Financial Highlights
First Quarter
- Revenues of $3.2 billion - up 35%
- Net earnings from continuing operations of $258.1 million - up 34%
- EPS from continuing operations of $1.58 - up 35%
- Homebuilding operating earnings of $450.9 million - up 36%
- Gross margin on home sales of 24.9% - up 30 basis points
- Homebuilding debt to total capital of 36.0%, Moody's upgrade in March
to Baa2
- Return on equity of 29.6%
- New orders of 9,793 homes - up 4%
- Backlog dollar value of $7.1 billion - up 18%
2006 Goal
- Fiscal 2006 EPS goal of $9.25 reaffirmed
MIAMI, March 28 /PRNewswire-FirstCall/ -- Lennar Corporation
(NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today
reported earnings for its first quarter ended February 28, 2006. First quarter
earnings from continuing operations in 2006 were $258.1 million, or $1.58 per
share diluted, compared to earnings from continuing operations of $192.8
million, or $1.17 per share diluted, in 2005.
Stuart Miller, President and Chief Executive Officer of Lennar
Corporation, said, "We are pleased to report record results for our first
quarter, where we produced a 35% increase in both revenues and earnings per
share from continuing operations, compared to last year. These record results
were supported by a strong performance from both our homebuilding and land
divisions."
Mr. Miller continued, "While there has been a slower sales pace in certain
markets in which we operate and price appreciation in these markets has
moderated relative to the appreciation experienced in the past few years, we
were still able to achieve a 4% increase in new orders during the first
quarter. We are focused on maintaining a sales pace that supports our current
and planned inventory levels, and we believe that our intense focus on asset
management and our homebuilding manufacturing process will set the foundation
to achieve a more evenflow production of home deliveries."
Mr. Miller concluded, "As a result of our $7.1 billion backlog, we believe
2006 will be another record year and are reaffirming our 2006 earnings per
share goal of $9.25. Given our strong balance sheet liquidity, we are well
positioned for organic growth as well as strategic growth opportunities as
they arise."
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 28, 2006 COMPARED TO
THREE MONTHS ENDED FEBRUARY 28, 2005
Homebuilding
Revenues from homes sales increased 32% in the first quarter of 2006 to
$2.9 billion from $2.2 billion in 2005. Revenues were higher primarily due to
an 18% increase in the number of home deliveries and a 12% increase in the
average sales price of homes delivered in 2006. New home deliveries,
excluding unconsolidated entities, increased to 8,904 homes in the first
quarter of 2006 from 7,577 homes last year. In the first quarter of 2006, new
home deliveries were higher in each of the Company's regions, compared to
2005. The average sales price of homes delivered increased to $326,000 in the
first quarter of 2006 from $292,000 in 2005.
Gross margins on home sales were $727.9 million, or 24.9%, in the first
quarter of 2006, compared to $544.4 million, or 24.6%, in 2005. Gross margin
percentage on home sales increased 30 basis points due to an improvement in
the Company's East region, primarily Florida, partially offset by decreases in
the Central and West regions, primarily due to higher sales incentives offered
to homebuyers, compared to last year.
Selling, general and administrative expenses as a percentage of revenues
from home sales increased to 13.0% in the first quarter of 2006, from 12.4% in
2005. The 60 basis point increase was primarily due to higher personnel-
related expenses resulting from an increase in the number of land divisions
established to manage increased levels of owned and controlled homesites, as
well as land sales activity, compared to prior year. Additionally, broker
commissions increased compared to prior year. Management fees of $6.4 million
received during 2005 from unconsolidated entities in which the Company has
investments, which were previously recorded as a reduction of selling, general
and administrative expenses, have been reclassified to management fees and
other income, net in order to conform to the 2006 presentation.
Gross profit on land sales totaled $49.1 million in the first quarter of
2006, compared to $23.5 million in 2005. Equity in earnings from
unconsolidated entities was $38.2 million in the first quarter of 2006,
compared to $16.1 million last year. Management fees and other income, net,
totaled $19.4 million in the first quarter of 2006, compared to $21.7 million
in the first quarter of 2005. Minority interest expense, net was $4.4 million
and $1.2 million, respectively, in the first quarter of 2006 and 2005. Sales
of land, equity in earnings from unconsolidated entities, management fees and
other income, net and minority interest expense, net may vary significantly
from period to period depending on the timing of land sales and other
transactions entered into by the Company and unconsolidated entities in which
it has investments.
Financial Services
Operating earnings from continuing operations for the Financial Services
Division were $10.6 million in the first quarter of 2006, compared to $16.3
million last year. The decrease was primarily due to reduced profitability
from the Division's mortgage and title operations as a result of a more
competitive mortgage environment and a decrease in the number of title
transactions.
Corporate General and Administrative Expenses
Corporate general and administrative expenses as a percentage of total
revenues were 1.6% and 1.5%, respectively, for the first quarter of 2006 and
2005.
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 and U.S. Home brand
names. Lennar's Financial Services Division provides primarily mortgage
financing, title insurance and closing services for both buyers of the
Company's homes and others. Previous press releases and further information
about the Company may be obtained at the "Investor Relations" section of the
Company's website, http://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 Relating to Our Business" in Item 1A of our Annual
Report on Form 10-K for our fiscal year ended November 30, 2005. We do not
undertake any obligation or duty to update forward-looking statements.
