Financial Highlights
Third Quarter
* Revenues from continuing operations of $3.5 billion -- up 27%
* EPS from continuing operations of $2.06 -- up 51%
* Homebuilding operating earnings of $552.6 million -- up 48%
* Gross margin % on home sales of 26.3% -- up 340 basis points
* Financial services operating earnings from continuing operations
of $34.9 million -- up 52%
* Homebuilding debt to total capital of 37.1%
* New orders of 11,614 -- up 24%
* Backlog dollar value of $8.1 billion -- up 33%
2005 / 2006 Goals
* Fiscal 2005 EPS goal from continuing operations increased to $8.10 from
$7.80 ($7.97 -- including $0.13 per share charge on the redemption of
the Company's 9.95% senior notes)
* Fiscal 2006 EPS goal of $9.25
MIAMI, Sept. 26 /PRNewswire-FirstCall/ -- Lennar Corporation
(NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today
reported earnings for its third quarter ended August 31, 2005. Third quarter
net earnings from continuing operations in 2005 were $337.3 million, or $2.06
per share diluted, compared to net earnings from continuing operations of
$225.0 million, or $1.36 per share diluted, in 2004.
Stuart Miller, President and Chief Executive Officer of Lennar
Corporation, said, "Our strong performance reflects the continued strength of
the homebuilding market along with our intense focus on our homebuilding
process. We exceeded our home delivery target through increased conversion of
homes in backlog combined with a 340 basis point increase in gross margin
percentage."
Mr. Miller continued, "New home sales activity continued to point to
strong consumer demand as our new orders increased 24% year-over-year. As the
industry continues to benefit from favorable market conditions, we continue to
strengthen our position in strategic markets through organic and acquisitive
growth."
Mr. Miller concluded, "Assuming general economic stability and minimal
impact from the recent hurricane activity, our record-level $8.1 billion
backlog, strong balance sheet and strategic positioning give us confidence in
our future outlook. We are increasing our fiscal 2005 earnings per share goal
from $7.80 to $8.10 per share and establishing a fiscal 2006 earnings per
share goal of $9.25."
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 2005 COMPARED TO
THREE MONTHS ENDED AUGUST 31, 2004
Homebuilding
Revenues from home sales increased 30% in the third quarter of 2005 to
$3.2 billion from $2.5 billion in 2004. Revenues were higher primarily due to
a 14% increase in the number of home deliveries and a 14% increase in the
average sales price of homes delivered in the third quarter of 2005. New home
deliveries, excluding unconsolidated entities, increased to 10,503 homes in
the third quarter of 2005 from 9,213 homes last year. In the third quarter of
2005, new home deliveries were higher in each of the Company's regions,
compared to 2004. The average sales price of homes delivered increased to
$306,000 in the third quarter of 2005 from $269,000 in 2004.
Gross margins on home sales were $846.4 million, or 26.3%, in the third
quarter of 2005, compared to $566.5 million, or 22.9%, in 2004. Gross margin
percentage on home sales increased 340 basis points primarily due to favorable
pricing conditions. The most significant impact on the margin improvement
came from Arizona, California, Florida, Maryland/Virginia, Nevada and Texas.
Selling, general and administrative expenses as a percentage of revenues
from home sales were 11.0% in the third quarter of 2005, compared to 10.8% in
2004.
Gross profit on land sales totaled $46.4 million in the third quarter of
2005, compared to $53.9 million in 2004. Some of these land sales were from
consolidated joint ventures, which resulted in minority interest expense.
Minority interest expense from these land sales and other activities of the
consolidated joint ventures was $13.2 million and $7.2 million, respectively,
in the third quarter of 2005 and 2004 and is included in management fees and
other income (expense), net. Management fees and other income (expense), net,
totaled ($3.0) million in the third quarter of 2005, compared to $10.3 million
in 2004. Equity in earnings from unconsolidated entities was $16.8 million in
the third quarter of 2005, compared to $9.7 million last year. Sales of land,
equity in earnings from unconsolidated entities and management fees and other
income (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 $34.9 million in the third quarter of 2005, compared to
$22.9 million last year. The increase was primarily due to the Division's
title operations, which generated higher volume and profit per transaction in
the third quarter of 2005, compared to 2004.
Corporate General and Administrative Expenses
Corporate general and administrative expenses as a percentage of total
revenues from continuing operations were 1.3% in the third quarter of 2005,
compared to 1.2% last year.
