Lennar Corporation : Lennar Reports First Quarter EPS of $0.08
03/27/2012| 06:20am US/Eastern
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MIAMI, March 27, 2012/PRNewswire/
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Net earnings of $15.0 million, or
$0.08per diluted share, compared to
$27.4 million, or $0.14per
diluted share, in prior year, which included $37.5
million, or $0.19per diluted share,
related to the receipt of a non-recurring litigation
settlement
Deliveries of 2,482 homes - up 29%
New orders of 3,022 homes - up 33%; cancellation rate of
18%
Backlog of 2,711 homes - up 39%
Revenues of $724.9 million- up 30%
Gross margin on home sales of 20.9% - improved 90 basis
points
S,G&A expenses as a % of revenues from home sales of
14.9% - improved 150 basis points
Operating margin on home sales of 6.0% - improved 240
basis points
Lennar Homebuilding operating earnings of $20.0
million, compared to $35.5 millionin
prior year, which included $37.5
millionrelated to the receipt of a non-recurring
litigation settlement
Lennar Financial Services operating earnings of
$8.3 million, compared to $1.2
million
Rialto Investments operating earnings of $9.4
million(including $4.3 millionof net
loss attributable to noncontrolling interests), compared
to operating earnings of $11.0 million(net
of $12.0 millionof net earnings attributable
to noncontrolling interests)
Rialto Investments operating earnings include net gains
in the AB PPIP fund of $8.4 million,
primarily related to unrealized gains as a result of
mark-to-market adjustments, compared to gains totaling
$2.0 millionin Q1 2011
Lennar Homebuilding cash and cash equivalents of
approximately $800 million
Lennar Homebuilding debt to total capital, net of cash
and cash equivalents, of 49.6%
Lennar Corporation (NYSE: LEN and LEN.B), one of the
nation's largest homebuilders, today reported results
for its first quarter ended February 29, 2012.
First quarter net earnings attributable to Lennar in
2012 were $15.0 million, or
$0.08per diluted share, compared to
$27.4 million, or $0.14per
diluted share, in 2011, which included $37.5
million, or $0.19per diluted share,
related to the receipt of a non-recurring litigation
settlement.
Stuart Miller, Chief Executive Officer of
Lennar Corporation, said, "We are pleased to announce
EPS of $0.08in the first quarter, making this
our eighth consecutive quarter of profitability. We
were profitable in each of our business segments and
recorded our strongest first quarter homebuilding operating
margins in six years."
Mr. Miller continued, "New sales orders in the first
quarter were encouraging. We have seen the market
stabilize, driven by a combination of low home prices and
low interest rates, making the decision to purchase a new
home more attractive, compared to the heated rental market.
We recorded our strongest first quarter sales since
2008, with new orders increasing 33% year-over-year. We
have been able to increase sales prices and have started to
reduce sales incentives in some of our communities.
We have also seen a noticeable improvement in our
sales pace per community, which should lead to a
significant increase in the operating leverage of our
homebuilding segment in the second half of the year."
"During the quarter, we continued to manage our
homebuilding business carefully with tight controls over
our costs and an intense focus on improving our gross
margins. We benefited greatly from our strategic capital
investments in new higher margin communities, which helped
us drive a 20.9% gross margin in the first quarter and
improve our operating margin by 240 basis points over last
year."
"Our Rialto segment continues to show strength as it
generated $9.4 millionof earnings in the first
quarter. Rialto remains intensely focused on
maximizing the value of its assets, which it purchased at
significant discounts; however, the timing of these asset
resolutions varies from quarter to quarter. We remain
very enthusiastic about Rialto's position in the market
and its prospects for future profitability, which will be
even stronger as the market continues to improve."
Mr. Miller concluded, "Our strong balance sheet,
significant liquidity and deep management team continue to
position us to capitalize on opportunities and we believe
that the strategic investments we have made in our
Homebuilding and Rialto segments will lead the way to our
third consecutive profitable year in 2012."
