2007 Performance Final Grade[Download PDF]

Individuals who survive a brush with the grave almost always come away from it with an eerie, compelling story to share. But only if they happen to be talkers.

And if they happen not to be the chatty type? You often can still tell them apart in a crowd. They wear the preternatural experience of "the bottom line" in their physical bearing, their vantage point of focus, the calm comfort of being in their own skin, their steely resolve, and their painfully earned air of transcendence. They behave differently because life, and its very real near-end, has more than marked them. What there is to lose–how to win and how not to win–seems to have different parameters and operates by different rules than for the rest of us. The stakes, the odds, the ethics?the entire game they're playing is not the same because triumph and loss themselves are redefined.

Illustration By Robin Eley Such is true of NVR. A survivor and a defier of financial oblivion amidst widespread hard times for builders two decades ago, NVR managed to deal with being written off as a goner who'd committed the cardinal sin in home building of going too long on land. It has kept quiet about most everything ever since, except for dutiful quarterly reports of how its stock rose from a near flatline of $0.22 a share in 1992 to a bionic high of $938 the week of July 25, 2005, based on best-of-class performance in its operations year in and year out for going on two decades. On Chapter 11 financial life support for a little over a year?from April 6, 1992, to September 30, 1993?NVR today stands as the lone profitable public enterprise in the dark mid-winter of home building's discontent.

It moved up two notches, from No. 9 to No. 7 on the Builder 100 list last year, and could easily hopscotch another public company or two when 2008 closings and revenue are tallied up next spring.

But even as a $500-a-share poster child for home builders that have done almost everything right up to today, it's no time to brag or say you've got the riddle of housing's worst downturn since the 1930s solved. Far be it for anybody at NVR to jinx whatever it has going for it by saying it's risen above the rest. The company, its leadership, and its management ranks would rather just let its actions speak volumes.

A home building executive close to NVR business strategy says simply, "We're not through this, and we won't know whether we've made it to the other side for a while yet. It's probably going to be the second half of 2010 before we see profitability return for home builders. For all of those people who said with such conviction, 'We're no longer in a cyclical business,' things are looking pretty tough right now."

What Next?

But just as many of its peers scramble to make themselves more NVR-like (see page 40), NVR recently has begun making no uncertain noise about becoming more. It swooped into familiar turf in Columbus, Ohio, picking up dozens of Beazer Homes' lots for a song. In early September, it advanced, then withdrew, an offer for $325 million in new capital through senior convertible notes, judging that then was not the moment to raise capital efficiently.

But what is more NVR? Is it more of the same: houses sold for more of a profit, with less competition in the 40-or-so markets it currently marks as its wheelhouse–a classic market share play? Or is it differnet, perhaps the export of NVR's formula beyond its current 12-state comfort zone into an entirely new market such as Florida?

NVR isn't about to broadcast its plans. But even amid the furor of global financial Armageddon, a credit deep-freeze, an equity markets meltdown, and political desperation to find fixes that might ease a long and deep recession, the smartest players are sniffing out where they might strike when the right moment finally arrives. NVR's re-emergence in Columbus, its fleeting plan to raise money in the equity markets, and its reconnaissance missions in states where it currently doesn't operate have the faint but familiar scent of an acquirer on the prowl. Time will tell. NVR won't.

Reston, Va.-based NVR nearly perished in one of home building's down cycles 17 years ago. Not much else is known about NVR by virtue of what the company or its tight-lipped executives say about it. It's as if NVR's senior management flaunts the glad-handing pageantry and Wall Street-wooing so typical of public disclosure. About the only bone investors get is, "Here are the latest numbers; the numbers are good, and now it's time to get back to work so that we can come back in a quarter an talk about good numbers again. Goodbye."