Lennar Increases Revenue by 42% in 4Q
Homebuilder Lennar Corp.’s fiscal fourth-quarter earnings thrived as the housing market continues on its road to recovery.
Through Nov. 30, 2012, Lennar reported net earnings of $124.3 million, or $0.56 per diluted share, compared to $30.3 million, or $0.16 per diluted share, a year ago. For the year, Lennar’s net earnings were $679.1 million, versus $92.2 million in 2011.
Also, the Miami-based homebuilder’s revenue increased 42% to $1.35 billion for the quarter due to profitability in all of the company’s business segments.
For example, Lennar Homebuilding saw new orders go up 32% to 3,983. Gross margins on home sales jumped to 23.5% from 19.4% a year ago.
Additionally, the backlog of homes—which indicates future business—was at 4,053 homes with a value of $1.2 billion. This is 87% more than the same time period last year.
Furthermore, new home deliveries increased 32% to 4,443 units, with the average selling price climbing to $261,000 from $243,000.
“Our homebuilding machine continues to improve and be our primary driver of profitability, fueled by our opportunistic land acquisitions and increasing operating leverage due to higher absorption per community and overall deliveries,” said Stuart Miller, CEO of Lennar Corp.
Lennar’s financial services segment also had a strong fourth quarter with operating earnings of $33.2 million, compared to $9.1 million last year. The increase in profitability was driven by increased volume and margins in the segment’s mortgage operations as well as higher volume in title operations due to more refinance transactions and homebuilding deliveries, the company stated.
Meanwhile, Rialto Investments, Lennar’s segment that focuses on distressed real estate asset investments, asset management and workout strategies, saw its quarterly earnings drop from $8 million to $4.6 million on an annual basis. This led to lower revenue that declined due to lower interest income as a result of a decrease in the portfolio of loans.
Despite the negative quarter for Rialto Investments, Miller is optimistic for the segment’s future helping Lennar’s overall growth.
"Rialto has continued to contribute directly to the profitability of the company while providing our homebuilding segment with unique opportunities to acquire attractive land parcels,” Miller added. “We remain enthusiastic about Rialto's position in the market and its prospects for long-term profitability and value creation, which should be enhanced by continued economic recovery."
“As we head into 2013, we are extremely well positioned to gain market share in a recovering market,” Miller continued. “We have a strong balance sheet and we will continue to benefit from our strategic land acquisitions and new community openings. With a beginning sales backlog value up more than 100% from the prior year, fiscal 2013 promises to be another year of strong profitability.”