filings.toolsItem 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
69K characters. Original on sec.gov · Markdown
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
(dollars in thousands, except per share data)
Forward-Looking Statements
Some of the statements in this Quarterly Report on Form 10-Q, as well as statements made by us in periodic press releases or other public communications, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other comparable terminology. All statements other than of historical facts are forward-looking statements. Forward-looking statements contained in this document may include those regarding market trends, our financial position and financial results, business strategy, the outcome of pending litigation, investigations or similar contingencies, projected plans and objectives of management for future operations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results or performance to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements. Such risk factors include, but are not limited to the following: general economic and business conditions (on both a national and regional level); interest rate changes; access to suitable financing by us and our customers; increased regulation in the mortgage banking industry; the ability of our mortgage banking subsidiary to sell loans it originates into the secondary market; competition; the availability and cost of land and other raw materials used by us in our homebuilding operations; shortages of labor; the economic impact of a major epidemic or pandemic; weather related slow-downs; building moratoriums; governmental regulation; fluctuation and volatility of stock and other financial markets; mortgage financing availability; and other factors over which we have little or no control. We undertake no obligation to update such forward-looking statements except as required by law. For additional information regarding risk factors, see Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Unless the context otherwise requires, references to “NVR,” “we,” “us,” or “our” include NVR and its consolidated subsidiaries.
Results of Operations for the Three and Nine Months Ended September 30, 2023 and 2022
Business Environment and Current Outlook
During the third quarter of 2023, housing affordability reached a 35-year low due to high home prices and increasing interest rates. This weak affordability resulted in a slowing in new home sales compared to the first half of 2023. There remains uncertainty in the market as the Federal Reserve continues to address high inflation rates by raising interest rates, which could lead to an economic slowdown. We expect to face margin pressure as we adjust our product offering and positioning to meet market demands. We also expect margin pressure from higher building materials, labor and land costs. We have seen an improvement in our supply chain which has improved our construction cycle times. We believe 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.
Business
Our primary business is the construction and sale of single-family detached homes, townhomes and condominiums, all of which are primarily constructed on a pre-sold basis. To fully serve customers of our homebuilding operations, we also operate a mortgage banking and title services business. We primarily conduct our operations in mature markets. Additionally, we generally grow our business through market share gains in our existing markets and by expanding into markets contiguous to our current active markets. Our four homebuilding reportable segments consist of the following regions:
| Mid Atlantic: | Maryland, Virginia, West Virginia, Delaware and Washington, D.C. | |||||||
| North East: | New Jersey and Eastern Pennsylvania | |||||||
| Mid East: | New York, Ohio, Western Pennsylvania, Indiana and Illinois | |||||||
| South East: | North Carolina, South Carolina, Tennessee, Florida and Georgia |
Our lot acquisition strategy is predicated upon avoiding the financial requirements and risks associated with direct land ownership and development. We generally do not engage in land development (see discussion below of our land development activities). Instead, we typically acquire finished building lots from various third party land developers pursuant to fixed price finished lot purchase agreements (“LPAs”). These LPAs require deposits, typically ranging up to 10% of the aggregate purchase price of the finished lots, in the form of cash or letters of credit that may be forfeited if we fail to perform under the LPA. This strategy has allowed us to maximize inventory turnover, which we believe enables us to minimize market risk and to operate with less capital, thereby enhancing rates of return on equity and total capital.
In addition to constructing homes primarily on a pre-sold basis and utilizing what we believe is a conservative lot acquisition strategy, we focus on obtaining and maintaining a leading market position in each market we serve. This strategy allows us to gain valuable efficiencies and competitive advantages in our markets, which we believe contributes to minimizing the adverse effects of regional economic cycles and provides growth opportunities within these markets. Our continued success is contingent upon our ability to control an adequate supply of finished lots on which to build.
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.
As of September 30, 2023, we controlled approximately 133,900 lots as described below.
Lot Purchase Agreements
We controlled approximately 127,000 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $568,500 and $7,200, respectively. Included in the number of controlled lots are approximately 10,000 lots for which we have recorded a contract land deposit impairment reserve of approximately $50,200 as of September 30, 2023.
Joint Venture Limited Liability Corporations (“JVs”)
We had an aggregate investment totaling approximately $28,100 in four JVs, expected to produce approximately 5,250 lots. Of the lots to be produced by the JVs, approximately 4,900 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 $12,000 to one of the JVs at September 30, 2023.
Land Under Development
We owned land with a carrying value of approximately $41,200 that we intend to develop into approximately 2,000 finished lots. We had additional funding commitments of approximately $1,700 under a joint development agreement related to one parcel, a portion of which we expect will be offset by development credits of approximately $900.
See Notes 2, 3 and 4 to the condensed consolidated financial statements included herein for additional information regarding LPAs, JVs and land under development, respectively.
Raw Land Purchase Agreements
In addition, we have certain properties under contract with land owners that are expected to yield approximately 23,700 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 September 30, 2023, these properties are controlled with deposits in cash and letters of credit totaling approximately $11,900 and $100, respectively, of which approximately $2,800 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.
