Lennar Corporation (LEN) reported net earnings of $30 million or 16 cents per share in the third quarter of the year, an improvement from the net loss of $171.6 million or 97 cents per share in the prior-year quarter and the Zacks Consensus Estimate of 6 cents per share. Revenues increased 14% to $825 million, up $23 million from the Zacks Consensus Estimate of $802 million.
The improvement in results was attributable to reduced construction costs and increased cycle times, partially offset by the expiration of the federal homebuyer tax credit at the end of April, high unemployment and foreclosures.
Performance by Segment
Revenues in the Homebuilding segment increased 11.6% to $718.1 million, driven by an increase in home deliveries. Home deliveries rose to 2,950 units from 2,691 units last year. Operating earnings from the segment were $38.1 million compared with a loss of $154.7 million in the corresponding period of 2009.
Revenues in the Financial Services segment stood at $68.8 million, a decline of 10.8% from the year-earlier quarter. The segment generated operating earnings of $6.8 million, down from $11.2 million in the third quarter of 2009. The fall in earnings was attributable to lower profits earned per loan in the segment’s mortgage operations.
Rialto Investments posted revenues of $38 million and operating earnings of $18.5 million (including $10.8 million attributable to non-controlling interests) in the quarter. The segment reported an operating loss of $496,000 in the year-ago quarter. The segment’s results were positively affected by successful investments in the Federal Deposit Insurance Corporation (FDIC) loan portfolios and in the Public-Private Investment Program (PPIP) fund.
Lennar had cash and cash equivalents and restricted cash worth $1 billion and total debt worth $2.8 billion from homebuilding operations as of August 31, 2010. The company’s net homebuilding debt was $1.98 billion as of the above period, up from $1.33 billion as of August 31, 2009. This translated into homebuilding net debt-to-capitalization ratio of 44.1% as of the same date compared with 35.6% as of August 31, 2009.
Lennar Corporation, a Zacks #3 Rank stock, engages in the construction and sale of single-family attached and detached homes, and to a lesser extent multi-level residential buildings, as well as the purchase, development and sale of residential land.
The homebuilder is based in Miami, Florida. It also offers various financial services, including mortgage financing and serves customers in Florida, Maryland, New Jersey, Virginia, Arizona, Colorado, Texas, California, Nevada, Illinois, Minnesota, New York, North Carolina and South Carolina.
Based on the improved results, Lennar’s share price went up 8.65% to $15.20 in Monday afternoon trading.