NVR INC

Previous wording

Results of Operations for the Three Months Ended March 31, 2024 and 2023

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2024 and 2023

Previous wording

Demand for new homes remained solid in the first quarter of 2024 despite continued affordability issues driven by high mortgage interest rates and home prices. New home demand continues to be favorably impacted by a limited supply of homes in the resale market; however, we expect that affordability issues, inflationary pressures, interest rate volatility and the possibility of an economic slowdown may weigh on future demand. We also expect to continue to face cost pressures related to building materials, labor and land costs which will impact profit margins based on our ability to manage these costs while balancing sales pace and home prices. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet and our disciplined lot acquisition strategy.

Current wording

Consistent with the first quarter of 2024, demand for new homes remained solid in the second quarter of 2024 despite continued affordability issues driven by high mortgage interest rates and home prices. New home demand continues to be favorably impacted by a limited supply of homes in the resale market; however, we expect that affordability issues, inflationary pressures, interest rate volatility and economic uncertainty may weigh on future demand. We also expect to continue to face cost pressures related to building materials, labor and land costs which will impact profit margins based on our ability to manage these costs while balancing sales pace and home prices. Although we are unable to predict the extent to which this will impact our operational and financial performance, we believe that we are well positioned to take advantage of opportunities that may arise from future economic and homebuilding market volatility due to the strength of our balance sheet and our disciplined lot acquisition strategy.

Previous wording

In certain specific strategic circumstances, we deviate from our historical lot acquisition strategy and engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development. Once we acquire control of raw ground, we determine whether to sell the raw parcel to a developer and enter into an LPA with the developer to purchase the finished lots or to hire a developer to develop the land on our behalf. While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so. We expect, however, to continue to acquire substantially all our finished lot inventory using LPAs with forfeitable deposits.

Current wording

In certain specific strategic circumstances we engage in joint venture arrangements with land developers or directly acquire raw ground already zoned for its intended use for development. Once we acquire control of raw ground, we determine whether to sell the raw parcel to a developer and enter into an LPA with the developer to purchase the finished lots or to hire a developer to develop the land on our behalf. While joint venture arrangements and direct land development activity are not our preferred method of acquiring finished building lots, we may enter into additional transactions in the future on a limited basis where there exists a compelling strategic or prudent financial reason to do so. We expect, however, to continue to acquire substantially all our finished lot inventory using LPAs with forfeitable deposits.

Previous wording

As of March 31, 2024, we controlled approximately 143,200 lots as described below.

Current wording

As of June 30, 2024, we controlled approximately 149,700 lots as described below.

Previous wording

We controlled approximately 135,800 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $641,300 and $10,000, respectively. Included in the number of controlled lots are approximately 9,700 lots for which we have recorded a contract land deposit impairment reserve of approximately $45,900 as of March 31, 2024.

Current wording

We controlled approximately 142,300 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $673,900 and $10,400, respectively. Included in the number of controlled lots are approximately 9,700 lots for which we have recorded a contract land deposit impairment reserve of approximately $44,600 as of June 30, 2024.

Previous wording

We had an aggregate investment totaling approximately $28,100 in four JVs, expected to produce approximately 5,150 lots. Of the lots to be produced by the JVs, approximately 4,800 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional funding commitments totaling approximately $11,500 to one of the JVs as of March 31, 2024.

Current wording

We had an aggregate investment totaling approximately $27,100 infour JVs, expected to produce approximately 5,150 lots. Of the lots to be produced by the JVs, approximately 4,800 lots were controlled by us and approximately 350 were either under contract with unrelated parties or currently not under contract. We had additional funding commitments totaling approximately $10,600 to one of the JVs as of June 30, 2024.

Previous wording

We owned land with a carrying value of approximately $59,000 that we intend to develop into approximately 2,600 finished lots.

Current wording

We owned land with a carrying value of approximately $61,500 that will be developed into approximately 2,600 finished lots.

