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NVR Inc. IR Plan

NVR Inc. IR Plan. Presented by Katie Hutchinson December 2011. Situation Analysis. Housing Market: outlook uncertain, demand soft Trending down since 2007 Key Contributors: High unemployment rates S trict mortgage conditions Low consumer confidence High cancellation rates

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NVR Inc. IR Plan

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  1. NVR Inc. IR Plan Presented by Katie Hutchinson December 2011

  2. Situation Analysis • Housing Market: outlook uncertain, demand soft • Trending down since 2007 • Key Contributors: • High unemployment rates • Strict mortgage conditions • Low consumer confidence • High cancellation rates • Market surplus (high foreclosure rates) • Dodd-Frank Wall Street Reform & Consumer Protection Act, July 2010

  3. NVR Inc. Performance & Reputation 2009 – 2010 Q3 2010 - 2011 Revenue Growth 11% 5.3% EPS Growth 5.6% 9.1% “We see NVR’s shares as a way of capturing the upside to an eventual recovery in the housing market with a lower-risk profile than peers.” - xxxx • Analysts Coverage • Rating: Predominately Outperform • Stock Price: $632 • Valuation: $500 to $870 “NVR…best-managed homebuilders, with a unique strategy of avoiding land risk by optioning its Land.” –Credit Suisse “NVR is the best-positioned public homebuilder, in our view.” – Wells Fargo

  4. NVR Inc. Performance

  5. NVR Inc. Analysts COMPANYANALYST Credit Suisse Dan Oppenheim Goldman Sachs Joshua Pollard Guggenheim James McCanless JMP Securities James Wilson JP Morgan Michael Rehaut Stifel Nicolaus Michael Widner Susquehanna Jack Micenko Ticonderoga Securities Stephen East Wells Fargo Adam Rudiger Zelman & Associates Ivy Zelman

  6. NVR Inc. & Peers Performance

  7. NVR & Peers Stock Performance; 12 months NVR & S&P 500

  8. NVR & PeerPerformanceIncome & Price to Book Value

  9. Investor StylePercent of Outstanding Shares & Number of Investors

  10. Ownership & Turnover Rate

  11. Strengths • Only profitable builder during downturn • Market concentration • Supply of lots for future growth • Financial flexibility • Consistent positive earnings • Industry-leading cost structure • Shareholder-friendly stock buyback program • Strong operating margins vs. peers • Energy Star Partner of the Year 2011 Weaknesses • Cyclical Industry • Housing market & mortgage crisis • Industry fallout & effects of current economy • Thinly traded • Limited interaction with investors • Rely on 3rd party for land contracts • D-rating: Stewardship, Morning Star • Raw land on balance sheet SWOT Opportunities • Market turns: poised to increase revenues & cash flow at rapid rate • Expand geographical footprint • Continue to increase market share in current locations • Purchase distressed assets at bargain price • Stock price appreciation (Stock gains) Threats • Mid-Atlantic markets concentration- • Slower housing recovery | deeper economic recession • Heightened Competition for land deals • “Risk Investors” increase – NVR underperform peers • Limited mortgage capital availability| Steep spike in interest rates • Unexpected changes in customer preferences

  12. Goals and Objectives • Increase percent of outstanding shares held by existing GARP investors from 13% to 15%. • Increase sell-side analysts who cover NVR Inc. quarterly from 11 to 13. • Build awareness and understanding about proven business model to targeted investors, sell-side analysts& employees. • Strengthen relationship with stakeholders by providing a more comprehensive IR website.

  13. Target Audience • Internal • Board of Directors | Senior Management | Employees • External • Sell-Side analysts • CURRENT: • Joel Locker, CFA | FBN Research [Reduced NVR from Outperform to Sector Perform] • JoshuaPollard | Goldman Sachs [Rated: NVR = Neutral but TOL & PHM = Buy] • NEW: Do NOT cover NVR Inc. but DO cover Toll, Pulte, Horton • Michael Kim | CRT Capital Group, • Nishu Sood | Deutsche Bank, • Kenneth Zener | KeyBanc Capital Markets • Robert Wetenhall | RBC Capital Markets • Buck Horne | Raymond James & Associates

  14. Current NVR Inc. GARP Investors • Buy-Side analysts • Specific analyst noted in events calendar • Fidelity Management & Research Company - #1 Toll Brother Investor

  15. Best positioned builder now • & when market turns • Paid off public debt. • Financial Flexibility – able to take advantage of opportunities when they arise. • Increased market share & geographical footprint. • Solid choice in a “risky” industry • Housing market projected to stabilize & NVR Inc. in best position to capitalize on market improvement. • History of high revenue & EPS growth when housing market increases. Value Drivers • History of profitable performance: even through current downturn • Only national homebuilder profitable every year of downturn. • Revenue, net income& EPS all increased versus 2009. • Lead industry in return on equity, return on capital & inventory turnover.

  16. Website Recommendations • Recommendations • Fresh Look: • landing page • Tab Setup • Search Application • RSS Feed • Calendar of Events • Conference Calls • PPT & Presentation Doc. • Executive Bios • FAQ • Analyst Emails (only phone # listed) • Rework - Forward Looking Statement – repeat visitor frustration Search Box | RSS

  17. Communication Vehicles • Press Release • Earning Reports, SEC filings • Annual Report • Meetings – CEO | CFO • Annual shareholder • Employees by Region (6) • Senior Management (2) • Board of Directors (2) • Investor Day • "Best Positioned for Industry Growth“ • CFO &CEO to speak • To Attend • Current: 11 sell-side analysts, Top10 buy-side analysts (based on o/s) • Potential: 5 sell-side analysts, 20 investors (new or potential to increase NVR o/s) • Location: Reston, VA

  18. Communication Vehicles • CEO (5) one-on-one meetings with prospectivesell-side analysts • CEO (7) one-on-one meetings with prospective GARP buy-side analysts • CEO/CFO host (2) meeting for current sell-side analysts • 30 minute presentation • 1 hour (11) one-on-one meetings • Joel Locker, CFA | FBN Research • Joshua Pollard | Goldman Sachs • CEO/CFO host (2) meeting for current buy-side analysts • 30 minute presentation • 1 hour (10) one-on-one meetings

  19. Communication Vehicles • Field Trip • On-sight tour of NVR Panelized Construction Facility • 1 hour tour • Lunch • Q & A with CEO • Attend: current & prospective buy-side & sell-side analysts • Industry Conference: 2012 Housing Leadership Summit • “Reduce Risk & Increase Inventory Turnover” • Break-out speaker CEO, Paul Seville • Road Shows with Sell-side analysts (5) • Investment Conferences (8)

  20. Road Shows 2012

  21. Calendar of Events: January- March

  22. Calendar of Events: April - June

  23. Calendar of Events: July - September

  24. Calendar of Events: October - December

  25. Measurement • GARP investors percent (increase) of outstanding shares • Total Sell-side analysts covering NVR Inc. (2012) • Reports published per year • Ratings: Neutral to Outperform • NVR Inc. Perception Survey results • Internal customer survey results • Website hits • Activity and time on website • Amount of emails and inquiries in comparison to 2011

  26. Budget

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