Key Financial Results
Our consolidated revenues for the third quarter of 2023 totaled $2,569,025, a 7% decrease from the third quarter of 2022. Net income for the third quarter ended September 30, 2023 was $433,157, or $125.26 per diluted share, increases of 5% and 6% when compared to net income and diluted earnings per share for the third quarter of 2022, respectively. Our homebuilding gross profit margin percentage increased to 24.3% in the third quarter of 2023 from 23.6% in the third quarter of 2022. New orders, net of cancellations (“New Orders”) increased by 7% in the third quarter of 2023 compared to the third quarter of 2022. The New Order cancellation rate for the third quarter of 2023 decreased to 13.6% from 15.0% in the same period in 2022. The average sales price for New Orders in the third quarter of 2023 was $456.1, an increase of 1% compared to the third quarter of 2022.
Homebuilding Operations
The following table summarizes the results of operations and other data for our homebuilding operations:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Financial Data: | ||||||||||||||||||||||||||
| Revenues | $ | 2,512,409 | $ | 2,739,445 | $ | 6,927,511 | $ | 7,658,734 | ||||||||||||||||||
| Cost of sales | $ | 1,902,174 | $ | 2,092,457 | $ | 5,238,230 | $ | 5,668,549 | ||||||||||||||||||
| Gross profit margin percentage | 24.3 | % | 23.6 | % | 24.4 | % | 26.0 | % | ||||||||||||||||||
| Selling, general and administrative expenses | $ | 142,715 | $ | 129,416 | $ | 434,876 | $ | 391,358 | ||||||||||||||||||
| Operating Data: | ||||||||||||||||||||||||||
| New orders (units) | 4,746 | 4,421 | 16,539 | 15,011 | ||||||||||||||||||||||
| Average new order price | $ | 456.1 | $ | 453.4 | $ | 447.7 | $ | 463.9 | ||||||||||||||||||
| Settlements (units) | 5,606 | 5,949 | 15,330 | 16,983 | ||||||||||||||||||||||
| Average settlement price | $ | 448.0 | $ | 460.5 | $ | 451.8 | $ | 450.9 | ||||||||||||||||||
| Backlog (units) | 10,371 | 10,758 | ||||||||||||||||||||||||
| Average backlog price | $ | 463.1 | $ | 472.8 | ||||||||||||||||||||||
| New order cancellation rate | 13.6 | % | 15.0 | % | 12.7 | % | 13.0 | % |
Consolidated Homebuilding - Three Months Ended September 30, 2023 and 2022
Homebuilding revenues decreased 8% in the third quarter of 2023 compared to the same period in 2022, as a result of a 6% decrease in settlements, coupled with a 3% decrease in the average settlement price quarter over quarter. The decreases in settlements and the average settlement price were primarily attributable to a 9% lower backlog unit balance and a 3% lower average sales price of units in backlog entering the third quarter of 2023 compared to the backlog unit balance and average sales price of units in backlog entering the third quarter of 2022. Gross profit margin percentage in the third quarter of 2023 increased to 24.3%, from 23.6% in the third quarter of 2022. Gross profit margin was favorably impacted by lower lumber costs, offset partially by higher lot costs, incentives and closing costs quarter over quarter.
New Orders and the average sales price of New Orders increased 7% and 1%, respectively, in the third quarter of 2023 compared to the third quarter of 2022. New Orders were favorably impacted by improved demand quarter over quarter attributable to a limited supply of homes in the resale market. In addition, New Orders were positively impacted by a 2% increase in the average number of active communities quarter over quarter.
Selling, general and administrative (“SG&A”) expense in the third quarter of 2023 increased by approximately $13,300 compared to the third quarter of 2022, and as a percentage of revenue increased to 5.7% from 4.7% quarter over quarter. The increase in SG&A expense was primarily attributable to a $13,200 increase in personnel costs.
Consolidated Homebuilding - Nine Months Ended September 30, 2023 and 2022
Homebuilding revenues decreased 10% in the first nine months of 2023 compared to the same period in 2022, as a result of a 10% decrease in settlements. The average settlement price remained relatively flat year over year. The decrease in the number of units settled was attributable to a 28% lower backlog unit balance entering 2023 compared to the backlog unit balance entering 2022, offset partially by a higher backlog turnover rate year over year. Gross profit margin percentage in the first nine months of 2023 decreased to 24.4%, from 26.0% in the first nine months of 2022. Gross profit margins were negatively impacted primarily by higher costs for labor, certain materials, incentives and closing costs, offset partially by lower lumber costs year over year.
New Orders increased 10% while the average sales price of New Orders decreased 3% in the first nine months of 2023 compared to the same period in 2022. New Orders were favorably impacted by improved demand in 2023 attributable to a limited supply of homes in the resale market and by a 3% increase in the average number of active communities year over year. The average sales price of New Orders was negatively impacted by price adjustments to address affordability issues resulting from higher mortgage interest rates and significant home price appreciation over the previous two years.
SG&A expense in the first nine months of 2023 increased by approximately $43,500 compared to the same period in 2022, and as a percentage of revenue increased to 6.3% in 2023 from 5.1% in 2022. The increase in SG&A expense was primarily attributable to a $28,500 increase in personnel costs. In addition, SG&A expense was higher due to an increase in equity-based compensation of approximately $11,900 due to the issuance of a four year block grant of Options and RSUs in the second quarter of 2022.
