NVR Q1 Profit Down 32%, Shares Fall - Update

(RTTNews) - Homebuilding and mortgage banking company NVR, Inc. (NVR) Monday reported a 32 percent decline in first-quarter profit, reflecting a sharp fall in mortgage banking income hurt by a competitive mortgage lending market. Homebuilding revenues and margins, however, increased from last year. The shares are down about 5 percent in the morning trade.

For the first quarter, the company's net income decreased to $23.85 million or $5.16 per share from $35.04 million or $6.84 per share in the previous year.

On average, 10 analysts polled by Thomson Reuters expected earnings of $10.02 per share. Analysts estimates typically exclude special items.

Income tax expense for the quarter was negatively impacted by $6.88 million due to the reversal of certain previously recognized tax deductions, the firm said.

Consolidated revenues grew 5 percent to $811.31 million from $770.26 million for the comparable quarter in 2013. Analysts expected revenues of $866.79 million.

Homebuilding revenues increased 6 percent to $799.19 million. Gross profit margins rose to 18 percent from 16.9 percent a year earlier.

New orders in the first quarter decreased 5 percent to 3,325 units, compared to 3,510 units in the same quarter last year. Cancellation rate was 12 percent compared to 13 percent in the year-ago quarter. Settlements declined 3 percent to 2,211 units.

The company's backlog of homes sold but not settled as of March 31, 2014 decreased on a unit basis by 3 percent to 6,059 units, but increased on a dollar basis by 4 percent from last year to $2.27 billion.

In Mortgage Banking operations, quarterly operating income plunged 91 percent to $991 thousand, negatively impacted by a more competitive mortgage lending market, resulting in reduced loan profitability. Mortgage closed loan production of $472.93 million, flat with last year.

In addition, general and administrative expenses in Mortgage Banking were higher due to increased staffing in response to increased mortgage regulations and expected higher loan volume.

NVR is currently trading at $1,063.74, down $52.88 or 4.74 percent.