $425,262 | $382,927 | | **Diluted EPS** | $221.13 | $194.80 | $126.77 | $103.61 | $89.99 | | **Total Assets** | $3,809,815 | $3,165,933 | $2,989,279 | $2,643,943 | $2,511,718 | | **Shareholders' Equity** | $2,341,244 | $1,808,562 | $1,605,492 | $1,304,441 | $1,239,165 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2019, revenue and net income grew due to favorable market conditions, increased unit settlements, and improved mortgage banking profits - As of December 31, 2019, the company controlled approximately **101,300 lots** under Lot Purchase Agreements, with total deposits of about **$445 million**[96](index=96&type=chunk) Key Financial Results (2019 vs. 2018, $ in thousands) | Metric | 2019 | 2018 | % Change | | :--- | :--- | :--- | :--- | | **Consolidated Revenues** | $7,388,664 | $7,163,674 | 3% | | **Net Income** | $878,539 | $797,197 | 10% | | **Diluted EPS** | $221.13 | $194.80 | 14% | | **Homebuilding Gross Profit Margin** | 19.0% | 18.7% | +0.3 p.p. | | **New Orders (Units)** | 19,536 | 18,281 | 7% | [Results of Operations](index=15&type=section&id=Results%20of%20Operations) Revenue growth was driven by a 7% increase in settled units, while a lower effective tax rate also contributed to higher net income - The consolidated effective tax rate was **14.36%** in 2019, down from 16.94% in 2018, primarily due to the retroactive reinstatement of certain energy tax credits[139](index=139&type=chunk) Consolidated Homebuilding Operations (2019 vs. 2018, $ in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Revenues** | $7,220,844 | $7,004,304 | | **Gross Profit Margin %** | 19.0% | 18.7% | | **New Orders (units)** | 19,536 | 18,281 | | **Average New Order Price** | $368,400 | $376,300 | | **Settlements (units)** | 19,668 | 18,447 | | **Average Settlement Price** | $367,100 | $379,700 | Mortgage Banking Operations (2019 vs. 2018, $ in thousands) | Metric | 2019 | 2018 | | :--- | :--- | :--- | | **Total Principal (Loan Closing Volume)** | $5,164,725 | $4,829,406 | | **Segment Profit** | $105,292 | $93,462 | | **Capture Rate** | 90% | 88% | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains a strong liquidity position through cash flow and debt facilities, funding significant share repurchases in 2019 - NVR has **$600 million** in 3.95% Senior Notes due 2022 and a **$200 million** unsecured revolving credit facility, under which no borrowings were outstanding at year-end[143](index=143&type=chunk)[147](index=147&type=chunk) - The mortgage banking subsidiary (NVRM) has a **$150 million** revolving mortgage repurchase facility, which had no outstanding balance at year-end 2019[148](index=148&type=chunk)[149](index=149&type=chunk) - In 2019, the company repurchased 220,965 shares of its common stock for an aggregate price of **$698.4 million**[150](index=150&type=chunk) - Net cash provided by operating activities was **$866.5 million** in 2019, while net cash used in financing activities was **$424.7 million**, primarily for stock repurchases[151](index=151&type=chunk) [Off-Balance Sheet Arrangements](index=29&type=section&id=Off-Balance%20Sheet%20Arrangements) The company's primary off-balance sheet arrangements involve lot purchase agreements and mortgage rate lock commitments - The company controlled approximately 104,900 lots with an aggregate purchase price of **~$10 billion**, with its risk of loss limited to deposits and commitments of **~$656.5 million**[157](index=157&type=chunk) - As of December 31, 2019, NVRM had contractual commitments to extend credit to borrowers aggregating **$581.1 million** and open forward delivery contracts to hedge this risk aggregating **$986.0 million**[160](index=160&type=chunk)[161](index=161&type=chunk) [Critical Accounting Policies](index=30&type=section&id=Critical%20Accounting%20Policies) Management's critical accounting policies require significant estimates for inventory valuation, impairment, and various liability accruals - Key estimates include inventory valuation, impairment of contract land deposits, warranty reserves, equity-based compensation expense, and the mortgage repurchase reserve[164](index=164&type=chunk) - Contract land deposits are evaluated for impairment quarterly on a community-by-community basis, considering sales pace, profitability, and developer performance[168](index=168&type=chunk)[170](index=170&type=chunk) - Equity-based compensation expense is calculated using the **Black-Scholes model**, which requires management judgment for inputs like expected term and volatility[177](index=177&type=chunk)[179](index=179&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risk is interest rate sensitivity, which is managed through fixed-rate debt and hedging activities - The company's main market risk is **interest rate risk**, affecting both its homebuilding debt obligations and its mortgage banking lending activities[184](index=184&type=chunk) - The mortgage banking segment uses **forward delivery contracts** to mitigate interest rate risk on its loan portfolio and rate lock commitments[187](index=187&type=chunk) Financial Instruments Maturities and Fair Value (as of Dec 31, 2019, in thousands) | Instrument | 2020 | 2021 | 2022 | Total | Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | | **Mortgage loans