Our backlog represents homes sold but not yet settled with our customers. As of September 30, 2023, our backlog decreased on a unit basis by 4% to 10,371 units and on a dollar basis by 6% to $4,802,807 when compared to 10,758 units and $5,086,766, respectively, as of September 30, 2022. The decrease in the number of backlog units was primarily attributable to a 28% lower backlog unit balance entering 2023 compared to the backlog unit balance entering 2022, offset partially by a 17% increase in New Orders during the six-month period ended September 30, 2023 compared to the same period of 2022. Backlog dollars were lower primarily due to the decrease in backlog units year over year, coupled with a 2% decrease in the average sales price of New Orders for the six month period ended September 30, 2023 compared to the same period in 2022.
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% both in the first nine months of 2023 and 2022. During the most recent four quarters, approximately 5% 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 2023 or future years. Other than those units that are cancelled, we expect to settle substantially all of our September 30, 2023 backlog within the next twelve months.
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.
Reportable Segments
Homebuilding segment profit includes all revenues and income generated from the sale of homes, less the cost of homes sold, SG&A expenses, and a corporate capital allocation charge determined by corporate management. The corporate capital allocation charge eliminates in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker to determine whether the operating segment is providing the desired rate of return after covering our cost of capital.
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 at September 30, 2023 and December 31, 2022 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 $7,200 and $6,900 at September 30, 2023 and December 31, 2022, respectively, of letters of credit issued as deposits in lieu of cash.
The following tables summarize certain homebuilding operating activity by reportable segment for the three and nine months ended September 30, 2023 and 2022.
Selected Segment Financial Data:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Mid Atlantic | $ | 1,146,559 | $ | 1,282,504 | $ | 3,146,501 | $ | 3,632,524 | ||||||||||||||||||
| North East | 268,237 | 250,067 | 684,593 | 663,012 | ||||||||||||||||||||||
| Mid East | 468,727 | 569,991 | 1,282,806 | 1,552,434 | ||||||||||||||||||||||
| South East | 628,886 | 636,883 | 1,813,611 | 1,810,764 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Gross profit margin: | ||||||||||||||||||||||||||
| Mid Atlantic | $ | 281,230 | $ | 346,395 | $ | 775,983 | $ | 988,595 | ||||||||||||||||||
| North East | 67,861 | 67,092 | 180,389 | 167,958 | ||||||||||||||||||||||
| Mid East | 103,918 | 128,529 | 278,983 | 345,785 | ||||||||||||||||||||||
| South East | 156,846 | 191,612 | 476,319 | 537,947 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Gross profit margin percentage: | ||||||||||||||||||||||||||
| Mid Atlantic | 24.5 | % | 27.0 | % | 24.7 | % | 27.2 | % | ||||||||||||||||||
| North East | 25.3 | % | 26.8 | % | 26.3 | % | 25.3 | % | ||||||||||||||||||
| Mid East | 22.2 | % | 22.5 | % | 21.7 | % | 22.3 | % | ||||||||||||||||||
| South East | 24.9 | % | 30.1 | % | 26.3 | % | 29.7 | % |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Segment profit: | ||||||||||||||||||||||||||
| Mid Atlantic | $ | 212,826 | $ | 272,860 | $ | 567,119 | $ | 774,380 | ||||||||||||||||||
| North East | 48,787 | 49,614 | 125,779 | 116,839 | ||||||||||||||||||||||
| Mid East | 75,136 | 92,364 | 193,360 | 246,059 | ||||||||||||||||||||||
| South East | 107,666 | 145,619 | 339,723 | 409,895 |
Operating Activity:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Units | Average Price | Units | Average Price | Units | Average Price | Units | Average Price | |||||||||||||||||||||||||||||||||||||||||||
| New orders, net of cancellations: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mid Atlantic | 1,822 | $ | 526.2 | 1,813 | $ | 516.2 | 6,405 | $ | 520.2 | 5,980 | $ | 527.1 | ||||||||||||||||||||||||||||||||||||||
| North East | 448 | $ | 561.3 | 348 | $ | 510.5 | 1,353 | $ | 563.7 | 1,249 | $ | 512.7 | ||||||||||||||||||||||||||||||||||||||
| Mid East | 916 | $ | 407.2 | 955 | $ | 406.7 | 3,572 | $ | 392.4 | 3,603 | $ | 404.4 | ||||||||||||||||||||||||||||||||||||||
| South East | 1,560 | $ | 372.8 | 1,305 | $ | 385.0 | 5,209 | $ | 366.3 | 4,179 | $ | 410.2 | ||||||||||||||||||||||||||||||||||||||
| Total | 4,746 | $ | 456.1 | 4,421 | $ | 453.4 | 16,539 | $ | 447.7 | 15,011 | $ | 463.9 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||||
| Units | Average Price | Units | Average Price | Units | Average Price | Units | Average Price | |||||||||||||||||||||||||||||||||||||||||||
