Lennar Corp (LEN, Financial) released its third-quarter results before the opening bell on Oct. 2.
Earnings highlight
The homebuilder recorded earnings of $1.59 per share, up 16.1% from the prior-year quarter. Analysts had anticipated earnings of $1.32. Revenue grew 3% from the year-ago quarter to $5.9 billion. Analysts were anticipating revenue of $5.52 billion.
At the end of the quarter, the company had $795.4 million in cash and cash equivalents.
"As the market continued to solidify through the third quarter, stimulating both the affordability and demand for homes, our new orders and deliveries increased 9% and 7%, respectively, from the prior year," Executive Chairman Stuart Miller said. "Our homebuilding gross margin in the third quarter was 20.4%, while our SG&A of 8.3% marked an all-time, third-quarter low. We continue to believe that the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remain favorable."
Segment performance
In the homebuilding division, revenue increased 2% to $5.3 billion for the three months ended Aug. 31. Lennar attributed the growth to a higher number of homes delivered (up 7% year over year), which was partially offset by a 5% decline in the average sales price of homes delivered. Sales incentives on homes delivered came in at $24,400 per home.
The Miami-based company delivered 13,522 homes during the quarter, reflecting a gain of 7% from the year-ago period. New orders jumped 8.5% to 13,369 homes. At quarter-end, the backlog amounted to 18,908 units, which was down 2%. Potential housing revenue from the backlog declined 9% to $7.6 billion.
The Financial Services segment recorded a 13.1% decline in revenue to $224.5 million. In contrast, operating earnings rose from $60.5 million in year-ago quarter to $78.8 million on the back of a robust mortgage business.
Lennar Multi-Family reported $184 million in sales, which grew 82% from last year. The sement's operating earnings totalled $10.5 million, which was an improvement from a $3.9 million operating loss in the year-ago quarter.
Last word
The lower borrowing costs and scintillating demand for new homes helped Lennar’s overall performance, which is evident from the quarterly numbers. Miller said:
"Our intense operational focus on our homebuilding machine, together with our strategic land program, drove solid homebuilding cash flow, which is trending towards $1.5 billion for fiscal 2019.”
Disclosure: I do not hold any positions in the stocks mentioned.
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