N.V.R. Inc., Reston, Va. (NYSE:NVR) on Thursday reported net income for its fourth quarter ended December 31, 2010 of $58.7 million, or $9.96 per diluted share, 3% below the profit reported for the comparable quarter in 2009 but 4% above in terms of earnings per share. Analysts were expecting a profit of $7.38 per share.
Consolidated revenues for the fourth quarter of 2010 totaled $811 million, a 9% increase from $745.8 million for the comparable 2009 quarter. The fourth quarter 2010 gross profit margin results and pre-tax income were negatively impacted by a $4,915,000 land deposit impairment charge.
Home building revenues for the quarter totaled $794.5 million, up 9% from the year earlier period. Closings were up 3% to 2,639 units, and the average closing price moved up to $301,000 from $286,200 in fourth quarter, 2009.
New orders in the fourth quarter of 2010 fell 12% to 1,765 units, but the average new order price rose to $321,700 from $297,800. The cancellation rate rose to 18% from 15% in the fourth quarter of 2009 but remained flat with the previous quarter.
Backlog at quarter's end decreased 17% to 2,916 units with a value of $958.3 million, a drop of 11% compared to the prior-year-quarter end.
Gross profit margins decreased to 17.6% in quarter compared to 18.9% for the same period in 2009. SG&A was flat with the 2009 quarter at roughly $62 million.
The company ended the quarter and the fiscal year with $1.19 billion in cash and equivalents, down from $1.25 billion at the close of the prior fiscal year. The balance listed under the "senior notes" line on the company's yearend balance sheet was zero. There was $1.7 million in "other term debt"and $7.6 million in "non-recourse debt related to consolidated variable interest entities."
Net income for the year ended December 31, 2010 was $206,005,000, compared to $192,180,000 for the year ended December 31, 2009. Diluted earnings per share for the year ended December 31, 2010 were $33.42, an increase of 7% from $31.26 for the comparable period of 2009.
New orders for the 2010 fiscal year totaled 9,415 units and were flat compared to the 9,409 units reported for 2009. Home settlements for 2010 increased 11% to 10,030 units when compared to 9,042 units settled in 2009.
Home building revenues for 2010 totaled $2,980,758,000, 11% higher than 2009. Home building gross profit margins decreased to 18.2% in 2010 from 18.5% in 2009.
Managment, as is the custom at N.V.R., provided no comment on the results.
Carl Reichardt, home-building analyst at Wells Fargo Securities, put out his take in a note to investors, stating, "1) Orders were below our estimate but outperformed peers recently reporting. We believe tight mortgage underwriting standards continue to be headwind for orders. 2) While NVR's mortgage business increased loan loss reserves during the quarter by $4MM, we do not believe the company had any new putback requests during the quarter, and instead took more conservative estimates based on prior activity. 3) Average closing price increased by 5% yr/yr which we attribute to both geographical mix as well as fewer first time home-buyers as Q4:09 saw an increase in tax-credit driven activity among first-time buyers. 4) Margins remain above peers, particularly on the cost side, but NVR expects to see labor and material pressure going forward. We concur with this view, but do not believe other builders are expecting costs to rise as such. Given NVR's efficient manufacturing and tight cost controls, we believe the company is better positioned than peers to handle any increases. 5) We expect share buybacks to continue for NVR, enabling the company to grow EPS even in a depressed macro-environment."