| Settlements: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Mid Atlantic | 2,199 | $ | 521.2 | 2,417 | $ | 530.6 | 6,024 | $ | 522.2 | 6,889 | $ | 527.3 | ||||||||||||||||||||||||||||||||||||||
| North East | 476 | $ | 563.5 | 487 | $ | 513.5 | 1,271 | $ | 538.6 | 1,307 | $ | 507.3 | ||||||||||||||||||||||||||||||||||||||
| Mid East | 1,209 | $ | 387.5 | 1,468 | $ | 388.3 | 3,265 | $ | 392.8 | 4,034 | $ | 384.8 | ||||||||||||||||||||||||||||||||||||||
| South East | 1,722 | $ | 365.2 | 1,577 | $ | 403.9 | 4,770 | $ | 380.2 | 4,753 | $ | 381.0 | ||||||||||||||||||||||||||||||||||||||
| Total | 5,606 | $ | 448.0 | 5,949 | $ | 460.5 | 15,330 | $ | 451.8 | 16,983 | $ | 450.9 |
| As of September 30, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| Units | Average Price | Units | Average Price | ||||||||||||||||||||
| Backlog: | |||||||||||||||||||||||
| Mid Atlantic | 4,073 | $ | 531.7 | 4,009 | $ | 536.2 | |||||||||||||||||
| North East | 967 | $ | 587.5 | 911 | $ | 519.1 | |||||||||||||||||
| Mid East | 2,160 | $ | 401.1 | 2,596 | $ | 407.8 | |||||||||||||||||
| South East | 3,171 | $ | 379.3 | 3,242 | $ | 433.5 | |||||||||||||||||
| Total | 10,371 | $ | 463.1 | 10,758 | $ | 472.8 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| New order cancellation rate: | ||||||||||||||||||||||||||
| Mid Atlantic | 12.8 | % | 16.1 | % | 13.0 | % | 13.6 | % | ||||||||||||||||||
| North East | 11.5 | % | 19.1 | % | 11.5 | % | 12.0 | % | ||||||||||||||||||
| Mid East | 15.3 | % | 15.3 | % | 13.3 | % | 14.4 | % | ||||||||||||||||||
| South East | 14.1 | % | 12.0 | % | 12.3 | % | 11.0 | % |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Average active communities: | ||||||||||||||||||||||||||
| Mid Atlantic | 167 | 164 | 166 | 157 | ||||||||||||||||||||||
| North East | 36 | 37 | 37 | 36 | ||||||||||||||||||||||
| Mid East | 109 | 126 | 111 | 126 | ||||||||||||||||||||||
| South East | 119 | 96 | 110 | 92 | ||||||||||||||||||||||
| Total | 431 | 423 | 424 | 411 |
Homebuilding Inventory:
| September 30, 2023 | December 31, 2022 | |||||||||||||
| Sold inventory: | ||||||||||||||
| Mid Atlantic | $ | 808,569 | $ | 727,501 | ||||||||||
| North East | 210,166 | 156,798 | ||||||||||||
| Mid East | 286,858 | 278,034 | ||||||||||||
| South East | 430,258 | 413,576 | ||||||||||||
| Total (1) | $ | 1,735,851 | $ | 1,575,909 |
| September 30, 2023 | December 31, 2022 | |||||||||||||
| Unsold lots and housing units inventory: | ||||||||||||||
| Mid Atlantic | $ | 136,643 | $ | 111,816 | ||||||||||
| North East | 31,970 | 23,013 | ||||||||||||
| Mid East | 13,667 | 17,044 | ||||||||||||
| South East | 59,314 | 31,791 | ||||||||||||
| Total (1) | $ | 241,594 | $ | 183,664 |
(1) The reconciling items between segment inventory and consolidated inventory include certain consolidation adjustments necessary to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes. These consolidation adjustments are not allocated to our operating segments.
Lots Controlled and Land Deposits:
| September 30, 2023 | December 31, 2022 | |||||||||||||
| Total lots controlled: | ||||||||||||||
| Mid Atlantic | 46,300 | 48,200 | ||||||||||||
| North East | 12,200 | 11,300 | ||||||||||||
| Mid East | 21,000 | 21,800 | ||||||||||||
| South East | 54,400 | 50,600 | ||||||||||||
| Total | 133,900 | 131,900 |
| September 30, 2023 | December 31, 2022 | |||||||||||||
| Contract land deposits, net: | ||||||||||||||
| Mid Atlantic | $ | 209,091 | $ | 212,273 | ||||||||||
| North East | 57,859 | 54,558 | ||||||||||||
| Mid East | 44,939 | 44,813 | ||||||||||||
| South East | 225,443 | 191,332 | ||||||||||||
| Total | $ | 537,332 | $ | 502,976 |
Mid Atlantic
Three Months Ended September 30, 2023 and 2022
The Mid Atlantic segment had an approximate $60,000, or 22%, decrease in segment profit in the third quarter of 2023 compared to the third quarter of 2022. The decrease in segment profit was driven by a decrease in segment revenues of approximately $135,900, or 11%, coupled with a decrease in gross profit margins. Segment revenues decreased due to a decrease in settlements of 9% and a 2% decrease in the average settlement price quarter over quarter. The decrease in settlements was primarily attributable to a 4% lower backlog unit balance entering the third quarter of 2023 compared to backlog entering the third quarter of 2022, as well as by a lower backlog turnover rate quarter over quarter. The decrease in the average settlement price quarter over quarter is primarily attributable to a 2% lower average sales price of units in backlog entering the third quarter of 2023 compared to backlog entering the third quarter of 2022. The Mid Atlantic segment’s gross profit margin percentage decreased to 24.5% in the third quarter of 2023 from 27.0% in the third quarter of 2022. Gross profit margins were negatively impacted primarily by higher lot costs, incentives and closing costs, offset partially by lower lumber costs quarter over quarter.