Previous wording

In addition, we have certain properties under contract with land owners that are expected to yield approximately 22,400 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. As of March 31, 2024, these properties are controlled with deposits in cash totaling approximately $14,100, of which approximately $3,300 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.

Current wording

In addition, we have certain properties under contract with land owners that are expected to yield approximately 30,400 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. As of June 30, 2024, these properties are controlled with deposits in cash totaling approximately $17,000, of which approximately $4,300 is refundable if certain contractual conditions are not met. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.

Previous wording

Our consolidated revenues for the first quarter of 2024 totaled $2,333,463, a 7% increase from the first quarter of 2023. Net income for the first quarter ended March 31, 2024 was $394,269, or $116.41 per diluted share, increases of 14% and 17% when compared to net income and diluted earnings per share in the first quarter of 2023, respectively. Our homebuilding gross profit margin percentage decreased slightly to 24.5% in the first quarter of 2024 from 24.6% in the first quarter of 2023. New orders, net of cancellations (“New Orders”) increased by 3% in the first quarter of 2024 compared to the first quarter of 2023. The average sales price for New Orders in the first quarter of 2024 was $454.3, an increase of 3% compared to the first quarter of 2023.

Current wording

Our consolidated revenues for the second quarter of 2024 totaled $2,612,457, a 12% increase from the second quarter of 2023. Net income for the second quarter ended June 30, 2024 was $400,904, or $120.69 per diluted share. For the second quarter ended June 30, 2024, net income decreased 1% and diluted earnings per share increased 4% when compared to net income and diluted earnings per share for the second quarter of 2023, respectively. Our homebuilding gross profit margin percentage decreased to 23.6% in the second quarter of 2024 from 24.3% in the second quarter of 2023. New orders, net of cancellations (“New Orders”) increased by 3% in the second quarter of 2024 compared to the second quarter of 2023. The New Order cancellation rate for the second quarter of 2024 increased to 12.9% from 10.9% in the same period in 2023. The average sales price for New Orders in the second quarter of 2024 was $458.8, an increase of 3% compared to the second quarter of 2023.

Previous wording

The number of New Orders and the average sales price of New Orders both increased 3% in the first quarter of 2024 compared to the first quarter of 2023. New Orders were favorably impacted by a 3% increase in the average number of active communities quarter over quarter. The increase in the average sales price of New Orders is primarily attributable to favorable market conditions and a relative shift to higher priced communities in certain of our reporting segments as discussed in the respective segments below.

Current wording

New Orders and the average sales price of New Orders both increased 3% in the second quarter of 2024 compared to the second quarter of 2023. New Orders were favorably impacted by a 2% increase in the average number of active communities quarter over quarter, coupled with favorable market conditions which led to a higher sales absorption rate in the second quarter of 2024. The increase in the average sales price of New Orders is primarily attributable to a relative shift to higher priced communities in certain of our reporting segments as discussed in the respective segments below.

Previous wording

Selling, general and administrative (“SG&A”) expense in the first quarter of 2024 increased by approximately $8,900 compared to the first quarter of 2023, but as a percentage of revenue remained flat quarter over quarter. The increase in SG&A expense was primarily attributable to an increase of approximately $9,100 in personnel costs due primarily to increased headcount quarter over quarter. This increase was offset partially by a decrease of approximately $4,300 in equity-based compensation quarter over quarter due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Current wording

Selling, general and administrative (“SG&A”) expense in the second quarter of 2024 decreased by approximately $7,300 compared to the second quarter of 2023, and as a percentage of revenue decreased to 5.5% from 6.5% quarter over quarter. The decrease in SG&A expense was primarily attributable to a decrease of approximately $6,800 in equity-based compensation quarter over quarter due primarily to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Previous wording

Homebuilding revenues increased 7% in the first quarter of 2024 compared to the same period in 2023, as a result of a 10% increase in the number of units settled offset partially by a 2% decrease in the average settlement price. The increase in the number of units settled was attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023, offset partially by a lower backlog turnover rate quarter over quarter. The decrease in the average settlement price was primarily attributable to a 2% lower average sales price of units in backlog entering 2024 compared to backlog entering 2023. The gross profit margin percentage in the first quarter of 2024 decreased slightly to 24.5%, compared to 24.6% in the first quarter of 2023.