held for sale** | $485,106 | — | — | $485,106 | $492,125 | | **Interest-bearing deposits** | $1,043,205 | — | — | $1,043,205 | $1,043,205 | | **Fixed rate obligations (Senior Notes)** | $— | — | $600,000 | $600,000 | $626,520 | [Financial Statements and Supplementary Data](index=35&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's consolidated financial statements and supplementary data by reference - The financial statements listed in Item 15 are filed as part of this report[191](index=191&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=35&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[192](index=192&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that disclosure controls and procedures were **effective** as of December 31, 2019[194](index=194&type=chunk) - Management concluded that internal control over financial reporting was **effective** as of December 31, 2019[195](index=195&type=chunk) - KPMG LLP issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting[196](index=196&type=chunk) [Other Information](index=35&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[197](index=197&type=chunk) Part III [Directors, Executive Officers, and Corporate Governance](index=35&type=section&id=Item%2010.%20Directors,%20Executive%20Officers,%20and%20Corporate%20Governance) This section identifies the executive officers, with other required information incorporated by reference from the Proxy Statement - Additional information required by this item is incorporated by reference from the company's Proxy Statement[204](index=204&type=chunk) Executive Officers of the Registrant | Name | Age | Position | | :--- | :--- | :--- | | Paul C. Saville | 64 | President and Chief Executive Officer | | Daniel D. Malzahn | 50 | Senior Vice President, Chief Financial Officer and Treasurer | | Jeffrey D. Martchek | 54 | President of Homebuilding Operations | | Paul W. Praylo | 48 | Senior Vice President and Chief Operating Officer | | Eugene J. Bredow | 50 | President of NVRM | [Executive Compensation](index=36&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement - Information is incorporated by reference from the Proxy Statement[205](index=205&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=36&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides details on equity compensation plans and incorporates other ownership information by reference - Other information required by this item is incorporated by reference from the Proxy Statement[206](index=206&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2019) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | **Approved by Security Holders** | 753,796 | $2,007.52 | 287,291 | | **Not Approved by Security Holders** | 10,504 | $703.00 | — | | **Total** | **764,300** | **$1,989.60** | **287,291** | [Certain Relationships and Related Transactions, and Director Independence](index=36&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information on related transactions and director independence is incorporated by reference from the Proxy Statement - Information is incorporated by reference from the Proxy Statement[208](index=208&type=chunk) [Principal Accountant Fees and Services](index=36&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the Proxy Statement - Information is incorporated by reference from the Proxy Statement[209](index=209&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=38&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents, including financial statements and various exhibits, filed as part of the report - This section provides a comprehensive list of all financial statements, schedules, and exhibits filed with the Form 10-K[211](index=211&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 1-12378 NVR, Inc. (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 1-12378 NVR, Inc. (Exact name of registrant as specified in its charter) Virginia 54-1394360 (State or other jurisdiction ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 1-12378 NVR, Inc. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or ...

PART I [Business](index=4&type=section&id=Item%201.%20Business) NVR, Inc. operates as a major US homebuilder with two primary business segments: homebuilding and mortgage banking - The company's primary business is the construction and sale of single-family homes, townhomes, and condominiums, which are mainly constructed on a pre-sold basis[13](index=13&type=chunk) - NVR operates under three main trade names: **Ryan Homes** (for first-time and first-time move-up buyers), **NVHomes**, and **Heartland Homes** (for move-up and luxury buyers)[14](index=14&type=chunk) - A core business strategy is to avoid direct land ownership and development by acquiring finished building lots from third-party developers through Lot Purchase Agreements, which require forfeitable deposits typically up to **10% of the purchase price**[15](index=15&type=chunk)[16](index=16&type=chunk) Homebuilding Geographic Segments | Segment | Geographic Regions | | :--- | :--- | | **Mid Atlantic** | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | | **North East** | New Jersey and Eastern Pennsylvania | | **Mid East** | New York, Ohio, Western Pennsylvania, Indiana and Illinois | | **South East** | North Carolina, South