NVR, Inc. (NYSE:NVR), Reston, Va., on Wednesday morning reported a net profit of $41.4 million ($6.79 per diluted share) for the second quarter ended June 30 on a decline in closings and revenues and an increase in new orders. Shares of NVR opened higher on the news and were trading up nearly 5% at $581 by mid-morning.
The company's merchant builder strategy again paid off. There were no impairments or write-downs for the quarter, but instead the company booked$4.5 million in recovery of land deposits it previously thought uncollectable. It was the company's second profitable quarter following a loss of $30.5 million in last year's fourth quarter.
Still, profit was down 19% from the second quarter of 2008, itself down 43% from the same quarter in 2007. Revenues were down 35% to $625.4 million as closings fell 26% to 2,048 homes. Home-building revenues were down 35% to$612.4 million, but gross profit margins increased to 19.3% from 17.9% for the same period in 2008. SG&A was down to $54.6 million from $89.9 million last second quarter.
New orders, however, were up 2% from last year's second quarter to 2,728, and the cancellation rate fell to 14% from 19% in the second quarter of 2008 and 15% in this year's first quarter.
Backlog, compared to last year's second quarter, was down 16% to 4,497 units, a drop of 27% in dollar value to $1.332 billion. The average backlog price was down to $296,200 from $341,500 at the same time last year.
NVR's community count was down to 356 from 435 at the end of last year's second quarter. Lots controlled were down to 44,000 from 60,500 last July.
In the company's mortgage baking unit, operating income decreased 3% to $6,957,000 as closed loan production slid 18% to $487.6 million.
NVR ended the quarter with cash, cash equivalents and marketable securities totaling $1.24 billion. Term debt and senior notes fell to $137.7 million from $165.8 million at yearend 2008.
The increase in new orders came primarily in the company's Mid-Atlantic regions, comprising Virginia, West Virginia, Maryland and Delaware, which saw an increase of nearly 6% to 1,421 homes. The Northeast division, Eastern Pennsylvania and New Jersey, was up marginally to 246 orders; the Mid-East, Western Pennsylvania, Kentucky, New York and Ohio, was up slightly more than 2% to 746 units; the South East, North Carolina, South Carolina and Tennessee, was down 13.2% to 315.
The average new-order price was down to $294,800 from $316,400 at the same time last year.