NVR (NYSE:NVR) early Tuesday reported a profit of $36.5 million, or $6.12 per diluted share, for its fiscal third quarter ended Sept. 30.
Revenues for the quarter fell 27% to $1.29 billion as deliveries decreased to 2,750 units, down 21% from the same quarter in 2007. New orders decreased 25% to 2,002 units, and the cancellation rate was 24% compared to 27% in the third quarter of 2007 and 19% in the second quarter of 2008. Backlog of homes sold but not settled at the end of the quarter decreased 35% to 4,583 units and 44% on a dollar basis to $1,499,830,000 compared to the same period last year.
Home building revenues totaled $928,265,000, down 27% lower than the year earlier period. Gross profit margins decreased to 13.2% from 14.4% for the same period in 2007. Gross profit margins were impacted by land deposit impairments of approximately $43,000,000, 461 basis points of revenue, in the 2008 third quarter, and approximately $97,000,000, 760 basis points of revenue, in the year ago period. Gross profit margins excluding the land deposit impairments were 17.8% in the 2008 third quarter compared to 22.0% for the same period in 2007.
The average settlement price fell 7.6% to $337,100; the average backlog price fell 9% to $343,500. Average new order prices fell 8.2% to $330,100.
The community count fell from 506 at the end of last year's third quarter to 426 this year, and lots controlled at the end of the quarter fell from 79,700 last year to 58,300 this year.
"Operating unit activity and financial performance are being negatively impacted by high levels of new and existing home inventories, affordability issues, a tight mortgage lending environment and declining homebuyer confidence," the Reston, Va.-based company said in its earnings release.
NVR's mortgage unit closed loan production of $610,313,000 for the three months ended September 30, 2008 was 23% lower than the same period last year. Operating income for the mortgage banking operations during the third quarter of 2008 decreased 76% to $4,072,000, when compared to $16,814,000 reported for the same period of 2007.
Among other metrics, the company's SG&A increased from $54.9 million in last year's third quarter to $66.8 million this year. It ended the quarter with $963.3 million in home building cash.
For the nine months ended September 30, 2008, consolidated revenues were $2,782,865,000, 25% lower than the $3,701,945,000 reported for the same period of 2007. Net income for the nine months ended September 30, 2008 was $131,349,000, a decrease of 51% when compared to the nine months ended September 30, 2007. Diluted earnings per share for the nine months ended September 30, 2008 was $22.21, a decrease of 47% from $42.25 per diluted share for the comparable period of 2007.