NINE MONTHS ENDED AUGUST 31, 2005 COMPARED TO
NINE MONTHS ENDED AUGUST 31, 2004
Homebuilding
Revenues from home sales increased 30% in the nine months ended August 31,
2005 to $8.1 billion from $6.2 billion in 2004. Revenues were higher
primarily due to a 15% increase in the number of home deliveries and a 13%
increase in the average sales price of homes delivered in 2005. New home
deliveries, excluding unconsolidated entities, increased to 27,031 homes in
the nine months ended August 31, 2005 from 23,473 homes last year. In the
nine months ended August 31, 2005, new home deliveries were higher in each of
the Company's regions, compared to 2004. The average sales price of homes
delivered increased to $298,000 in the nine months ended August 31, 2005 from
$264,000 in 2004.
Gross margins on home sales were $2.0 billion, or 25.4%, in the nine
months ended August 31, 2005, compared to $1.4 billion, or 23.0%, in 2004.
Gross margin percentage on home sales increased 240 basis points primarily due
to favorable pricing conditions. The most significant impact to the margin
improvement came from Arizona, California, Florida, Nevada and Texas.
Selling, general and administrative expenses as a percentage of revenues
from home sales were 11.5% in the nine months ended August 31, 2005, compared
to 11.6% in 2004.
Gross profit on land sales totaled $142.6 million in the nine months ended
August 31, 2005, compared to $146.1 million in 2004. Some of these land sales
were from consolidated joint ventures, which resulted in minority interest
expense. Minority interest expense from these land sales and other activities
of the consolidated joint ventures was $33.9 million and $7.8 million,
respectively, in the nine months ended August 31, 2005 and 2004 and is
included in management fees and other income, net. Management fees and other
income, net, totaled $2.3 million in the nine months ended August 31, 2005,
compared to $47.0 million in 2004. Equity in earnings from unconsolidated
entities was $54.7 million in the nine months ended August 31, 2005, compared
to $28.9 million last year. Sales of land, equity in earnings from
unconsolidated entities and management fees and other income, 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 $70.2 million in the nine months ended August 31, 2005, compared
to $77.6 million last year. The decrease was primarily due to reduced
profitability from the Division's mortgage operations as a result of a more
competitive mortgage environment in 2005, as well as a $6.5 million pretax
gain generated from monetizing a majority of the Division's alarm monitoring
contracts in 2004. This decrease was partially offset by improved
profitability from the Division's title operations in 2005.
Corporate General and Administrative Expenses
Corporate general and administrative expenses as a percentage of total
revenues from continuing operations were 1.4% in both the nine months ended
August 31, 2005 and 2004.
Loss on Redemption of 9.95% Senior Notes
In 2005, the Company redeemed all of its outstanding 9.95% senior notes,
which resulted in a pretax loss on redemption of $34.9 million, or $0.13 per
share diluted.
Discontinued Operations
In 2005, the Company generated a $15.8 million pretax gain on the sale of
a subsidiary of the Financial Services Division's title company. As a result
of the sale, the subsidiary's results are presented as discontinued operations
for 2005 and 2004. Net earnings from discontinued operations for the nine
months ended August 31, 2005 were $10.7 million, or $0.07 per share diluted,
compared to $0.6 million in the prior year.
Lennar Corporation, founded in 1954, is headquartered in Miami, Florida
and is one of the nation's leading builders of quality homes for all
generations, building affordable, move-up and retirement homes. The Company
operates primarily under the Lennar and U.S. Home brand names and utilizes a
Dual Marketing strategy consisting of the Everything's Included(R) and Design
Studio(SM) programs. Lennar's Financial Services Division provides mortgage
financing, title insurance, closing services and insurance agency services for
both buyers of the Company's homes and others. Its Strategic Technologies
Division provides high-speed Internet and cable television services to
residents of the Company's communities and others. Previous press releases
may be obtained at 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" included in our Annual Report
on Form 10-K for our fiscal year ended November 30, 2004, and in our other
filings with the Securities and Exchange Commission. We do not undertake any
obligation to update forward-looking statements.
A conference call to discuss the Company's third quarter earnings will be
held at 11:00 AM Eastern time on Tuesday, September 27, 2005. 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 795678 as the confirmation number.