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 29, 2012COMPARED
TO THREE MONTHS ENDED FEBRUARY 28, 2011
Lennar Homebuilding
Revenues from home sales increased 33% in the first quarter
of 2012 to $610.7 millionfrom $457.9
millionin 2011. Revenues were higher primarily
due to a 3% increase in the average sales price of homes
delivered and 30% increase in the number of home
deliveries, excluding unconsolidated entities. New
home deliveries, excluding unconsolidated entities,
increased to 2,472 homes in the first quarter of 2012 from
1,903 homes last year. There was an increase in home
deliveries in all of the Company's Homebuilding
segments and Homebuilding Other. The average sales price of
homes delivered increased to $246,000in the
first quarter of 2012, in all of the Company's
Homebuilding segments, from $240,000in the
same period last year. Sales incentives offered to
homebuyers were $34,200per home delivered in
the first quarter of 2012, or 12.2% as a percentage of home
sales revenue, compared to $33,100per home
delivered in the same period last year, or 12.1% as a
percentage of home sales revenue, and
$33,900per home delivered in the fourth
quarter of 2011, or 12.2% as a percentage of home sales
revenue.
Gross margins on home sales were $127.9
million, or 20.9%, in the first quarter of 2012,
compared to $91.7 million, or 20.0%, in the
first quarter of 2011. Gross margin percentage on home
sales improved compared to last year, primarily due to an
increase in average sales price and lower valuation
adjustments. Gross profits on land sales totaled $2.9
millionin the first quarter of 2012, compared to
$2.5 millionin the first quarter of 2011.
Selling, general and administrative expenses were
$91.1 millionin the first quarter of 2012,
compared to $75.2 millionin the first quarter
of 2011, which included $6.6 millionrelated to
expenses associated with remedying pre-existing liabilities
of a previously acquired company, offset by $8.0
millionof income related to the receipt of a
litigation settlement. As a percentage of revenues from
home sales, selling, general and administrative expenses
improved to 14.9% in the first quarter of 2012, from 16.4%
in the first quarter of 2011 due to higher revenues.
Lennar Homebuilding equity in earnings from unconsolidated
entities was $1.1 millionin the first quarter
of 2012, compared to $8.7 million, in the
first quarter of 2011, which included the Company's
share of a gain on debt extinguishment at one of Lennar
Homebuilding's unconsolidated entities totaling
$15.4 million, partially offset by $4.5
millionof valuation adjustments related to assets of
Lennar Homebuilding's unconsolidated entities.
Lennar Homebuilding other income, net, totaled $4.1
millionin the first quarter of 2012, compared to
$30.0 million, in the first quarter of 2011,
which included $29.5 millionrelated to the
receipt of a litigation settlement. Lennar Homebuilding
other income, net, in the first quarter of 2011 also
included the recognition of $10.0 millionof
deferred management fees related to management services
previously performed for one of Lennar Homebuilding's
unconsolidated entities. These amounts were partially
offset by $13.1 millionof valuation
adjustments to the Company's investments in Lennar
Homebuilding's unconsolidated entities in the first
quarter of 2011.
Homebuilding interest expense was $41.3
millionin the first quarter of 2012 ($16.1
millionwas included in cost of homes sold,
$0.4 millionin cost of land sold and
$24.8 millionin other interest expense),
compared to $35.8 millionin the first quarter
of 2011 ($13.5 millionwas included in cost of
homes sold, $0.2 millionin cost of land sold
and $22.1 millionin other interest expense).
Interest expense increased due to an increase in the
Company's outstanding debt compared to the same period
last year.
Lennar Financial Services
Operating earnings for the Lennar Financial Services
segment were $8.3 millionin the first quarter
of 2012, compared to operating earnings of $1.2
millionin the first quarter of 2011. The
increase in profitability was primarily due to improved
operating leverage as a result of an increase in
originations in the segment's mortgage operations and
reduced costs in the segment's title operations.