Carolina, Florida and Tennessee | Backlog Summary (2017-2018) | Metric | Dec 31, 2018 | Dec 31, 2017 | | :--- | :--- | :--- | | **Units** | 8,365 | 8,531 | | **Value** | ~$3.2 billion | ~$3.3 billion | Mortgage Banking Loan Closings (2017-2018) | Metric | 2018 | 2017 | | :--- | :--- | :--- | | **Loans Closed** | ~15,100 | ~13,100 | | **Aggregate Principal** | ~$4.8 billion | ~$4.2 billion | [Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors) The company's business is subject to significant risks inherent in the residential construction and mortgage banking industries - Demand for new homes is highly sensitive to economic conditions such as employment levels, consumer confidence, and interest rates; an economic downturn could materially adversely affect business results[42](index=42&type=chunk) - The business is significantly dependent on the Washington, D.C. and Baltimore, MD metropolitan areas, which accounted for approximately **30%** and **10%** of 2018 homebuilding revenues, respectively[47](index=47&type=chunk) - The availability of suitable mortgage financing for customers is critical; tightening credit standards could impair home affordability, lower demand, and limit the ability to deliver the existing backlog[48](index=48&type=chunk) - Inventory risk is substantial, as the market value of building lots and housing inventories can fluctuate significantly; adverse market changes could lead to the forfeiture of land contract deposits or inventory impairments[51](index=51&type=chunk) - The mortgage industry faces increasing regulation, which may negatively impact the mortgage loan origination business through lower demand, decreased revenue, and increased operating costs[63](index=63&type=chunk) - The homebuilding industry is highly competitive, with competition from numerous builders and the existing home resale market based on price, location, design, quality, and service[65](index=65&type=chunk) [Unresolved Staff Comments](index=11&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - There are no unresolved staff comments[75](index=75&type=chunk) [Properties](index=11&type=section&id=Item%202.%20Properties) NVR's corporate offices are leased in Reston, Virginia, and the company operates seven production facilities, with a new one expected in Q2 2019 - Corporate offices are located in a leased **61,000 square foot** space in Reston, Virginia, with the lease expiring in April 2026[76](index=76&type=chunk) - The company leases six production facilities and owns one, with total plant utilization at **52% in 2018** and **47% in 2017**[77](index=77&type=chunk) - A new 20-year lease for a **130,000 square foot** production facility in Richmond, Virginia is expected to commence in the second quarter of 2019[77](index=77&type=chunk) [Legal Proceedings](index=11&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various litigation matters arising in the ordinary course of business, which are not expected to have a material adverse effect - Management believes that ongoing litigation, which arises in the ordinary course of business, is not expected to have a material adverse effect on the company's financial condition[79](index=79&type=chunk) [Mine Safety Disclosures](index=11&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[80](index=80&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=12&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) NVR's common stock is traded on the NYSE, the company has never paid a cash dividend, and repurchased shares in Q4 2018 - The company's common stock is listed on the New York Stock Exchange under the trading symbol "**NVR**"[82](index=82&type=chunk) - NVR has never paid a cash dividend on its common stock and has no current plans to do so[83](index=83&type=chunk) Share Repurchases - Q4 2018 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 1 - 31, 2018 | 8,500 | $2,382.65 | | Nov 1 - 30, 2018 | 32,909 | $2,361.91 | | Dec 1 - 31, 2018 | 37,182 | $2,441.61 | | **Total** | **78,591** | **$2,401.86** | [Selected Financial Data](index=14&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents a five-year summary of NVR's selected consolidated financial data from 2014 to 2018, showing consistent growth in key metrics Selected Consolidated Income Statement Data (2016-2018) | (in thousands, except per share) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Homebuilding Revenues** | $7,004,304 | $6,175,521 | $5,709,223 | | **Net Income** | $797,197 | $537,521 | $425,262 | | **Diluted EPS** | $194.80 | $126.77 | $103.61 | Selected Consolidated Balance Sheet Data (as of Dec 31) | (in thousands) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Total Assets** | $3,165,933 | $2,989,279 | $2,643,943 | | **Notes and Loans Payable** | $597,681 | $597,066 | $596,455 | | **Shareholders' Equity** | $1,808,562 | $1,605,492 | $1,304,441 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2018, NVR saw a 14% increase in consolidated revenues to $7.16 billion and a 48% rise in net income, despite softening demand in the second half - The company's lot acquisition strategy is centered on avoiding direct land ownership by using Lot Purchase Agreements with forfeitable deposits, typically up to **10% of the aggregate purchase