Segment New Orders were relatively flat in the third quarter of 2023 compared to the same period in 2022, while the average sales price of New Orders increased 2% quarter over quarter. The increase in the average sales price of New Orders was favorably impacted by a shift in New Orders to higher priced markets within the segment quarter over quarter.
Nine Months Ended September 30, 2023 and 2022
The Mid Atlantic segment had an approximate $207,300, or 27%, decrease in segment profit in the first nine months of 2023 compared to the first nine months of 2022. The decrease in segment profit was driven by a decrease in segment revenues of approximately $486,000, or 13%, coupled with a decrease in gross profit margins. Segment revenues decreased due to a 13% decrease in the number of units settled. The decrease in settlements was primarily attributable to a 25% lower backlog unit balance entering 2023 compared to backlog entering 2022, offset partially by a higher backlog turnover rate year over year. The Mid Atlantic segment’s gross profit margin percentage decreased to 24.7% in the first nine months of 2023 from 27.2% in the first nine months of 2022. Gross profit margins were negatively impacted primarily by higher costs for labor, certain materials, lots, incentives and closing costs, offset partially by lower lumber costs year over year.
Segment New Orders increased 7% in the first nine months of 2023 compared to the first nine months of 2022, while the average sales price of New Orders decreased 1% year over year. New Orders were favorably impacted primarily by a 6% increase in the average number of active communities year over year.
North East
Three Months Ended September 30, 2023 and 2022
The North East segment had an approximate $800, or 2%, decrease in segment profit in the third quarter of 2023 compared to the third quarter of 2022, despite an increase of approximately $18,200, or 7%, in revenues. Segment profit was lower due primarily to a decrease in gross profit margins to 25.3% in the third quarter of 2023 from 26.8% in the third quarter of 2022. Gross profit margins were negatively impacted primarily by higher lot costs, incentives and closing costs, offset partially by lower lumber costs quarter over quarter. The increase in segment revenues in the third quarter of 2023 was due to a 10% increase in the average settlement price, offset partially by a 2% decrease in settlements, quarter over quarter. The increase in the average settlement price quarter over quarter was primarily due to a 13% higher average sales price of units in backlog entering the third quarter of 2023 compared to backlog entering the third quarter of 2022. The decrease in settlements is attributable primarily to a 5% lower backlog unit balance entering the third quarter of 2023 compared to backlog entering the third quarter of 2022.
Segment New Orders and the average sales price of New Orders increased 29% and 10%, respectively, in the third quarter of 2023 compared to the third quarter of 2022. New Orders were favorably impacted by improved demand as previously discussed in the "Consolidated Homebuilding" section above. 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 in communities in certain markets quarter over quarter.
Nine Months Ended September 30, 2023 and 2022
The North East segment had an approximate $8,900, or 8%, increase in segment profit in the first nine months of 2023 compared to the first nine months of 2022. Segment profits were favorably impacted by an increase in segment revenue of approximately $21,600, or 3%, coupled with an increase in gross profit margins to 26.3% in the first nine months of 2023 from 25.3% in the first nine months of 2022. Segment revenues were favorably impacted primarily by a 6% increase in the average settlement price due primarily to an 8% higher average sales price of units in backlog entering 2023 compared to backlog entering 2022. Gross profit margins were favorably impacted by the aforementioned increase in the average settlement price and by lower lumber prices year over year.
Segment New Orders and the average sales price of New Orders increased 8% and 10%, respectively, in the first nine months of 2023 compared to the first nine months of 2022. New Orders were favorably impacted by improved demand as previously discussed in the "Consolidated Homebuilding" section above. 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.
Mid East
Three Months Ended September 30, 2023 and 2022
The Mid East segment had an approximate $17,200, or 19%, decrease in segment profit in the third quarter of 2023 compared to the third quarter of 2022, due primarily to a decrease in segment revenues of approximately $101,300, or 18%. Segment revenues decreased due to an 18% decrease in the number of units settled which was attributable to a 21% lower backlog balance entering the third quarter of 2023 compared to the same period of 2022, offset partially by a higher backlog turnover rate quarter over quarter. The segment's gross profit margin percentage remained relatively flat quarter over quarter.
Segment New Orders decreased 4% in the third quarter of 2023 compared to the second quarter of 2022, while the average sales price of New Orders remained relatively flat. New Orders were negatively impacted by a 13% decrease in the number of active communities quarter over quarter, offset partially by improved demand as previously discussed in the "Consolidated Homebuilding" section above.