Current wording

Homebuilding revenues increased 9% in the first six months of 2024 compared to the same period in 2023, as a result of an 11% increase in the number of units settled, offset partially by a 1% decrease in the average settlement price year over year. The increase in settlements was attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Gross profit margin percentage in the first six months of 2024 decreased to 24.0% from 24.4% in the first six months of 2023. Gross profit margin was negatively impacted by higher lot and closing costs year over year.

Previous wording

Our backlog represents homes sold but not yet settled with our customers. As of March 31, 2024, our backlog increased on a unit basis by 7% to 11,189 units and on a dollar basis by 9% to $5,218,598 when compared to 10,411 units and $4,792,193, respectively, as of March 31, 2023. The increase in the number of backlog units was primarily attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Backlog dollars were higher primarily due to the increase in backlog units in 2024.

Current wording

Our backlog represents homes sold but not yet settled with our customers. As of June 30, 2024, our backlog increased on a unit basis by 3% to 11,597 units and on a dollar basis by 6% to $5,454,470 when compared to 11,231 units and $5,150,347, respectively, as of June 30, 2023. The increase in the number of backlog units was primarily attributable to a 12% higher backlog unit balance entering 2024 compared to the backlog unit balance entering 2023. Backlog dollars were higher primarily due to the increase in backlog units year over year, coupled with a 3% increase in the average sales price of New Orders for the six month period ended June 30, 2024 compared to the same period in 2023.

Previous wording

Our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Calculated as the total of all cancellations during the period as a percentage of gross sales during that same period, our first quarter cancellation rate was approximately 13% and 14% for 2024 and 2023, respectively. During the most recent four quarters, approximately 4% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2024 or future years. Other than those units that are cancelled, we expect to settle substantially all of our March 31, 2024 backlog within the next twelve months.

Current wording

Our backlog may be impacted by customer cancellations for various reasons that are beyond our control, such as failure to obtain mortgage financing, inability to sell an existing home, job loss, or a variety of other reasons. In any period, a portion of the cancellations that we experience are related to new sales that occurred during the same period, and a portion are related to sales that occurred in prior periods and therefore appeared in the opening backlog for the current period. Calculated as the total of all cancellations during the period as a percentage of gross sales during that same period, our cancellation rate was approximately 13% and 12% in the first six months of 2024 and 2023, respectively. During the most recent four quarters, approximately 4% of a reporting quarter’s opening backlog cancelled during the fiscal quarter. We can provide no assurance that our historical cancellation rates are indicative of the actual cancellation rate that may occur during the remainder of 2024 or future years. Other than those units that are cancelled, we expect to settle substantially all of our June 30, 2024 backlog within the next twelve months.

Previous wording

The backlog turnover rate is impacted by various factors, including, but not limited to, changes in New Order activity, internal production capacity, external subcontractor capacity, building material availability and other external factors over which we do not exercise control.

Current wording

The backlog turnover rate is impacted by various factors, including, but not limited to, changes in New Order activity, internal production capacity, external subcontractor capacity, building material supply chain disruptions and other external factors over which we do not exercise control.

Previous wording

We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve as of March 31, 2024 and December 31, 2023 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $10,000 and $7,700 as of March 31, 2024 and December 31, 2023, respectively, of letters of credit issued as deposits in lieu of cash.