price**[90](index=90&type=chunk) - While demand was strong in the first half of 2018, it softened in the second half due to affordability issues from rising interest rates, leading to pricing and sales pressure[99](index=99&type=chunk) Lots Controlled as of Dec 31, 2018 | Control Method | Lots | | :--- | :--- | | Lot Purchase Agreements | ~95,750 | | Joint Ventures (JVs) | ~6,800 | | Land Under Development | ~500 | Key Financial Results (2018 vs. 2017) | Metric | 2018 | 2017 | % Change | | :--- | :--- | :--- | :--- | | **Consolidated Revenues** | $7,163,674 | $6,305,840 | +14% | | **Net Income** | $797,197 | $537,521 | +48% | | **Diluted EPS** | $194.80 | $126.77 | +54% | | **Homebuilding Gross Margin** | 18.7% | 19.2% | -0.5 p.p. | [Homebuilding Operations](index=16&type=section&id=Homebuilding%20Operations) Homebuilding revenues increased 13% in 2018 to $7.0 billion, driven by higher settlements, though gross profit margin declined due to increased costs - The **13% increase** in 2018 homebuilding revenues was a result of a **16% increase in units settled**, partially offset by a **2% decrease** in the average settlement price[103](index=103&type=chunk) - The gross profit margin decreased from **19.2% in 2017 to 18.7% in 2018**, primarily due to higher lot and certain material costs[104](index=104&type=chunk) - New home demand softened in the second half of 2018, leading to a decrease in new orders of **11% in Q4 2018** compared to Q4 2017[105](index=105&type=chunk) Consolidated Homebuilding Operations Summary | Metric | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Revenues ($ thousands)** | $7,004,304 | $6,175,521 | $5,709,223 | | **Gross profit margin %** | 18.7% | 19.2% | 17.5% | | **New orders (units)** | 18,281 | 17,608 | 15,583 | | **Settlements (units)** | 18,447 | 15,961 | 14,928 | | **Backlog (units)** | 8,365 | 8,531 | 6,884 | [Mortgage Banking Segment](index=27&type=section&id=Mortgage%20Banking%20Segment) The mortgage banking segment's profit increased 26% to $93.5 million in 2018, driven by a 14% rise in loan closing volume - Loan closing volume increased by **14% in 2018**, primarily due to a **15% increase** in the number of loans closed, which aligns with the increase in homebuilding settlements[147](index=147&type=chunk) - Segment profit increased by **26% in 2018**, driven by a **22% rise** in mortgage banking fees from higher loan volume and increased secondary marketing gains[148](index=148&type=chunk) Mortgage Banking Operations Summary | Metric | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Loan Closing Volume ($ thousands)** | $4,829,406 | $4,229,507 | $3,952,575 | | **Segment Profit ($ thousands)** | $93,462 | $73,959 | $63,711 | | **Capture Rate** | 88% | 88% | 88% | | **Mortgage Banking Fees ($ thousands)** | $159,370 | $130,319 | $113,321 | [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) NVR funds operations through cash, a $200 million credit facility, and $600 million in Senior Notes, generating $723.1 million in operating cash flow in 2018 - The company has **$600 million** in **3.95% Senior Notes** that mature on September 15, 2022[161](index=161&type=chunk) - NVR maintains a **$200 million unsecured revolving credit facility**, which terminates on July 15, 2021, with no borrowings outstanding as of December 31, 2018[164](index=164&type=chunk)[166](index=166&type=chunk) - The mortgage subsidiary, NVRM, has a **$150 million revolving mortgage repurchase facility** to finance loan originations, expiring on July 24, 2019, with no debt outstanding at year-end[167](index=167&type=chunk)[168](index=168&type=chunk) - In 2018, the company repurchased **300,815 shares** of its common stock for an aggregate price of **$846.1 million**; **$415.6 million** remained available under repurchase authorizations at year-end[169](index=169&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Net Cash from Operating** | $723,126 | $570,354 | $392,988 | | **Net Cash from Investing** | ($8,177) | ($15,193) | ($10,350) | | **Net Cash from Financing** | ($672,258) | ($281,641) | ($417,395) | [Quantitative and Qualitative Disclosure About Market Risk](index=36&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed through hedging strategies in its mortgage banking segment - The homebuilding segment's interest rate risk is primarily related to its **$600 million of fixed-rate Senior Notes** due 2022, which are not significantly impacted by interest rate fluctuations in terms of earnings or cash flows[205](index=205&type=chunk) - The mortgage banking segment is exposed to interest rate risk from its lending activities, managed by using optional or mandatory forward delivery contracts to sell loans into the secondary market, hedging its portfolio of loans held for sale and rate lock commitments[207](index=207&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates by reference the company's consolidated financial statements and supplementary data filed as part of the Form 10-K report - The financial statements listed in Item 15 are filed as part of this report and are incorporated by reference[212](index=212&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=38&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None reported[213](index=213&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2018 - The principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of December 31, 2018[215](index=215&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2018, based on the COSO framework (2013)[216](index=216&type=chunk) [Other Information](index=38&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None reported[218](index=218&type=chunk) PART III [Directors, Executive Officers, and Corporate Governance](index=38&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%2C%20and%20Corporate%20Governance) This section identifies NVR's executive officers and incorporates further governance details by reference from the Proxy Statement Executive Officers of the Registrant | Name | Age | Positions | | :--- | :--- | :--- | | Paul C. Saville | 63 | President and Chief Executive Officer of NVR | | Daniel D. Malzahn | 49 | Senior Vice President, Chief Financial Officer and Treasurer of NVR | | Jeffrey D. Martchek | 53 | President of Homebuilding Operations of NVR | | Paul W. Praylo | 47 | Senior Vice President and Chief Operating Officer | | Robert W. Henley | 52 | President of NVRM | | Eugene J. Bredow | 49 | Senior Vice President and Chief Administrative Officer | - Other information required by this item is incorporated by reference from the company's Proxy Statement, expected to be filed by April 30, 2019[226](index=226&type=chunk) [Executive Compensation](index=39&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's Proxy Statement - This item is incorporated by reference from the company's Proxy Statement[227](index=227&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=39&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section details securities authorized for issuance under equity compensation plans and incorporates other ownership information by reference Equity Compensation Plan Information (as of Dec 31, 2018) | Plan Category | Securities to be issued upon exercise | Weighted-average exercise price | Securities remaining for future issuance | | :--- | :--- | :--- | :--- | | **Approved by security holders** | 1,007,378 | $1,796.52 | 257,485 | | **Not approved by security holders** | 62,634 | $703.00 | — | | **Total** | **1,070,012** | **$1,732.51** | **257,485** | [Certain Relationships and Related Transactions, and Director Independence](index=39&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's Proxy Statement - This item is incorporated by reference from the company's Proxy Statement[231](index=231&type=chunk) [Principal Accountant Fees and Services](index=40&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from the company's Proxy Statement - This item is incorporated by reference from the company's Proxy Statement[232](index=232&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=41&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the documents filed as part of the Form 10-K report, including Consolidated Financial Statements and various exhibits - The documents filed as part of this report include NVR, Inc.'s Consolidated Financial Statements and a list of exhibits[234](index=234&type=chunk) Financial Statements and Notes [Consolidated Financial Statements](index=51&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements present NVR, Inc.'s financial position, results of operations, and cash flows for the three-year period ended December 31, 2018 Consolidated Balance Sheet Highlights (as of Dec 31, 2018) | (in thousands) | Amount | | :--- | :--- | | **Total Assets** | $3,165,933 | | Homebuilding Inventory | $1,253,110 | | Senior Notes | $597,681 | | **Total Liabilities** | $1,357,371 | | **Total Shareholders' Equity** | $1,808,562 | Consolidated Income Statement Highlights (Year Ended Dec 31, 2018) | (in thousands) | Amount | | :--- | :--- | | **Homebuilding Revenues** | $7,004,304 | | **Homebuilding Income** | $871,106 | | **Mortgage Banking Income** | $88,626 | | **Income Before Taxes** | $959,732 | | **Net Income** | $797,197 | [Notes to Consolidated Financial Statements](index=56&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on significant accounting policies, segment information, debt, commitments, and the impact of the 2017 Tax Cuts and Jobs Act - The company adopted ASU 2014-09 (Revenue from Contracts with Customers) on January 1, 2018, using the modified retrospective method, which did not materially change the timing of revenue recognition at settlement[306](index=306&type=chunk)[307](index=307&type=chunk) - The company does not consolidate the development entities from which it purchases lots, as it lacks the power to direct the activities that most significantly impact the developers' economic performance[342](index=342&type=chunk) - The effective tax rate was **16.94% in 2018**, down from **36.53% in 2017**, primarily due to the reduction in the federal statutory rate from 35% to 21% following the Tax Cuts and Jobs Act of 2017 and the recognition of excess tax benefits from stock option exercises[157](index=157&type=chunk)[377](index=377&type=chunk) - As of December 31, 2018, the company had approximately **$302 million** in total unrecognized compensation cost related to outstanding stock options and RSUs, to be recognized over a weighted-average period of **2.6 years**[393](index=393&type=chunk)