NVR(NVR) - 2025 Q2 - Quarterly Results

Overall Financial Performance NVR, Inc. experienced a decline in net income and diluted EPS for Q2 and YTD 2025, despite relatively stable or slightly increased revenues Second Quarter 2025 Consolidated Results NVR, Inc. reported a decrease in net income and diluted earnings per share for the second quarter of 2025 compared to the prior year, while consolidated revenues remained relatively flat Second Quarter 2025 Consolidated Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Net Income | $333.7 Million | $400.9 Million | -17% | | Diluted EPS | $108.54 | $120.69 | -10% | | Consolidated Revenues | $2.60 Billion | $2.61 Billion | -0.4% | Six Months Ended June 30, 2025 Consolidated Results For the first six months of 2025, NVR, Inc. experienced a slight increase in consolidated revenues but a notable decrease in net income and diluted earnings per share compared to the same period in 2024 Six Months Ended June 30, 2025 Consolidated Financial Metrics | Metric | YTD 2025 | YTD 2024 | Change (%) | | :----------------------- | :--------- | :--------- | :--------- | | Consolidated Revenues | $5.00 Billion | $4.95 Billion | +1% | | Net Income | $633.3 Million | $795.2 Million | -20% | | Diluted EPS | $203.20 | $237.05 | -14% | Segment Performance Analysis This section analyzes the performance of NVR, Inc.'s homebuilding and mortgage banking segments, highlighting key operational and financial trends Homebuilding Segment The homebuilding segment saw a decrease in new orders and settlements, with backlog also declining. Revenues remained flat, but gross profit margin decreased due to higher costs and pricing pressures Homebuilding Operational Metrics Key operational metrics for the homebuilding segment show declines in new orders, settlements, and backlog, alongside an increased cancellation rate Homebuilding Operational Metrics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | New Orders (units) | 5,379 | 6,067 | -11% | | Avg. Sales Price (New Orders) | $458,100 | $458,100 | Flat | | Cancellation Rate | 17% | 13% | +4 percentage points | | Settlements (units) | 5,475 | 5,659 | -3% | | Avg. Settlement Price | $465,400 | $450,200 | +3% | | Backlog (units) | 10,069 | 11,597 | -13% | | Backlog (dollar) | $4.75 Billion | $5.45 Billion | -13% | Homebuilding Financial Performance Financial performance for the homebuilding segment indicates flat revenues but a notable decrease in gross profit margin and income before tax Homebuilding Financial Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Homebuilding Revenues | $2.55 Billion | $2.55 Billion | Flat | | Gross Profit Margin | 21.5% | 23.6% | -2.1 percentage points | | Income Before Tax | $417.5 Million | $488.5 Million | -15% | - Gross profit margin was negatively impacted by higher lot costs, pricing pressure due to affordability challenges, and contract land deposit impairments totaling approximately $13.2 million[5] Mortgage Banking Segment The mortgage banking segment reported an increase in closed loan production but a significant decrease in income before tax, primarily due to lower secondary marketing gains Mortgage Banking Segment Performance (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :---------- | :---------- | :--------- | | Mortgage Closed Loan Production | $1.56 Billion | $1.53 Billion | +2% | | Income Before Tax | $29.6 Million | $45.0 Million | -34% | - The decrease in income before tax was primarily attributable to a decrease in secondary marketing gains on sales of loans[6] Effective Tax Rate This section details the changes in NVR, Inc.'s effective tax rate for the three and six months ended June 30, 2025 Effective Tax Rate Analysis NVR's effective tax rate increased for both the three and six-month periods ended June 30, 2025, mainly due to a lower income tax benefit from stock option exercises Effective Tax Rate Comparison | Period | 2025 Tax Rate | 2024 Tax Rate | Change (percentage points) | | :----------------------- | :------------ | :------------ | :------------ | | Three Months Ended June 30 | 25.4% | 24.9% | +0.5 | | Six Months Ended June 30 | 25.4% | 20.8% | +4.6 | - The increase in the effective tax rate is primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled $3.5 million (Q2 2025) and $6.2 million (YTD 2025), compared to $6.8 million (Q2 2024) and $50.6 million (YTD 2024)[7] Company Overview This section provides a brief overview of NVR, Inc.'s business structure, operating segments, and geographical presence About NVR NVR, Inc. operates in two primary business segments: homebuilding and mortgage banking, serving multiple metropolitan areas across sixteen states and Washington, D.C. under various trade names - NVR, Inc. operates in two business segments: homebuilding and mortgage banking[8] - The homebuilding segment sells and builds homes under the Ryan Homes, NVHomes, and Heartland Homes trade names[8] - Homebuilding operations span thirty-six metropolitan areas in sixteen states and Washington, D.C.