NVR INC (NVR)·Q4 2024 Earnings Summary

Executive Summary

• NVR delivered a strong Q4: consolidated revenue rose 17% YoY to $2.85B and diluted EPS increased 15% YoY to $139.93, driven by a 16% increase in settlements to 6,180 units despite an 8% decline in new orders and higher cancellations .
• Homebuilding gross margin was 23.6% (down ~50 bps YoY), while mortgage banking profit rebounded to $45.9M on higher secondary marketing gains, supporting EPS growth despite margin pressure .
• Backlog moderated sequentially: units fell to 9,953 and backlog dollars to $4.79B, as strong closings outpaced orders; new order ASP rose 4% YoY to $469K, while cancellation rate increased to 17% .
• Capital returns remained aggressive: Q4 repurchases of 64,216 shares for $564M and a new $750M buyback authorization announced Dec 11, 2024, underscore ongoing capital allocation discipline .
• Estimate comparisons unavailable: S&P Global consensus data could not be retrieved at this time; this limits formal beat/miss assessment and may be a near‑term constraint on narrative formation until third‑party comps are refreshed (see Estimates Context).

What Went Well and What Went Wrong

• What Went Well

  • Strong top and bottom line: revenue +17% YoY to $2.85B; diluted EPS +15% YoY to $139.93 on robust closings (+16% to 6,180 units) .
  • Mortgage banking strength: income before tax rose to $45.9M, “primarily attributable to an increase in secondary marketing gains on sales of loans,” aiding consolidated earnings .
  • Pricing resilience: new order ASP increased 4% YoY to $469K; average settlement price held flat at ~$450K despite demand variability .

• What Went Wrong

  • Demand deceleration into year‑end: new orders fell 8% YoY to 4,794 units as cancellations climbed to 17% vs 13% last year, signaling late‑quarter churn and buyer sensitivity .
  • Margin pressure persists: homebuilding gross margin of 23.6% was down YoY; prior quarter commentary cited higher lot costs and closing cost assistance as headwinds, suggesting limited leverage into Q4 .
  • Backlog contraction: backlog units declined to 9,953 and backlog dollars to $4.79B, down sequentially from Q3’s $5.32B, reducing near‑term revenue visibility .

Financial Results

Headline P&L (sequential trend; oldest → newest)

Notes: Net income margin is calculated using consolidated revenue and net income from the company releases (citations in cell). Q4 YoY: Revenue +17%, EPS +15% ; Q3 YoY: Revenue +6% ; Q2 YoY: Revenue +12% .

Segment Performance (oldest → newest)

Key Operating KPIs (oldest → newest)

Guidance Changes

NVR did not issue formal revenue, margin, or EPS guidance in the Q4 materials. The company did disclose quarterly effective tax rates (Q4: 20.1%) but this was backward-looking rather than prospective guidance .

Earnings Call Themes & Trends

Note: An earnings call transcript for Q4 2024 was not available in our document set; themes below rely on company press releases.

Management Commentary

• “This increase [in mortgage banking income] was primarily attributable to an increase in secondary marketing gains on sales of loans.” – Q4 press release, on the $45.9M mortgage banking profit .
• “Gross profit margin in the third quarter of 2024 decreased to 23.4%, from 24.3% in the third quarter of 2023. Gross profit margin was negatively impacted by higher lot costs and closing cost assistance.” – Q3 press release, margin context into Q4 .
• “Our effective tax rate for the three… months ended December 31, 2024 was 20.1%… The increase… is primarily attributable to a lower income tax benefit recognized for excess tax benefits from stock option exercises.” – Q4 press release .

Strategic messages inferred from releases:

• Drive volume through settlements while managing price and incentives; maintain resilient ASPs amid mixed demand .
• Monetize mortgage channel to support profitability through secondary market gains; maintain high capture rate (86%) .
• Continue returning capital via substantial buybacks, reinforced by an additional $750M authorization .

Q&A Highlights

• An earnings call transcript for Q4 2024 was not available in our document library; as a result, no Q&A takeaways or tone shifts versus prior quarters could be extracted.

Estimates Context

• We attempted to retrieve S&P Global consensus for Q4 2024 EPS and revenue, but access was unavailable due to a data request limit at this time; therefore, we cannot provide a beat/miss assessment for Q4. We will update this section when S&P Global estimates can be retrieved.
• As a result, any estimate-based adjustments by the Street (EPS, revenue, margins) cannot be quantified here; investors should revisit this once consensus data is refreshed to assess the magnitude of potential revisions.

Key Takeaways for Investors

• Volume-led quarter: settlements +16% YoY and stable settlement ASP (~$450K) underpinned revenue +17% YoY and EPS +15% YoY, despite elevated cancellations .
• Margins steady but not expanding: homebuilding gross margin at 23.6% suggests ongoing lot cost/incentive headwinds; monitor pricing discipline and incentive cadence into spring selling season .
• Demand mixed: order ASPs improved, but orders -8% YoY and cancellations up to 17% highlight buyer sensitivity to rates/affordability late in the year .
• Backlog normalization: backlog dollars fell to $4.79B from $5.32B in Q3 as closings outpaced orders, tempering near‑term visibility; watch order trends and community count in Q1/Q2 .
• Mortgage banking tailwind: profit rebound to ~$46M on stronger secondary marketing gains is a positive offset; sustainability depends on secondary market dynamics and capture rate stability .
• Capital returns a support: $564M of Q4 buybacks and a fresh $750M authorization provide downside support and EPS accretion potential, contingent on cash generation and land spend .
• Near‑term stock narrative: likely hinges on early‑year order pace, cancellation rates, and incentive trends versus rate moves; absence of formal guidance and unavailable consensus comparisons may keep focus on monthly order color and spring selling visibility .

Appendix: Additional Detail

• Effective tax rate: 20.1% in Q4 (vs 15.3% LY), driven by lower excess tax benefits from stock option exercises .
• Share count/capital returns: 64,216 shares repurchased in Q4 at $564M aggregate cost; FY total 256,871 shares at $2.06B .
• Regional mix and ASP detail, backlog by region, and active communities by division are provided in company tables for deeper operational tracking .