Lennar Corp. (LEN) Tops Q3 EPS by 11c; Backlog Up 22%

(Updated - September 17, 2014 6:19 AM EDT)

Lennar Corp. (NYSE: LEN) reported Q3 EPS of $0.78, $0.11 better than the analyst estimate of $0.67. Revenue for the quarter came in at $2.01 billion versus the consensus estimate of $1.96 billion.

• Deliveries of 5,457 homes – up 9%
• New orders of 5,889 homes – up 23%; new orders dollar value of $1.9 billion – up 28%
• Backlog of 7,290 homes – up 22%; backlog dollar value of $2.5 billion – up 29%
• Gross margin on home sales of 25.2% – improved 30 basis points

Stuart Miller, Chief Executive Officer of Lennar Corporation, said, "We are extremely pleased with our third quarter results as we achieved solid profitability in each of our reporting segments. Our core homebuilding business continues to drive earnings, with strong sales, deliveries and margins. New orders in the quarter rose 23% over the prior year, with increases in each of our segments. Our gross and operating margins edged higher year over year to 25.2% and 14.8%, respectively. Our sales backlog increased 29% from last year to approximately $2.5 billion, providing an excellent foundation going forward.

The housing market in general has continued its slow and steady recovery. This recovery has been driven by years of production deficit that has limited supply while demand has come back to the market. Concurrently, the market has been constrained by reduced access to credit available to many potential purchasers. The recovery has traveled in a fairly narrow channel driven by a need for production and limited by credit availability. Within that channel the road has been somewhat volatile, atypical of previous recoveries, and often difficult for many to read. Our core homebuilding business is hitting on all cylinders as we have properly considered and understood the uniqueness of this recovery."

Mr. Miller continued, "Complementing our core homebuilding business, Lennar Multifamily recorded its first two sales of apartment properties in the third quarter. Both sales produced greater than our targeted 25% return on invested capital, and demonstrated that our multifamily segment is maturing and beginning to contribute to the bottom line. Our geographically diversified $5 billion pipeline of multifamily product will become a more predictable source of quarterly earnings starting in late 2015 and 2016.

Rialto has continued to develop and expand its strategic plan to become a best in class asset manager, as it is now returning cash to the company and producing consistent bottom line results. Rialto's fund investments are poised for strong long-term returns while the commercial mortgage origination business provides steady, current earnings."

Mr. Miller concluded, "While our homebuilding business continues to be the primary driver of our quarterly earnings, we are extremely well positioned across all of our platforms to continue to produce industry-leading results."

For earnings history and earnings-related data on Lennar Corp. (LEN) click here.

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