[8] Forward-Looking Statements & Risk Factors This section addresses the inherent uncertainties in forward-looking statements and outlines key risk factors that could impact NVR, Inc.'s future performance Forward-Looking Statements Disclaimer This section outlines the nature of forward-looking statements within the release, emphasizing that actual results may differ materially due to various known and unknown risks and uncertainties - Statements in the release may constitute 'forward-looking statements' under the Private Securities Litigation Reform Act of 1995 and other securities acts[9] - Forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied[9] - Risk factors include general economic conditions, interest rate changes, financing access, increased regulation in mortgage banking, competition, availability and cost of land/materials, labor shortages, and governmental regulation[9] Consolidated Financial Statements This section presents NVR, Inc.'s unaudited consolidated statements of income and balance sheets for the specified periods Consolidated Statements of Income This section provides the unaudited consolidated statements of income for the three and six months ended June 30, 2025 and 2024, detailing revenues, costs, and income by segment Consolidated Statements of Income (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Homebuilding: | | | | | | Revenues | $2,548,267 | $2,547,891 | $4,898,712 | $4,834,068 | | Other income | 25,088 | 36,184 | 51,800 | 77,050 | | Cost of sales | (1,999,983) | (1,947,616) | (3,835,358) | (3,673,829) | | Selling, general and administrative | (149,170) | (141,213) | (314,287) | (293,716) | | Interest expense | (6,685) | (6,710) | (13,866) | (13,359) | | Homebuilding income | 417,517 | 488,536 | 787,001 | 930,214 | | Mortgage Banking: | | | | | | Mortgage banking fees | 50,547 | 64,566 | 103,134 | 111,852 | | Interest income | 4,493 | 4,672 | 8,299 | 8,764 | | Other income | 1,301 | 1,333 | 2,394 | 2,504 | | General and administrative | (26,425) | (25,351) | (51,118) | (48,709) | | Interest expense | (300) | (188) | (573) | (365) | | Mortgage banking income | 29,616 | 45,032 | 62,136 | 74,046 | | Income before taxes | 447,133 | 533,568 | 849,137 | 1,004,260 | | Income tax expense | (113,396) | (132,664) | (215,824) | (209,087) | | Net income | $333,737 | $400,904 | $633,313 | $795,173 | | Basic earnings per share | $114.52 | $128.21 | $214.78 | $251.94 | | Diluted earnings per share | $108.54 | $120.69 | $203.20 | $237.05 | | Basic weighted average shares outstanding | 2,914 | 3,127 | 2,949 | 3,156 | | Diluted weighted average shares outstanding | 3,075 | 3,322 | 3,117 | 3,355 | Consolidated Balance Sheets This section presents the unaudited consolidated balance sheets as of June 30, 2025, and December 31, 2024, detailing assets, liabilities, and shareholders' equity for both homebuilding and mortgage banking segments Consolidated Balance Sheets (in thousands, except share and per share data) | (in thousands, except share and per share data) | June 30, 2025 | December 31, 2024 | | :---------------------------------------------- | :------------ | :---------------- | | ASSETS | | | | Homebuilding: | | | | Cash and cash equivalents | $1,726,865 | $2,561,339 | | Restricted cash | 53,240 | 42,172 | | Receivables | 41,496 | 32,622 | | Inventory: | | | | Lots and housing units, covered under sales agreements with customers | 1,797,104 | 1,727,243 | | Unsold lots and housing units | 304,743 | 237,177 | | Land under development | 39,450 | 65,394 | | Building materials and other | 28,743 | 28,893 | | Total Inventory | 2,170,040 | 2,058,707 | | Contract land deposits, net | 837,845 | 726,675 | | Property, plant and equipment, net | 100,280 | 95,619 | | Operating lease right-of-use assets | 86,206 | 78,340 | | Reorganization value in excess of amounts allocable to identifiable assets, net | 41,580 | 41,580 | | Other assets | 295,858 | 251,178 | | Total Homebuilding Assets | 5,353,410 | 5,888,232 | | Mortgage Banking: | | |\ | Cash and cash equivalents | 39,307 | 49,636 | | Restricted cash | 10,513 | 11,520 | | Mortgage loans held for sale, net | 415,974 | 355,209 | | Property and equipment, net | 8,053 | 7,373 | | Operating lease right-of-use assets | 24,515 | 23,482 | | Reorganization value in excess of amounts allocable to identifiable assets, net | 7,347 | 7,347 | | Other assets | 80,220 | 38,189 | | Total Mortgage Banking Assets | 585,929 | 492,756 | | Total assets | $5,939,339 | $6,380,988 | | LIABILITIES AND SHAREHOLDERS' EQUITY | | | | Homebuilding: | | | | Accounts payable | $367,929 | $332,772 | | Accrued expenses and other liabilities | 333,456 | 441,300 | | Customer deposits | 295,145 | 322,926 | | Operating lease liabilities | 92,160 | 83,939 | | Senior notes | 910,145 | 911,118 | | Total Homebuilding