Rialto Investments
In the first quarter of 2012, operating earnings for the
Rialto Investments segment were $9.4 million,
or $5.1 million(net of $4.3
millionof net loss attributable to noncontrolling
interests), compared to $11.0 million, or
$23.0 million(which included $12.0
millionof net earnings attributable to
noncontrolling interests) in the same period last year. In
the first quarter of 2012, revenues in this segment were
$32.2 million, which consisted primarily of
accretable interest income associated with the
segment's portfolio of real estate loans and fees for
managing and servicing assets, compared to revenues of
$33.6 millionin the same period last year. In
the first quarter of 2012, Rialto Investments other income
(expense), net, was ($12.2) million, which
consisted primarily of expenses related to owning and
maintaining real estate owned, partially offset by rental
income and gains from acquisition of real estate owned
through foreclosure. In the first quarter of 2011, Rialto
Investments other income, net was $13.2
million, which consisted primarily of gains from
acquisition of real estate owned through foreclosure.
The segment also had equity in earnings from unconsolidated
entities of $18.5 millionduring the first
quarter of 2012, which included $8.4 millionof
net gains primarily related to unrealized gains for the
Company's share of the mark-to-market adjustments of
the investment portfolio underlying the AllianceBernstein
L.P. ("AB") fund formed under the Federal
government's Public-Private Investment Program
("PPIP"), $2.6 millionof interest
income earned by the AB PPIP fund and $7.6
millionof equity in earnings related to the Rialto
Investments Real Estate Fund. This compares to equity in
earnings from unconsolidated entities of $4.5
millionin the same period last year, which included
$2.0 millionof gains primarily related to
unrealized gains for the Company's share of the
mark-to-market adjustments of the AB PPIP investments and
$2.8 millionof interest income earned by the
AB PPIP fund, partially offset by other expenses. In the
first quarter of 2012, expenses in this segment were
$33.4 million, which consisted primarily of
costs related to its portfolio operations, due diligence
expenses related to both completed and abandoned
transactions, and other general and administrative
expenses, compared to expenses of $28.3
millionin the same period last year.
Corporate General and Administrative Expenses
Corporate general and administrative expenses were
$26.8 million, or 3.7% as a percentage of
total revenues, in the first quarter of 2012, compared to
$23.4 million, or 4.2% as a percentage of
total revenues, in the first quarter of 2011. The decrease
in corporate general and administrative expenses as a
percentage of total revenues was a result of an increase in
total revenues due primarily to an increase in home
deliveries.
Noncontrolling Interests
Net earnings (loss) attributable to noncontrolling
interests were ($7.0) millionand $11.3
million, respectively, in the first quarter of 2012
and 2011. Net loss attributable to noncontrolling interests
during the first quarter of 2012 was attributable to
noncontrolling interests related to the Company's
homebuilding and Rialto Investments segments. Net earnings
attributable to noncontrolling interests during the first
quarter of 2011 were primarily related to the FDIC's
interest in the portfolio of real estate loans that the
Company acquired in partnership with the FDIC.
Lennar Corporation, founded in 1954, is one of the
nation's leading builders of quality homes for all
generations. The Company builds affordable, move-up
and retirement homes primarily under the Lennar brand name.
Lennar's Financial Services segment provides
mortgage financing, title insurance and closing services
for both buyers of the Company's homes and others.
Lennar's Rialto Investments segment is focused on
distressed real estate asset investments, asset management
and workout strategies. Previous press releases and further
information about the Company may be obtained at the
"Investor Relations" section of the Company's
website, www.lennar.com.
Some of the statements in this press release are
"forward-looking statements," as that term is
defined in the Private Securities Litigation Reform Act of
1995. These forward-looking statements include
statements regarding our business, financial condition,
results of operations, strategies and prospects. You
can identify forward-looking statements by the fact that
these statements do not relate strictly to historical or
current matters. Rather, forward-looking statements
relate to anticipated or expected events, activities,
trends or results. Because forward-looking statements
relate to matters that have not yet occurred, these
statements are inherently subject to risks and
uncertainties. Many factors could cause our actual
activities or results to differ materially from the
activities and results anticipated in forward-looking
statements. These factors include those described
under the caption "Risk Factors" in Item 1A of
our Annual Report on Form 10-K for our fiscal year ended
November 30, 2011. We do not undertake
any obligation to update forward-looking statements, except
as required by Federal securities laws.
