Lennar Corp. (NYSE: LEN), one of largest U.S. home builders, this week reported a second-quarter net loss of $244.2 million, compared with net earnings of $324.7 million for second-quarter 2006.
That represents a loss of $1.55 per diluted share for the quarter ended May 31. Following the earnings announcement, the company’s stock price per share dropped $1.20 on Tuesday to $37.55.
The company’s performance reflects a continuing downturn in the housing market, said Stuart Miller, Lennar Corp. CEO and president, in an earnings announcement Tuesday.
“The housing market has continued to deteriorate,” Miller stated. He also said that “weak, and perhaps deteriorating, market conditions” may continue for the rest of the year, and company officials expect a third-quarter loss.
“The supply of new and existing homes has continued to increase, resulting in declining home prices across our markets. We have continued to adjust pricing to meet today’s market conditions. This has allowed us to carefully manage inventory levels; however, it has also resulted in lower margins and further impairments,” he stated.
“We continue to aggressively manage our inventory levels by converting inventory to cash, and reducing both land purchases and starts.”
The second-quarter loss translates to a drop of $1.55 per diluted share, compared with a gain of $2 per diluted share in second-quarter 2006.
Second-quarter revenues declined 33 percent in the second quarter to $2.7 billion, compared with $4 billion in second-quarter 2006. This drop was primarily related to a 29 percent decrease in home deliveries and a 7 percent decline in the average sales price of homes delivered in 2007, the company reported.
The company reported 8,940 home deliveries in second-quarter 2007 compared with 12,506 for the same quarter last year.
The average sales price of homes delivered decreased to $298,000 in the second quarter of 2007 compared with $322,000 in second-quarter 2006, “primarily due to higher sales incentives offered to home buyers ($43,700 per home delivered in the second quarter of 2007),” the company reported.
Losses on land sales totaled $108.8 million in the second quarter, the company reported, compared with gross profit from land sales of $41.1 million in second-quarter 2006.
Operating earnings from the company’s financial services segment totaled $14.2 million in the second quarter, compared with $34.6 million last year. The decline was due in part to the “decreased profitability from the segment’s mortgage operations as a result of decreased volume and profit per loan,” the company reported.
Revenues from home sales decreased 24 percent in the six months ended May 31, 2007, to $5.3 billion, compared with $6.9 billion in 2006.
New-home deliveries, excluding unconsolidated entities, decreased to 17,506 homes in the six months ended May 31, 2007, compared with 21,410 homes for the same period last year.
In the six months ended May 31, 2007, new home deliveries were lower in each of the company’s home-building segments and Homebuilding Other, compared to 2006. The average sales price of homes delivered decreased to $300,000 in the six months ended May 31, 2007, from $324,000 during the same period in 2006.
Lennar, founded in 1954, operates in Florida, Maryland, New Jersey, Virginia, Arizona, Colorado, Texas, California, Nevada, Illinois, Minnesota, New York, North Carolina and South Carolina.