Liabilities | 1,998,835 | 2,092,055 | | Mortgage Banking: | | | | Accounts payable and other liabilities | 68,785 | 53,433 | | Operating lease liabilities | 26,588 | 25,428 | | Total Mortgage Banking Liabilities | 95,373 | 78,861 | | Total liabilities | 2,094,208 | 2,170,916 | | Commitments and contingencies | | | | Shareholders' equity: | | | | Common stock, $0.01 par value | 206 | 206 | | Additional paid-in capital | 3,085,904 | 3,031,637 | | Deferred compensation trust | (16,710) | (16,710) | | Deferred compensation liability | 16,710 | 16,710 | | Retained earnings | 15,680,266 | 15,046,953 | | Less treasury stock at cost | (14,921,245) | (13,868,724) | | Total shareholders' equity | 3,845,131 | 4,210,072 | | Total liabilities and shareholders' equity | $5,939,339 | $6,380,988 | Supplemental Operating Data This section provides detailed supplemental operating data, including regional homebuilding activity and key company-wide metrics Homebuilding Operating Activity by Region This section provides a regional breakdown of key homebuilding operational metrics, including settlements, backlog, and new orders, for the three and six months ended June 30, 2025 and 2024 Settlements (Three Months Ended June 30) | Region | 2025 Units | 2025 Avg. Price ($K) | 2024 Units | 2024 Avg. Price ($K) | | :------------- | :--------- | :------------------- | :--------- | :------------------- | | Mid Atlantic | 2,101 | 537.2 | 2,199 | 515.5 | | North East | 474 | 651.7 | 487 | 589.8 | | Mid East | 1,082 | 415.8 | 1,075 | 403.7 | | South East | 1,818 | 363.3 | 1,898 | 365.1 | | Total | 5,475 | 465.4 | 5,659 | 450.2 | Settlements (Six Months Ended June 30) | Region | 2025 Units | 2025 Avg. Price ($K) | 2024 Units | 2024 Avg. Price ($K) | | :------------- | :--------- | :------------------- | :--------- | :------------------- | | Mid Atlantic | 4,151 | 532.6 | 4,165 | 516.5 | | North East | 945 | 632.5 | 950 | 571.5 | | Mid East | 2,095 | 411.6 | 2,124 | 400.6 | | South East | 3,417 | 359.2 | 3,509 | 367.3 | | Total | 10,608 | 461.8 | 10,748 | 449.7 | Backlog (As of June 30) | Region | 2025 Units | 2025 Avg. Price ($K) | 2024 Units | 2024 Avg. Price ($K) | | :------------- | :--------- | :------------------- | :--------- | :------------------- | | Mid Atlantic | 3,713 | 532.6 | 4,508 | 531.4 | | North East | 911 | 698.4 | 1,083 | 643.3 | | Mid East | 2,120 | 426.8 | 2,377 | 416.6 | | South East | 3,325 | 371.6 | 3,629 | 378.0 | | Total | 10,069 | 472.1 | 11,597 | 470.3 | New Orders, Net of Cancellations (Three Months Ended June 30) | Region | 2025 Units | 2025 Avg. Price ($K) | 2024 Units | 2024 Avg. Price ($K) | | :------------- | :--------- | :------------------- | :--------- | :------------------- | | Mid Atlantic | 1,930 | 531.3 | 2,297 | 536.2 | | North East | 424 | 655.3 | 478 | 623.4 | | Mid East | 1,072 | 424.2 | 1,262 | 403.7 | | South East | 1,953 | 361.7 | 2,030 | 366.7 | | Total | 5,379 | 458.1 | 6,067 | 458.8 | New Orders, Net of Cancellations (Six Months Ended June 30) | Region | 2025 Units | 2025 Avg. Price ($K) | 2024 Units | 2024 Avg. Price ($K) | | :------------- | :--------- | :------------------- | :--------- | :------------------- | | Mid Atlantic | 3,796 | 523.0 | 4,579 | 525.9 | | North East | 801 | 674.0 | 1,005 | 617.7 | | Mid East | 2,170 | 422.0 | 2,525 | 406.8 | | South East | 3,957 | 359.0 | 4,007 | 368.3 | | Total | 10,724 | 453.3 | 12,116 | 456.6 | Key Operating Metrics & Stock Information This section provides additional operational data, including average active communities, new order cancellation rates, lots controlled, mortgage banking loan closings and capture rates, and common stock information Average Active Communities | Region | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :------------- | :------ | :------ | :------- | :------- | | Mid Atlantic | 120 | 153 | 120 | 155 |\ | North East | 26 | 31 | 25 | 33 | | Mid East | 94 | 101 | 93 | 100 | | South East | 186 | 148 | 175 | 142 | | Total | 426 | 433 | 413 | 430 | Homebuilding Data | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------------- | :------ | :------ | :------- | :------- | | New order cancellation rate | 16.5% | 12.9% | 16.0% | 13.0% | | Lots controlled at end of period | N/A | N/A | 171,400 | 149,700 | Mortgage Banking Data | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :---------------- | :---------- | :---------- | :----------- | :----------- | | Loan closings | $1,555,280 | $1,530,081 | $2,988,201 | $2,908,090 | | Capture rate | 87% | 86% | 87% | 86% | Common Stock Information | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :-------------------------- | :------ | :------ | :--------- | :--------- | | Shares outstanding at end of period | N/A | N/A | 2,883,215 | 3,090,266 | | Number of shares repurchased | 65,834 | 83,168 | 142,954 | 150,026 | | Aggregate cost of shares repurchased | $471,413 | $638,976 | $1,054,807 | $1,135,912 |