NVR (NYSE: NVR) on Thursday morning announced a net loss of $30.5 million (-$5.54 per diluted share) for its fourth quarter ended Dec. 31, 2008. The loss included asset impairments of approximately $121.5 million.
For the year, NVR made a profit of $100.9 million, 70% below 2007 as revenues fell 28% to $3.7 billion.
New orders in the fourth quarter of 2008 decreased 30% to 1,357 units. The cancellation rate in the quarter ended Dec. 31, 2008 was 30% compared to 32% in the fourth quarter of 2007 and 24% in the third quarter of 2008. The average new order price fell to $296,000 from $318,400 a year earlier.
Closings decreased in the fourth quarter of 2008 to 2,776 units, 28% less than the same period of 2007. The average settlement price fell to $323,600 from $362,500.
Homes in backlog at yearend totaled 1,776, down 34.8% from the end of 2007, with an aggregate value of $316.9 million, down 14.9% from a year earlier.
NVR cut its community count to 397 from 472 a year ago and reduced its controlled lots from 67,600 at yearend 2007 to 45,000 at the end of 2008.
Home building revenues for the quarter ended Dec. 31, 2008 totaled $899.5 million, 36% lower than the year earlier period. Gross profit margins were 2.6% in the 2008 fourth quarter compared to 12.9% for the same period in 2007. Loss before tax from the home building segment totaled $56.9 million in the 2008 fourth quarter compared to income before tax of $92.6 million in the 2007 fourth quarter.
The home building results for the 2008 fourth quarter included goodwill impairments of $11.7 million and approximately $11 million of expenses related to employee severance and office closure costs as the company continued to downsize its operations in response to market conditions. In its earnings statement, the company said, "Operating unit activity and financial performance continue to be negatively impacted by high levels of new- and existing-home inventories, affordability issues, a tight lending environment, and low home buyer confidence."
For the year, new orders totaled 8,760 units, down 29% from 2007; settlements decreased 21% to 10,741; and home building revenues fell 28% to $3.6 billion.
The company also reported that Dwight C. Schar, the executive chairman, will relinquish the title of chief executive but will continue to serve as chairman of the board. The company said the move continues the leadership transition that separated the roles of chairman and CEO to strengthen the operating and governance structure of the company. Paul Saville is NVR's president and CEO.
William Gloede is a senior editor with BIG BUILDER magazine.