Nine Months Ended September 30, 2023 and 2022
The Mid East segment had an approximate $52,700, or 21%, decrease in segment profit in the first nine months of 2023 compared to the first nine months of 2022, due primarily to a decrease in segment revenues of approximately $269,600, or 17%, coupled with a decrease in gross profit margins. Segment revenues decreased due to a 19% decrease in settlements year over year, offset partially by a 2% increase in the average settlement price. The decrease in settlements was attributable primarily to a 39% lower backlog balance entering 2023 compared to the backlog entering 2022, offset partially by a higher backlog turnover rate year over year. The increase in the average settlement price was primarily attributable to a 6% higher average sales price of units in backlog entering 2023 compared to backlog entering 2022. The segment's gross profit margin percentage decreased to 21.7% in the first nine months of 2023 from 22.3% in the first nine months of 2022. Gross profit margins were negatively impacted primarily by higher incentives and closing costs, offset partially by lower lumber costs year over year.
Segment New Orders remained relatively flat in the first nine months of 2023 compared to the first nine months of 2022, while the average sales price of New Orders decreased 3%. The average sales price of New Orders was negatively impacted by price adjustments to address affordability issues resulting from higher mortgage interest rates period over period and significant home price appreciation over the previous two years.
South East
Three Months Ended September 30, 2023 and 2022
The South East segment had an approximate $38,000, or 26%, decrease in segment profit in the third quarter of 2023 compared to the third quarter of 2022. The decrease in segment profit was primarily driven by a decrease in gross profit margins to 24.9% in the third quarter of 2023 from 30.1% in the third quarter of 2022. Gross profit
margins were negatively impacted primarily by higher lot costs, incentives and closing costs, offset partially by lower lumber costs quarter over quarter. Segment revenues in the third quarter of 2023 were lower by approximately $8,000, or 1%, due to a 10% decrease in the average price of units settled, offset partially by a 9% increase in the number of units settled. The decrease in the average settlement price was primarily attributable to a 14% lower average sales price of units in backlog entering the third quarter of 2023 compared to backlog entering the third quarter of 2022. The increase in settlements is attributable to a higher backlog turnover rate quarter over quarter.
Segment New Orders increased 20% in the third quarter of 2023 compared to the third quarter of 2022, while the average sales price of New Orders decreased 3% quarter over quarter. New Orders were favorably impacted by a 24% increase in the average number of active communities quarter over quarter. In addition, New Orders were favorably impacted by improved demand as previously discussed in the "Consolidated Homebuilding" section above. The average sales price of New Orders was negatively impacted by price adjustments to address affordability issues resulting from higher mortgage interest rates and significant home price appreciation over the previous two years.
Nine Months Ended September 30, 2023 and 2022
The South East segment had an approximate $70,200, or 17%, decrease in segment profit in the first nine months of 2023 compared to the first nine months of 2022 due primarily to a decrease in gross profit margins to 26.3% in the first nine months of 2023 from 29.7% in the first nine months of 2022. Gross profit margins were negatively impacted primarily by higher costs for labor, certain materials, lots, incentives and closing costs, offset partially by lower lumber costs year over year. Segment revenues, the number of units settled and the average settlement price all remained relatively flat in the first nine months of 2023 compared to the first nine months of 2022.
Segment New Orders increased 25% in the first nine months of 2023 compared to the first nine months of 2022, while the average sales price of New Orders decreased 11% year over year. The increase in New Orders was primarily attributable to a 19% increase in the average number of active communities year over year. In addition, New Orders were favorably impacted by improved demand as previously discussed in the "Consolidated Homebuilding" section above. The average sales price of New Orders was negatively impacted by price adjustments to address affordability issues resulting from higher mortgage interest rates and significant home price appreciation over the previous two years.
Homebuilding Segment Reconciliations to Consolidated Homebuilding Operations
In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between homebuilding segment profit and homebuilding consolidated income before tax include unallocated corporate overhead (which includes all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. Our overhead functions, such as accounting, treasury and human resources, are centrally performed and the costs are not allocated to our operating segments. Consolidation adjustments consist of such items to convert the reportable segments’ results, which are predominantly maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments. External corporate interest expense primarily consists of interest charges on our Senior Notes, and is not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Homebuilding consolidated gross profit: | ||||||||||||||||||||||||||
| Mid Atlantic | $ | 281,230 | $ | 346,395 | $ | 775,983 | $ | 988,595 | ||||||||||||||||||
| North East | 67,861 | 67,092 | 180,389 | 167,958 | ||||||||||||||||||||||
| Mid East | 103,918 | 128,529 | 278,983 | 345,785 | ||||||||||||||||||||||
| South East | 156,846 | 191,612 | 476,319 | 537,947 | ||||||||||||||||||||||
| Consolidation adjustments and other | 380 | (86,640) | (22,393) | (50,100) | ||||||||||||||||||||||
| Homebuilding consolidated gross profit | $ | 610,235 | $ | 646,988 | $ | 1,689,281 | $ | 1,990,185 |
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Homebuilding consolidated income before taxes: | ||||||||||||||||||||||||||
| Mid Atlantic | $ | 212,826 | $ | 272,860 | $ | 567,119 | $ | 774,380 | ||||||||||||||||||
| North East | 48,787 | 49,614 | 125,779 | 116,839 | ||||||||||||||||||||||
| Mid East | 75,136 | 92,364 | 193,360 | 246,059 | ||||||||||||||||||||||
| South East | 107,666 | 145,619 | 339,723 | 409,895 | ||||||||||||||||||||||
| Reconciling items: | ||||||||||||||||||||||||||
| Contract land deposit reserve adjustment (1) | (3,783) | (8,736) | 6,696 | (2,391) | ||||||||||||||||||||||
| Equity-based compensation expense (2) | (24,665) | (25,279) | (69,356) | (56,251) | ||||||||||||||||||||||
| Corporate capital allocation (3) | 74,171 | 81,020 | 215,862 | 228,276 | ||||||||||||||||||||||
| Unallocated corporate overhead | (38,376) | (22,565) | (130,701) | (100,109) | ||||||||||||||||||||||
| Consolidation adjustments and other (4) | 16,947 | (66,182) | 10,948 | (15,417) | ||||||||||||||||||||||
| Corporate interest expense | (6,583) | (6,803) | (20,126) | (31,374) | ||||||||||||||||||||||
| Corporate interest income | 38,680 | 9,017 | 101,963 | 12,856 | ||||||||||||||||||||||
| Reconciling items sub-total | 56,391 | (39,528) | 115,286 | 35,590 | ||||||||||||||||||||||
| Homebuilding consolidated income before taxes | $ | 500,806 | $ | 520,929 | $ | 1,341,267 | $ | 1,582,763 | ||||||||||||||||||
(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of lot deposit impairment charges in Note 2 in the accompanying condensed consolidated financial statements.