Current wording

We record charges on contract land deposits when we determine that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are generally charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit. We evaluate our entire net contract land deposit portfolio for impairment each quarter. For presentation purposes below, the contract land deposit reserve as of June 30, 2024 and December 31, 2023 has been allocated to the respective year’s reportable segments to show contract land deposits on a net basis. The net contract land deposit balances below also include approximately $10,400 and $7,700 as of June 30, 2024 and December 31, 2023, respectively, of letters of credit issued as deposits in lieu of cash.

Previous wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three months ended March 31, 2024 and 2023.

Current wording

The following tables summarize certain homebuilding operating activity by reportable segment for the three and six months ended June 30, 2024 and 2023.

Previous wording

The Mid Atlantic segment had an approximate $30,900, or 19%, increase in segment profit in the first quarter of 2024 compared to the first quarter of 2023. The increase in segment profit was driven by an increase in segment revenues of approximately $76,300, or 8%, coupled with an increase in the segment's gross profit margin percentage. Segment revenues increased due to a 10% increase in the number of units settled, offset partially by a 1% decrease in the average settlement price quarter over quarter. The increase in units settled and decrease in the average settlement price were primarily attributable to an 11% higher backlog unit balance and 3% lower average sales price of units in backlog entering 2024 compared to backlog entering 2023, respectively. The Mid Atlantic segment’s gross profit margin percentage increased to 25.7% in the first quarter of 2024 from 24.4% in the first quarter of 2023. Gross profit margin was favorably impacted by the improved leveraging of certain operating costs as settlement activity increased, offset partially by higher lot and closing costs quarter over quarter.

Current wording

The Mid Atlantic segment had an approximate $44,800, or 13%, increase in segment profit in the first six months of 2024 compared to the first six months of 2023. The increase in segment profit was driven by an increase in segment revenues of approximately $151,200, or 8%, coupled with an increase in gross profit margins. Segment revenues increased due to a 9% increase in the number of units settled which was primarily attributable to an 11% higher backlog unit balance entering 2024 compared to backlog entering 2023. The segment’s gross profit margin percentage increased to 25.2% in the first six months of 2024 from 24.7% in the first six months of 2023. Gross profit margins were positively impacted primarily by the improved leveraging of certain operating costs attributable to the increase in settlement activity, offset partially by higher lot and closing costs year over year.

Previous wording

Segment New Orders increased 2%, while the average sales price of New Orders remained relatively flat in the first quarter of 2024 compared to the first quarter of 2023. New Orders were higher due to favorable market conditions which led to a higher sales absorption rate and lower cancellation rates in the first quarter of 2024.

Current wording

Segment New Orders remained relatively flat in the first six months of 2024 compared to the first six months of 2023, while the average sales price of New Orders increased 2% year over year. New Orders were negatively impacted by a 7% decrease in the average number of active communities quarter over quarter, offset by favorable market conditions which led to a higher sales absorption rate year over year. The increase in the average sales price of New Orders was favorably impacted by a shift in New Orders to higher priced communities within certain markets in the segment year over year.

Previous wording

Segment New Orders and the average sales price of New Orders increased 19% and 7%, respectively, in the first quarter of 2024 compared to the first quarter of 2023. The increase in New Orders was attributable to favorable market conditions which led to a higher sales absorption rate in the first quarter of 2024. The average sales price of New Orders was favorably impacted by a shift to higher priced communities in certain markets within the segment.

Current wording

Segment New Orders and the average sales price of New Orders increased 3% and 12%, respectively, in the second quarter of 2024 compared to the second quarter of 2023. Despite a 14% decrease in the average number of active communities quarter over quarter, New Orders were favorably impacted by favorable market conditions which led to a higher sales absorption rate quarter over quarter. The increase in the average sales price of New Orders was attributable to a shift in New Orders to higher priced markets within the segment, coupled with a shift to higher priced communities in certain markets quarter over quarter.