A conference call to discuss the Company's first
quarter earnings will be held at 11:00 a.m. Eastern
Timeon Tuesday, March 27, 2012.
The call will be broadcast live on the Internet and
can be accessed through the Company's website at www.lennar.com. If
you are unable to participate in the conference call, the
call will be archived at www.lennar.com for 90 days.
A replay of the conference call will also be
available later that day by calling 203-369-0799 and
entering 5723593 as the confirmation number.
LENNAR CORPORATION AND SUBSIDIARIES
Selected Revenues and Operational
Information
(In thousands, except per share
amounts)
(unaudited)
Three Months Ended
February 29,
February 28,
2012
2011
Revenues:
Lennar Homebuilding
$
624,433
466,709
Lennar Financial Services
68,215
57,713
Rialto Investments
32,208
33,623
Total revenues
$
724,856
558,045
Lennar Homebuilding operating earnings
$
19,989
35,488
Lennar Financial Services operating
earnings
8,250
1,183
Rialto Investments operating earnings
5,056
23,002
Corporate general and administrative
expenses
(26,842)
(23,352)
Earnings before income taxes
6,453
36,321
Benefit for income taxes
1,524
2,405
Net earnings (including net earnings (loss)
attributable
to noncontrolling interests)
7,977
38,726
Less: Net earnings (loss) attributable
to
noncontrolling interests
(6,991)
11,320
Net earnings attributable to Lennar
$
14,968
27,406
Average shares outstanding:
Basic
185,997
184,155
Diluted
213,813
194,859
Earnings per share:
Basic
$
0.08
0.15
Diluted
$
0.08
0.14
Supplemental information:
Interest incurred (1)
$
53,341
49,874
EBIT (2):
Net earnings attributable to Lennar
$
14,968
27,406
Benefit for income taxes
(1,524)
(2,405)
Interest expense
41,339
35,825
EBIT
$
54,783
60,826
(1)
Amount represents interest incurred related
to homebuilding debt.
(2)
EBIT is a non-GAAP financial measure defined
as earnings before interest and taxes.
This
financial measure has been presented because
the Company finds it important and useful in
evaluating its performance and believes that
it helps readers of the Company's
financial
statements compare its operations with those
of its competitors. Although management
finds
EBIT to be an important measure in conducting
and evaluating the Company's operations,
this measure has limitations as an analytical
tool as it is not reflective of the actual
profitability
generated by the Company during the period.
Management compensates for the limitations
of
using EBIT by using this non-GAAP measure
only to supplement the Company's GAAP
results. Due to the limitations discussed,
EBIT should not be viewed in isolation, as it is
not a
substitute for GAAP measures.
LENNAR CORPORATION AND SUBSIDIARIES
Segment Information
(In thousands)
(unaudited)
Three Months Ended
February 29,
February 28,
2012
2011
Lennar Homebuilding revenues:
Sales of homes
$
610,700
457,869
Sales of land
13,733
8,840
Total revenues
624,433
466,709
Lennar Homebuilding costs and
expenses:
Cost of homes sold
482,822
366,199
Cost of land sold
10,836
6,389
Selling, general and administrative
91,087
75,175
Total costs and expenses
584,745
447,763
Lennar Homebuilding operating margins
39,688
18,946
Lennar Homebuilding equity in earnings from
unconsolidated entities
1,083
8,661
Lennar Homebuilding other income, net
4,067
29,960
Other interest expense
(24,849)
(22,079)
Lennar Homebuilding operating earnings
$
19,989
35,488
Lennar Financial Services revenues
$
68,215
57,713
Lennar Financial Services costs and
expenses
59,965
56,530
Lennar Financial Services operating
earnings
$
8,250
1,183
Rialto Investments revenues
$
32,208
33,623
Rialto Investments costs and expenses
33,370
28,349
Rialto Investments equity in earnings from
unconsolidated entities
18,458
4,525
Rialto Investments other income (expense),
net
(12,240)
13,203
Rialto Investments operating earnings
$
5,056
23,002
LENNAR CORPORATION AND SUBSIDIARIES
Summary of Deliveries, New Orders and
Backlog
(Dollars in thousands)
(unaudited)
At or for the
Three Months Ended
February 29, 2012
February 28, 2011
Homes
Dollar Value
Homes
Dollar Value
Deliveries:
East
1,062
$ 237,021
831
$ 178,763
Central
387
84,927
312
66,064
West
394
126,015
341
110,992
Southeast Florida
187
49,788
134
35,091
Houston
352
80,768
219
48,664
Other
100
36,103
86
32,905
Total
2,482
$ 614,622
1,923
$ 472,479
Of the total home deliveries listed above, 10
homes with a dollar value of $3.9 million represent
home deliveries from
unconsolidated entities for the three months
ended February 29, 2012, compared to 20 home
deliveries with a dollar value of
$14.6 million for the three months ended
February 28, 2011.