A conference call to discuss the Company's first quarter earnings will be
held at 11:00 a.m. Eastern time on Tuesday, March 28, 2006. The call will be
broadcast live on the Internet and can be accessed through the Company's
website at http://www.lennar.com. If you are unable to participate in the
conference call, the call will be archived at http://www.lennar.com for 90
days. A replay of the conference call will also be available later that day
by calling 320-365-3844 and entering 821486 as the confirmation number.
LENNAR CORPORATION AND SUBSIDIARIES
Selected Revenues and Earnings Information
(In thousands, except per share amounts)
Three Months Ended
February 28,
2006 2005
Revenues:
Homebuilding $ 3,108,718 2,289,938
Financial services 131,941 115,793
Total revenues $ 3,240,659 2,405,731
Homebuilding operating earnings $ 450,872 330,519
Financial services operating earnings 10,625 16,286
Corporate general and administrative
expenses 51,891 37,160
Earnings from continuing operations
before provision for income taxes 409,606 309,645
Provision for income taxes 151,554 116,891
Earnings from continuing operations 258,052 192,754
Discontinued operations:
Earnings from discontinued
operations before provision for
income taxes -- 726
Provision for income taxes -- 274
Earnings from discontinued operations -- 452
Net earnings $ 258,052 193,206
Average shares outstanding:
Basic 157,826 155,144
Diluted 164,554 166,857
Earnings per share:
Basic:
Earnings from continuing operations $ 1.64 1.25
Earnings from discontinued
operations 0.00 0.00
Net earnings $ 1.64 1.25
Diluted:
Earnings from continuing operations $ 1.58 1.17
Earnings from discontinued
operations 0.00 0.00
Net earnings $ 1.58 1.17
Supplemental information:
Interest incurred (1) $ 53,484 36,923
EBIT (2):
Earnings from continuing operations
before provision for income taxes $ 409,606 309,645
Earnings from discontinued
operations before provision for
income taxes -- 726
Interest 44,870 31,052
EBIT $ 454,476 341,423
(1) Homebuilding interest incurred is capitalized to inventories and
relieved as cost of sales when homes are delivered or land is sold.
(2) EBIT is a non-GAAP financial measure derived by adding back
previously capitalized interest amortized to cost of sales that was
reflected in earnings before provision for income taxes. The
Company's management uses EBIT because it believes this financial
measure helps to compare the Company's operations with those of its
competitors, by eliminating factors that differ from company to
company for reasons that often are not related to the efficiency and
effectiveness of a particular company's operations. The Company
believes EBIT provides useful information to investors and analysts,
because it will help them compare the efficiency and effectiveness of
the Company's operations with those of its competitors.
LENNAR CORPORATION AND SUBSIDIARIES
Homebuilding Segment Information
(In thousands)
Three Months Ended
February 28,
2006 2005 (1)
Revenues:
Sales of homes $ 2,920,695 2,214,579
Sales of land 188,023 75,359
Total revenues 3,108,718 2,289,938
Costs and expenses:
Cost of homes sold 2,192,772 1,670,136
Cost of land sold 138,919 51,874
Selling, general and administrative 379,365 273,965
Total costs and expenses 2,711,056 1,995,975
Equity in earnings from unconsolidated
entities 38,190 16,139
Management fees and other income, net 19,433 21,654
Minority interest expense, net 4,413 1,237
Operating earnings $ 450,872 330,519
(1) Certain prior year amounts have been reclassified to conform to the
2006 presentation.
LENNAR CORPORATION AND SUBSIDIARIES
Summary of Deliveries, New Orders and Backlog By Region
(Dollars in thousands)
At or for the
Three Months Ended
February 28,
2006 2005
Deliveries:
East 2,898 2,209
Central 2,719 2,297
West 3,682 3,303
Total 9,299 7,809
Of the total deliveries listed above, 395 represents deliveries from
unconsolidated entities for the three months ended February 28, 2006,
compared to 232 deliveries last year.
New Orders:
East 3,417 3,040
Central 3,153 2,844
West 3,223 3,576
Total 9,793 9,460
Of the total new orders listed above, 282 represents new orders from
unconsolidated entities for the three months ended February 28, 2006,
compared to 322 new orders last year.
Backlog - Homes:
East 8,774 8,158
Central 3,670 3,114
West 7,014 6,192
Total 19,458 17,464
Of the total homes in backlog listed above, 1,505 represents homes in
backlog from unconsolidated entities at February 28, 2006, compared to
1,675 homes in backlog at February 28, 2005.
Backlog - Dollar Value:
East $ 3,140,046 2,577,295
Central 839,118 764,084
West 3,092,534 2,629,291
Total $ 7,071,698 5,970,670
Of the total dollar value of homes in backlog listed above, $596,664
represents the backlog dollar value from unconsolidated entities at
February 28, 2006, compared to $689,776 of backlog dollar value at
February 28, 2005.
Lennar's market regions consist of homebuilding divisions located in the
following states:
East: Florida, Maryland, Delaware, Virginia, New Jersey, New York,
North Carolina and South Carolina
Central: Texas, Illinois and Minnesota
West: California, Colorado, Arizona and Nevada
LENNAR CORPORATION AND SUBSIDIARIES
Supplemental Data
(Dollars in thousands)
February 28,
2006 2005
Homebuilding debt $ 3,125,172 2,002,867
Stockholders' equity 5,554,800 4,161,508
Total capital $ 8,679,972 6,164,375
Homebuilding debt to total capital 36.0% 32.5%
SOURCE Lennar Corporation
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