(2)The increase in equity-based compensation expense for the nine-month period ended September 30, 2023 was primarily attributable to a four-year block grant of Options and RSUs issued in May 2022.
(3)This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and is as follows for the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Corporate capital allocation charge: | ||||||||||||||||||||||||||
| Mid Atlantic | $ | 33,994 | $ | 37,305 | $ | 102,509 | $ | 108,514 | ||||||||||||||||||
| North East | 8,944 | 7,994 | 24,542 | 23,238 | ||||||||||||||||||||||
| Mid East | 9,974 | 14,509 | 29,453 | 38,801 | ||||||||||||||||||||||
| South East | 21,259 | 21,212 | 59,358 | 57,723 | ||||||||||||||||||||||
| Total | $ | 74,171 | $ | 81,020 | $ | 215,862 | $ | 228,276 |
(4)The consolidation adjustments and other for the three and nine month periods of 2023 and 2022 is primarily driven by units under construction as well as significant fluctuations in lumber prices year over year. Our reportable segments' results include the intercompany profits of our production facilities for home packages delivered to our homebuilding divisions. Costs related to homes not yet settled are reversed through the consolidation adjustment and recorded in inventory. These costs are subsequently recorded through the consolidation adjustment when the respective homes are settled. In both the three and nine month periods of 2023, the consolidation adjustment was favorably impacted by a reduction in the number of units under construction year over year, resulting in a decrease in intercompany profits deferred, as compared to the three and nine month periods of 2022. In the three month period of 2022, the consolidation adjustment was negatively impacted by the recognition of previously deferred home package costs that included significantly higher priced lumber.
Mortgage Banking Segment
Three and Nine Months Ended September 30, 2023 and 2022
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 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 nine months ended September 30, 2023 and 2022:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
| Loan closing volume: | ||||||||||||||||||||||||||
| Total principal | $ | 1,621,599 | $ | 1,656,186 | $ | 4,240,529 | $ | 4,788,751 | ||||||||||||||||||
| Loan volume mix: | ||||||||||||||||||||||||||
| Adjustable rate mortgages | 2 | % | 8 | % | 3 | % | 8 | % | ||||||||||||||||||
| Fixed-rate mortgages | 98 | % | 92 | % | 97 | % | 92 | % | ||||||||||||||||||
| Operating profit: | ||||||||||||||||||||||||||
| Segment profit | $ | 39,921 | $ | 18,993 | $ | 107,191 | $ | 97,899 | ||||||||||||||||||
| Equity-based compensation expense | (1,387) | (1,407) | (4,132) | (2,190) | ||||||||||||||||||||||
| Mortgage banking income before tax | $ | 38,534 | $ | 17,586 | $ | 103,059 | $ | 95,709 | ||||||||||||||||||
| Capture rate: | 89 | % | 81 | % | 86 | % | 84 | % | ||||||||||||||||||
| Mortgage banking fees: | ||||||||||||||||||||||||||
| Net gain on sale of loans | $ | 46,767 | $ | 25,222 | $ | 127,898 | $ | 120,035 | ||||||||||||||||||
| Title services | 9,753 | 12,154 | 30,068 | 35,327 | ||||||||||||||||||||||
| Servicing fees | 96 | 79 | 155 | 156 | ||||||||||||||||||||||
| $ | 56,616 | $ | 37,455 | $ | 158,121 | $ | 155,518 | |||||||||||||||||||
Loan closing volume for the three and nine months ended September 30, 2023 decreased by approximately $34,600, or 2%, and $548,200, or 11%, respectively, from the same periods in 2022. The decrease in loan closing volume during the three months ended September 30, 2023 was primarily attributable to the 6% decrease in the homebuilding segment’s number of units settled, partially offset by the higher capture rate in the period. The decrease in loan closing volume during the nine months ended September 30, 2023 was primarily attributable to the 10% decrease in the homebuilding segment’s number of units settled compared to the same period in 2022.