Previous wording

The North East segment had an approximate $14,800, or 46%, increase in segment profit in the first quarter of 2024 compared to the first quarter of 2023, due primarily to an increase in segment revenues of approximately $72,200, or 39%. Segment revenues increased due to a 28% increase in the number of units settled and a 9% increase in the average settlement price quarter over quarter. The increase in the number of units settled was primarily attributable to a 16% higher backlog unit balance entering 2024 compared to backlog entering 2023, coupled with a higher backlog turnover rate quarter over quarter. The increase in the average settlement price was primarily attributable to a 9% higher average sales price of units in backlog entering 2024 compared to backlog entering 2023. The segment’s gross profit margin percentage decreased to 26.3% in the first quarter of 2024 from 26.8% in the first quarter of 2023. Gross profit margin was negatively impacted primarily by higher lot and closing costs, offset partially by improved leveraging of certain operating costs as settlement activity increased.

Current wording

The North East segment had an approximate $24,200, or 31%, increase in segment profit in the first six months of 2024 compared to the first six months of 2023. Segment profits were favorably impacted by an increase in segment revenue of approximately $126,600, or 30%. Segment revenues were favorably impacted by a 20% increase in the number of units settled and a 9% increase in the average settlement price year over year. The increase in settlements was primarily attributable to a 16% higher backlog unit balance entering 2024 compared to backlog entering 2023, coupled with a higher backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 9% higher average sales price of units in backlog entering 2024 compared to backlog entering 2023. The segment's gross profit margin percentage decreased to 26.4% in the first six months of 2024 from 27.0% in the first six months of 2023. Gross profit margin was negatively impacted primarily by higher lot and closing costs, offset partially by improved leveraging of certain operating costs as settlement activity increased.

Previous wording

Segment New Orders decreased 4%, while the average sales price of New Orders increased 7% in the first quarter of 2024 compared to the first quarter of 2023. The decrease in New Orders was primarily attributable to a 12% decrease in average number of active communities quarter over quarter, offset partially by a higher sales absorption rate due to favorable market conditions. The average sales price of New Orders was favorably impacted by favorable market conditions, coupled with a shift to higher priced communities in certain markets within the segment.

Current wording

Segment New Orders and the average sales price of New Orders increased 11% and 9%, respectively, in the first six months of 2024 compared to the first six months of 2023. Despite a 11% decrease in the average number of active communities year over year, New Orders were favorably impacted by favorable market conditions which led to a higher sales absorption rate year over year. The increase in the average sales price of New Orders was attributable to a shift in New Orders to higher priced markets within the segment, coupled with a shift to higher priced communities in certain markets year over year.

Previous wording

The Mid East segment had an approximate $9,900, or 18%, increase in segment profit in the first quarter of 2024 compared to the first quarter of 2023, due primarily to an increase in segment revenues of approximately $14,600, or 4%, coupled with an increase in the segment's gross profit margin percentage. Segment revenues increased due to a 6% increase in settlements, offset partially by a 2% decrease in the average settlement price. The increase in the number of units settled was primarily attributable to a 7% higher backlog unit balance entering 2024 compared to the backlog entering 2023. The segment's gross profit margin percentage increased to 22.6% in the first quarter of 2024 from 21.0% in the first quarter of 2023. Gross profit margin was favorably impacted by the improved leveraging of certain operating costs as settlement activity increased, offset partially by higher lot and closing costs quarter over quarter.

Current wording

The Mid East segment had an approximate $11,800, or 10%, increase in segment profit in the first six months of 2024 compared to the first six months of 2023, due primarily to an increase in segment revenues of approximately $36,900, or 5%, coupled with an increase in gross profit margins to 22.2% in the first six months of 2024 from 21.5% in the first six months of 2023. Segment revenues increased primarily due to a 3% increase in the number of units settled year over year. The increase in settlements was attributable primarily to a 7% higher backlog unit balance entering 2024 compared to the backlog entering 2023, offset partially by a lower backlog turnover rate period over period. Gross profit margin was favorably impacted by the improved leveraging of certain operating costs as settlement activity increased, offset partially by higher lot and closing costs year over year.

