Lennar Corp. (NYSE: LEN) reported Q1 EPS of $0.74, $0.02 worse than the analyst estimate of $0.76. Revenue for the quarter came in at $3.9 billion versus the consensus estimate of $4.11 billion.

• Net earnings of $239.9 million, or $0.74 per diluted share, compared to net earnings of $136.2 million, or $0.53 per diluted share
• Deliveries of 8,820 homes – up 30%
• New orders of 10,463 homes – up 24%; new orders dollar value of $4.2 billion – up 23%
• Backlog of 17,259 homes – down 2%; backlog dollar value of $7.1 billion – down 7%
• Revenues of $3.9 billion – up 30%
• Homebuilding operating margins of $384.9 million, compared to $258.1 million
  • Gross margin on home sales of 20.1%, compared to 19.5%
  • S,G&A expenses as a % of revenues from home sales of 9.5%, compared to 9.7%
  • Operating margin on home sales of 10.6%, compared to 9.8%
• Financial Services operating earnings (net of noncontrolling interests) of $21.8 million, compared to $25.9 million
• Multifamily operating earnings of $6.8 million, compared to operating loss of $1.2 million
• Homebuilding cash and cash equivalents of $853 million
• Homebuilding debt to total capital of 38.5%

Stuart Miller, Executive Chairman of Lennar, said, "We are pleased to announce our results for the first quarter where we achieved net earnings of $239.9 million, or $0.74 per diluted share, compared to $136.2 million, or $0.53 per diluted share in the prior year. Our new order growth exceeded the high end of our guidance by 5%, while our deliveries fell short of guidance primarily due to well-documented weather issues across the country. Even with lower than expected revenues in the first quarter, our continued focus on homebuilding operating efficiencies allowed the Company to increase operating earnings at a higher rate than revenues."

Mr. Miller continued, "We continued to see choppiness in the marketplace during our first quarter, consistent with what we highlighted on our fourth quarter conference call. However, during the quarter, mortgage interest rates subsided and ultimately pulled back and home prices moderated providing a catalyst for the new home market to correct itself. Accordingly, sequentially throughout the first quarter, we saw increased interest in new home purchases as part of an improving and stabilizing housing market. We continue to believe that the basic underlying housing market fundamentals of low unemployment, higher wages and low inventory levels remain favorable."

"During the first quarter, we advanced our strategy of reverting to our pure-play core homebuilding platform. We completed the sale of our Berkshire Hathaway real estate brokerage business, the majority of our retail title business along with our title insurance underwriter and our retail mortgage business."

Rick Beckwitt, Chief Executive Officer of Lennar, said, "Despite the uneven market conditions in the first quarter, we produced strong results. Our core homebuilding operations continued to leverage our size and scale in the leading markets. Our homebuilding gross margin was 20.1%, while our SG&A of 9.5% marked an all-time, first-quarter low. Using our strong cash position, we repurchased an additional one million shares of our stock for $47.0 million during the quarter."

Jon Jaffe, President of Lennar, said, "During the first quarter, we continued our strategic production focus, controlling direct construction costs, while enhancing our 'Builder of Choice' status with our trades. These important relationships with our subcontractors will be particularly relevant as we ramp up production during the year and remain on target to meet our 2019 synergy goals."

Mr. Miller concluded, "As we move into the heart of the spring selling season, we are optimistic that we will see a continued improvement in the demand for new homes. With a solid balance sheet, strong cash flow generation and continued execution of our core operating strategies, we believe that we are well positioned to produce strong results throughout 2019."

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