NVR, Inc. (NYSE: NVR) on Tuesday morning reported net income of $67.3 million ($11.72 per diluted share) for the fourth quarter of 2007, a 50% drop from the same period last year but a profit nonetheless. For the year, NVR posted net income of $333.9 million ($54.14 per diluted share), down 43% from 2006.
The fourth-quarter results included land deposit impairments of approximately $97 million; the full-year results included impairments of approximately $261 million.
Revenues for the quarter totaled $1.4 billion, a 12% decrease from $1.6 billion for the comparable 2006 quarter. For all of 2007, revenues totaled$5.1 billion, a 16% decrease from the $6.1 billion in 2006.
During the fourth quarter, new orders fell 35% to 1,948 units. The company said new order activity slowed as the quarter progressed and activity has remained weak during January. The cancellation rate in the fourth quarter rose to 32% from 20% in the prior year's fourth quarter and 27% in the third quarter of 2007. Settlements decreased in the fourth quarter of 2007 to3,874 units, 3% less than the same period of 2006.
The average sales price of new orders in the fourth quarter of 2007 declined 13% from the fourth quarter of 2006, from $366,700 to $318,400, with the Mid-Atlantic region contributing heavily with a 17% decline. The average settlement price also declined for the quarter, from $399,500 in 2006 to $362,500 in 2007.
Home building revenues for the quarter were $1.4 billion, a 12% decrease from the year-ago quarter, with pre-tax homebuilding income at $92.6 billion, down 54% from fourth quarter, 2006. Gross profit margins decreased to 12.9% for the quarter from 19.0% for the same period in 2006.
New orders for the year totaled 12,270 units, a 7% decrease from 2006. Home settlements for the year decreased 11% to 13,513, also on a year-over-year basis. Home building revenues for 2007 totaled $5.0 billion, down 16% from 2006, and pre-tax home building income decreased to $485.6 billion, down 46% from the prior year. Gross profit margins decreased to 16.3% in 2007 from 22.1% in 2006. NVR cut its backlog 19% to 5,145 units at year's end with a dollar value of $1.9 billion, down 27% from a year earlier.
For the quarter, NVR cut its community count from 551 in 2006 to 472 in 2007. At year end, NVR had 67,600 controlled lots on its books, down from 88,500 at the end of 2006.
NVR's mortgage unit reported closed loan production of $867.1 million for the quarter, 19% lower than the same period last year. Pre-tax income from mortgage banking operations fell 14% to $15.3 million during the quarter. For the year, pre-tax income from the mortgage banking segment fell 17% to$53.9 million as mortgage production dropped 18% to $3.2 billion. The loan capture rate was 83% for the quarter, down from 87% in the same quarter of 2006, and 85% for the year, down from 86% in 2006.