Previous wording

The South East segment had an approximate $34,000, or 27%, decrease in segment profit in the first quarter of 2024 compared to the first quarter of 2023. The decrease in segment profit was primarily driven by a decrease in the segment's gross profit margin percentage, coupled with a decrease in segment revenues of approximately $8,300, or 1%. The segment’s gross profit margin percentage decreased to 24.5% in the first quarter of 2024 from 27.7% in the first quarter of 2023. Gross profit margin was negatively impacted by higher lot and closing costs quarter over quarter. The decrease in revenues is attributable to a 9% decrease in the average settlement price, partially offset by an 8% increase in the number of units settled quarter over quarter. The decrease in the average settlement price was primarily attributable to a 7% lower average sales price of units in backlog entering 2024 compared to backlog entering 2023. The increase in the number of units settled was attributable primarily to a 15% higher backlog balance entering 2024 compared to the backlog entering 2023, offset partially by a lower backlog turnover rate quarter over quarter.

Current wording

The South East segment had an approximate $46,200, or 20%, decrease in segment profit in the first six months of 2024 compared to the first six months of 2023 due primarily to a decrease in gross profit margins to 23.3% in the first six months of 2024 from 27.0% in the first six months of 2023. Gross profit margins were negatively impacted primarily by higher lot and closing costs. Segment revenues in the second quarter of 2024 were higher by approximately $104,200, or 9%, due to a 15% increase in the number of units settled, partially offset by a 6% decrease in the average price of units settled year over year. The increase in settlements was attributable primarily to a 15% higher backlog balance entering 2024 compared to the backlog entering 2023. The decrease in the average settlement price was attributable primarily to a 7% lower average sales price of units in backlog entering 2024 compared to backlog entering 2023.

Previous wording

Segment New Orders and the average sales price of New Orders increased 4% and 2%, respectively, in the first quarter of 2024 compared to the first quarter of 2023. The increase in New Orders was primarily attributable to a 34% increase in average number of active communities, offset partially by a lower absorption rate within the segment quarter over quarter.

Current wording

Segment New Orders and the average sales price of New Orders increased 10% and 1%, respectively, in the first six months of 2024 compared to the first six months of 2023. The increase in New Orders was primarily attributable to a 35% increase in the average number of active communities, offset partially by a lower absorption rate within the segment year over year.

Previous wording

(2)The decrease in equity-based compensation expense for the three-month period ended March 31, 2024 was primarily attributable to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Current wording

(2)The decrease in equity-based compensation expense for the three and six-month periods ended June 30, 2024 was primarily attributable to the Options and RSUs issued as part of the 2018 four-year block grant being fully vested as of December 31, 2023.

Previous wording

We conduct our mortgage banking activity through NVR Mortgage Finance, Inc. (“NVRM”), a wholly owned subsidiary. NVRM focuses exclusively on serving the homebuilding segment customer base. NVRM sells the mortgage loans it closes to investors in the secondary markets primarily on a servicing-released basis, typically within 30 days from the loan closing. The following table summarizes the results of our mortgage banking operations and certain statistical data for the three months ended March 31, 2024 and 2023:

Current wording

We conduct our mortgage banking activity through NVR Mortgage Finance, Inc. (“NVRM”), a wholly owned subsidiary. NVRM focuses exclusively on serving the homebuilding segment's customers. NVRM sells almost all of the mortgage loans it closes to investors in the secondary markets on a servicing-released basis, typically within 30 days from the loan closing. The following table summarizes the results of our mortgage banking operations and certain statistical data for the three and six months ended June 30, 2024 and 2023:

Previous wording

Loan closing volume for the three months ended March 31, 2024 increased by approximately $140,700, or 11%, from the same period in 2023. The increase in loan closing volume during the three months ended March 31, 2024 was primarily attributable to the 10% increase in the homebuilding segment's number of units settled and the 3% increase in the capture rate in the first quarter of 2024 compared to the first quarter of 2023.