New Orders:
East
1,246
$ 292,490
982
$ 207,591
Central
481
104,051
341
71,120
West
515
157,598
388
127,979
Southeast Florida
225
62,462
176
49,899
Houston
424
97,947
266
59,653
Other
131
48,786
114
45,298
Total
3,022
$ 763,334
2,267
$ 561,540
Of the total new orders listed above, 23
homes with a dollar value of $8.9 million represent
new orders from unconsolidated
entities for the three months ended February
29, 2012, compared to 21 new orders with a dollar
value of $16.9 million for the
three months ended February 28, 2011.
Backlog:
East
1,132
$ 278,092
906
$ 206,302
Central
403
84,245
283
58,348
West
419
129,173
226
74,825
Southeast Florida
204
64,920
165
53,842
Houston
427
96,948
292
69,900
Other
126
58,007
76
34,245
Total
2,711
$ 711,385
1,948
$ 497,462
Of the total homes in backlog listed above,
15homes with a backlog
dollar value of $6.0 million represent the backlog
from
unconsolidated entities at February 29, 2012,
compared to 4 homes with a backlog dollar value of
$4.5 million at February 28,
2011.
Lennar's reportable homebuilding segments
and homebuilding other consist of homebuilding
divisions located in:
East:
Florida(1), Georgia, Maryland, New Jersey,
North Carolina, South Carolina and Virginia
Central:
Arizona, Colorado and Texas(2)
West:
California and Nevada
Southeast Florida:
Southeast Florida
Houston:
Houston, Texas
Other:
Illinois and Minnesota
(1) Florida in the East reportable segment
excludes Southeast Florida, which is its own
reportable segment.
(2) Texas in the Central reportable segment
excludes Houston, Texas, which is its own
reportable segment.
LENNAR CORPORATION AND SUBSIDIARIES
Supplemental Data
(Dollars in thousands)
(unaudited)
February 29,
November 30,
February 28,
2012
2011
2011
Lennar Homebuilding debt
$
3,472,937
3,362,759
3,129,065
Total stockholders' equity
2,722,796
2,696,468
2,640,377
Total capital
$
6,195,733
6,059,227
5,769,442
Lennar Homebuilding debt to total
capital
56.1%
55.5%
54.2%
Lennar Homebuilding debt
$
3,472,937
3,362,759
3,129,065
Less: Lennar Homebuilding cash and cash
equivalents
792,165
1,024,212
1,014,000
Net Lennar Homebuilding debt
$
2,680,772
2,338,547
2,115,065
Net Lennar Homebuilding debt to total capital
(1)
49.6%
46.4%
44.5%
(1)
Net Lennar Homebuilding debt to total capital
consists of net Lennar Homebuilding debt (Lennar
Homebuilding debt less Lennar
Homebuilding cash and cash equivalents)
divided by total capital (net Lennar Homebuilding
debt plus total stockholders' equity).
SOURCE Lennar Corporation
Diane Bessette, Vice President and Treasurer of Lennar
Corporation, +1-305-229-6419
distributed by
This press release was issued by Lennar Corporation and was initially posted at http://phx.corporate-ir.net/phoenix.zhtml?c=65842&p=irol-newsArticle&ID=1676859&highlight= . It was distributed, unedited and unaltered, by noodls on 2012-03-27 12:07:45 PM. The issuer is solely responsible for the accuracy of the information contained therein.
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