Segment profit for the three months ended September 30, 2023 increased by approximately $20,900, or 110%, from the same period in 2022. This increase was primarily attributable to an increase of approximately $19,200, or 51%, in mortgage banking fees, primarily due to an increase in gains on sales of loans in the third quarter.
Segment profit for the nine months ended September 30, 2023 increased by approximately $9,300, or 9%, from the same period in 2022. This increase was primarily attributable to an increase in net interest income and a decrease in general and administrative expenses. Net interest income increased by approximately $4,000, or 56%, primarily due to an increase in mortgage interest rates in 2023 as compared to 2022. General and administrative expenses decreased by approximately $3,100, or 4%, during the nine months ended September 30, 2023 resulting from a decrease in personnel costs.
Seasonality
We generally have higher New Order activity in the first half of the year and higher home settlements, revenue and net income in the second half of the year. However, our typical seasonal New Order and settlement trends have been affected since 2020 by the pandemic, supply chain disruptions and the significant fluctuations in mortgage interest rates. We cannot therefore predict whether period-to-period fluctuations will be consistent with historical patterns.
Effective Tax Rate
Our effective tax rate for the three and nine months ended September 30, 2023 was 19.7% and 18.2%, respectively, compared to 23.6% and 24.3% for the three and nine months ended September 30, 2022, respectively. The decrease in the effective tax rate in the three and nine month periods of 2023 compared to the same periods in 2022 was primarily attributable to a higher income tax benefit recognized for excess tax benefits from stock option exercises, which totaled approximately $31,900 and $111,000 for the three and nine months ended September 30, 2023, respectively, and approximately $10,600 and $27,700 for the three and nine months ended September 30, 2022, respectively.
We expect to experience volatility in our effective tax rate in future quarters as the amount of the excess tax benefit from equity-based awards is dependent on our stock price when awards are exercised as well as on the timing of exercises, which historically has varied from quarter to quarter.
Liquidity and Capital Resources
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 September 30, 2023, we had approximately $2,900,000 in cash and cash equivalents, approximately $287,500 in unused committed capacity under our revolving credit facility and $150,000 in unused committed capacity under our revolving mortgage repurchase facility.
Material Cash Requirements
We believe that our current cash holdings, cash generated from operations, and cash available under our short-term unsecured credit agreement and revolving mortgage repurchase facility, as well as the public debt and equity markets, will be sufficient to satisfy both our short term and long term cash requirements for working capital to support our daily operations and meet commitments under our contractual obligations with third parties. Our material contractual obligations primarily consist of the following:
(i) Payments due to service our debt and interest on that debt. Future interest payments on our remaining outstanding senior notes total approximately $185,550, with $27,000 due within the next twelve months.
(ii) Payment obligations totaling approximately $340,500 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.
(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.
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 third quarter of 2023. For the nine months ended September 30, 2023, we repurchased 134,751 shares of our common stock at an aggregate purchase price of $795,387. As of September 30, 2023, we had approximately $212,300 available under a Board approved repurchase authorization.
Capital Resources
Senior Notes
As of September 30, 2023, we had Senior Notes with an aggregate principal balance of $900,000, which mature in May 2030. The Senior Notes are senior unsecured obligations and rank equally in right of payment with any of our existing and future unsecured senior indebtedness, will rank senior in right of payment to any of our future indebtedness that is by its terms expressly subordinated to the Senior Notes and will be effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The indenture governing the Senior Notes does not contain any financial covenants; however, it does contain, among other items, and subject to certain exceptions, covenants that restrict our ability to create, incur, assume or guarantee secured debt, enter into sale and leaseback transactions and conditions related to mergers and/or the sale of assets. We were in compliance with all covenants under the Senior Notes at September 30, 2023.
Credit Agreement
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 $12,500 outstanding at September 30, 2023. The Credit Agreement termination date is February 12, 2026. There were no borrowings outstanding under the Credit Agreement at September 30, 2023.
Repurchase Agreement
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 2023, NVRM entered into the First Amendment to the Repurchase Agreement, which extended the term of the Repurchase Agreement through July 17, 2024. All other terms and conditions under the amended Repurchase Agreement remained materially consistent. At September 30, 2023, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. There was no borrowings outstanding under the Repurchase Agreement at September 30, 2023.
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, 2022.
Cash Flows
For the nine months ended September 30, 2023, cash, restricted cash, and cash equivalents increased by $395,476. Net cash provided by operating activities was $1,002,287 for the nine months ended September 30, 2023, due primarily to cash provided by earnings. Cash was primarily used to fund the increase in inventory of $215,498, attributable to an increase in units under construction at September 30, 2023 compared to December 31, 2022 and a net use of approximately $23,000 from mortgage loan activity.
Net cash used in investing activities for the nine months ended September 30, 2023 was $17,354. Cash was used primarily for purchases of property, plant and equipment of $18,531.
Net cash used in financing activities was $589,457 for the nine months ended September 30, 2023. Cash was used to repurchase 134,751 shares of our common stock at an aggregate purchase price of $795,387 under our ongoing common stock repurchase program, discussed above. Cash was provided from stock option exercise proceeds totaling $207,163.
Critical Accounting Estimates
There have been no material changes to our critical accounting estimates as previously disclosed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.
Previous: Item 1. Financial Statements · Next: Item 3. Quantitative and Qualitative Disclosure about Market Risk