Current wording

Loan closing volume for the three and six months ended June 30, 2024 increased by approximately $148,400, or 11%, and $289,200, or 11%, respectively, from the same periods in 2023. The increase in loan closing volume during both the three and six months ended June 30, 2024 was primarily attributable to the 11% increase in the homebuilding segment’s number of units settled for both the three and six months ended June 30, 2024, when compared to the same periods in 2023.

Previous wording

Our effective tax rate during the three months ended March 31, 2024 was 16.2% compared to 20.6% for the three months ended March 31, 2023. The decrease in the effective tax rate in the first quarter of 2024 is primarily attributable to a higher income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $43,800 and $23,200 for the three months ended March 31, 2024 and March 31, 2023, respectively.

Current wording

Our effective tax rate for the three and six months ended June 30, 2024 was 24.9% and 20.8%, respectively, compared to 14.3% and 17.3% for the three and six months ended June 30, 2023, respectively. The increase in the effective tax rate in the three and six month periods of 2024 compared to the same periods in 2023 was primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $6,800 and $50,600 for the three and six months ended June 30, 2024, respectively, and approximately $55,900 and $79,200 for the three and six months ended June 30, 2023, respectively.

Previous wording

We fund our operations primarily from our current cash holdings and cash flows generated by operating activities. In addition, we have available a short-term unsecured working capital revolving credit facility and revolving mortgage repurchase facility, as further described below. As of March 31, 2024, we had approximately $2,900,000 in cash and cash equivalents, approximately $284,300 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.

Current wording

We fund our operations primarily from our current cash holdings and cash flows generated by operating activities. In addition, we have available a short-term unsecured working capital revolving credit facility and revolving mortgage repurchase facility, as further described below. As of June 30, 2024, we had approximately $2,500,000 in cash and cash equivalents, approximately $283,900 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.

Previous wording

(i) payments due to service our debt and interest on that debt. Future interest payments on our outstanding senior notes total approximately $172,050, with $27,000 due in within the next twelve months,

Current wording

(i) Payments due to service our debt and interest on that debt. Future interest payments on our outstanding senior notes total $158,550, with $27,000 due within the next twelve months.

Previous wording

(ii) payment obligations totaling approximately $379,000 under existing LPAs for deposits to be paid to land developers, assuming that contractual development milestones are met by the developers and we exercise our option to acquire finished lots under those LPAs. We expect to make the majority of these payments within the next three years, and

Current wording

(ii) Payment obligations totaling approximately $444,000 under existing LPAs for deposits to be paid to land developers, assuming that contractual development milestones are met by the developers and we exercise our option to acquire finished lots under those LPAs. We expect to make the majority of these payments within the next three years.

Previous wording

(iii) obligations under operating and finance leases related primarily to office space and our production facilities (see Note 13 of this Form 10-Q for additional discussion of our leases).

Current wording

(iii) Obligations under operating and finance leases related primarily to office space and our production facilities. See Note 13 of this Quarterly Report on Form 10-Q for additional discussion of our leases.

Previous wording

In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions. This ongoing repurchase program assists us in accomplishing our primary objective, creating increases in shareholder value. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, of this Form 10-Q for further discussion of repurchase activity during the first quarter of 2024. For the quarter ended March 31, 2024, we repurchased 66,858 shares of our common stock at an aggregate purchase price of $496,936. As of March 31, 2024, we had approximately $928,900 available under Board approved repurchase authorizations.

Current wording

In addition to funding growth in our homebuilding and mortgage banking operations, we historically have used a substantial portion of our excess liquidity to repurchase outstanding shares of our common stock in open market and privately negotiated transactions. This ongoing repurchase program assists us in accomplishing our primary objective, creating increases in shareholder value. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds, of this Quarterly Report on Form 10-Q for further discussion of repurchase activity during the second quarter of 2024. For the six months ended June 30, 2024, we repurchased 150,026 shares of our common stock at an aggregate purchase price of $1,135,912. As of June 30, 2024, we had approximately $1,040,000 available under Board approved repurchase authorizations.

Previous wording

We have an unsecured revolving credit agreement (the "Credit Agreement") with a group of lenders which may be used for working capital and general corporate purposes. The Credit Agreement provides for aggregate revolving loan commitments of $300,000 (the "Facility"). Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. In addition, the Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately $15,700 outstanding as of March 31, 2024. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Credit Agreement as of March 31, 2024.

Current wording

We have an unsecured revolving credit agreement (the "Credit Agreement") with a group of lenders which may be used for working capital and general corporate purposes. The Credit Agreement provides for aggregate revolving loan commitments of $300,000 (the "Facility"). Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. In addition, the Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which there was approximately $16,100 outstanding as of June 30, 2024. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Credit Agreement as of June 30, 2024.

Previous wording

NVRM has an unsecured revolving mortgage repurchase facility (the “Repurchase Agreement”) which provides for aggregate borrowings up to $150,000 and is non-recourse to NVR. The Repurchase Agreement expires on July 17, 2024. As of March 31, 2024, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. There were no borrowings outstanding under the Repurchase Agreement as of March 31, 2024.

Current wording

NVRM has an unsecured revolving mortgage repurchase facility (the "Repurchase Agreement") which provides for aggregate borrowings up to $150,000 and is non-recourse to NVR. In July 2024, NVRM entered into the Second Amendment to the Repurchase Agreement, which extended the term of the Repurchase Agreement through July 14, 2025. All other terms and conditions under the amended Repurchase Agreement remained materially consistent. As of June 30, 2024, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. There were no borrowings outstanding under the Repurchase Agreement as of June 30, 2024.

Previous wording

There have been no changes in our Credit Agreement or Repurchase Agreement during the three months ended March 31, 2024. For additional information regarding lines of credit and notes payable, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

For additional information regarding the Senior Notes, Credit Agreement and Repurchase Agreement, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Previous wording

For the three months ended March 31, 2024, cash, restricted cash, and cash equivalents decreased by $290,651. Net cash provided by operating activities was $146,458, due primarily to cash provided by earnings for the three months ended March 31, 2024 and a decrease of $57,637 in receivables. Cash was primarily used to fund the increase in inventory of $166,884, attributable to an increase in units under construction as of March 31, 2024 compared to December 31, 2023 and a net use of approximately $102,000 from mortgage loan activity.

Current wording

For the six months ended June 30, 2024, cash, restricted cash, and cash equivalents decreased by $686,498. Net cash provided by operating activities was $379,150 for the six months ended June 30, 2024, due primarily to cash provided by earnings. Cash was primarily used to fund the increase in inventory of $294,269, attributable to an increase in units under construction as of June 30, 2024 compared to December 31, 2023 and a net use of approximately $168,000 from mortgage loan activity.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2024 was $6,733. Cash was used primarily for purchases of property, plant and equipment of $8,979.

Current wording

Net cash used in investing activities for the six months ended June 30, 2024 was $11,145. Cash was used primarily for purchases of property, plant and equipment of $15,411.

Previous wording

Net cash used in financing activities was $430,376 for the three months ended March 31, 2024. Cash was used to repurchase 66,858 shares of our common stock at an aggregate purchase price of $496,936 under our ongoing common stock repurchase program, discussed above. Cash was provided from stock option exercise proceeds totaling $67,022.

Current wording

Net cash used in financing activities was $1,054,503 for the six months ended June 30, 2024. Cash was used to repurchase 150,026 shares of our common stock at an aggregate purchase price of $1,135,912 under our ongoing common stock repurchase program, discussed above. Cash was provided from stock option exercise proceeds totaling $82,464.