LENNAR CORPORATION AND SUBSIDIARIES
Selected Revenues and Earnings Information
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
August 31, August 31,
2005 2004 2005 2004
Revenues:
Homebuilding $3,346,008 2,621,438 8,437,261 6,589,543
Financial services 152,324 125,891 399,776 361,998
Total revenues $3,498,332 2,747,329 8,837,037 6,951,541
Homebuilding operating
earnings $552,577 372,680 1,314,557 924,570
Financial services operating
earnings 34,939 22,930 70,188 77,611
Corporate general and
administrative expenses 45,744 34,184 123,731 94,113
Loss on redemption of 9.95%
senior notes -- -- 34,908 --
Earnings from continuing
operations before
provision for income taxes 541,772 361,426 1,226,106 908,068
Provision for income taxes 204,519 136,438 462,855 342,795
Earnings from continuing
operations 337,253 224,988 763,251 565,273
Discontinued operations:
Earnings from discontinued
operations before provision
for income taxes (1) -- 376 17,261 984
Provision for income taxes -- 142 6,516 372
Earnings from discontinued
operations -- 234 10,745 612
Net earnings $ 337,253 225,222 773,996 565,885
Average shares outstanding:
Basic 155,048 155,449 154,828 155,316
Diluted 164,917 167,022 165,828 167,410
Earnings per share:
Basic:
Earnings from continuing
operations $ 2.18 1.45 4.93 3.64
Earnings from
discontinued operations 0.00 0.00 0.07 0.00
Net earnings $ 2.18 1.45 5.00 3.64
Diluted:
Earnings from continuing
operations $ 2.06 1.36 4.64 3.42
Earnings from
discontinued operations 0.00 0.00 0.07 0.00
Net earnings $2.06 1.36 4.71 3.42
Supplemental information:
Interest incurred (2) $ 45,388 35,471 122,871 99,540
EBIT (3):
Earnings from continuing
operations before
provision for income
taxes $ 541,772 361,426 1,226,106 908,068
Earnings from discontinued
operations before
provision for income
taxes (1) -- 376 17,261 984
Interest 44,190 33,729 121,794 89,171
EBIT $585,962 395,531 1,365,161 998,223
(1) Earnings from discontinued operations before provision for income
taxes includes a gain of $15.8 million for the nine months ended
August 31, 2005 related to the sale of a subsidiary of the Company's
Financial Services Division's title company.
(2) Homebuilding interest incurred is capitalized to inventories and
relieved as cost of sales when homes are delivered or land is sold.
(3) 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)
(Unaudited)
Three Months Ended Nine Months Ended
August 31, August 31,
2005 2004 2005 2004
Revenues:
Sales of homes $3,216,186 2,475,355 8,053,105 6,202,159
Sales of land 129,822 146,083 384,156 387,384
Total revenues 3,346,008 2,621,438 8,437,261 6,589,543
Costs and expenses:
Cost of homes sold 2,369,738 1,908,815 6,008,132 4,778,115
Cost of land sold 83,413 92,159 241,542 241,293
Selling, general and
administrative 354,075 267,727 930,002 721,480
Total costs and expenses 2,807,226 2,268,701 7,179,676 5,740,888
Equity in earnings from
unconsolidated entities 16,793 9,685 54,679 28,920
Management fees and other
income (expense), net (2,998) 10,258 2,293 46,995
Operating earnings $ 552,577 372,680 1,314,557 924,570
LENNAR CORPORATION AND SUBSIDIARIES
Summary of Deliveries, New Orders and Backlog By Region
(Dollars in thousands)
(Unaudited)
At or for the
Three Months Ended Nine Months Ended
August 31, August 31,
2005 2004 2005 2004
Deliveries:
East 3,172 2,751 8,078 7,293
Central 3,541 3,102 8,791 7,587
West 4,224 3,562 11,087 9,116
Total 10,937 9,415 27,956 23,996
Of the total deliveries listed above, 434 and 925, respectively,
represent deliveries from unconsolidated entities for the three and nine
months ended August 31, 2005, compared to 202 and 523 deliveries in the
same periods last year.
New Orders:
East 3,196 2,851 9,663 10,163
Central 3,517 3,054 10,208 8,379
West 4,901 3,433 13,298 10,965
Total 11,614 9,338 33,169 29,507
Of the total new orders listed above, 219 and 971, respectively,
represent new orders from unconsolidated entities for the three and nine
months ended August 31, 2005, compared to 541 and 1,351 new orders in
the same periods last year.
Backlog - Homes:
East 9,220 9,053
Central 3,984 3,289
West 8,614 7,252
Total 21,818 19,594
Of the total homes in backlog listed above, 1,401 represents homes in
backlog from unconsolidated entities at August 31, 2005, compared to
1,728 homes in backlog at August 31, 2004.
Backlog - Dollar Value:
East $3,253,404 2,515,212
Central 963,388 799,099
West 3,926,360 2,828,282
Total $8,143,152 6,142,593
Of the total dollar value of homes in backlog listed above, $593,238
represents the backlog dollar value from unconsolidated entities at
August 31, 2005, compared to $703,856 of backlog dollar value at August
31, 2004.
Lennar's market regions consist of homebuilding divisions located in the
following states:
East: Florida, Maryland, Virginia, New Jersey, 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)
(Unaudited)
August 31,
2005 2004
Homebuilding debt $2,780,331 1,998,657
Stockholders' equity 4,719,312 3,688,431
Total capital $7,499,643 5,687,088
Homebuilding debt to total capital 37.1% 35.1%
SOURCE Lennar Corporation
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Related links:
http://www.lennar.com
Photo Notes:
NewsCom:
http://www.newscom.com/cgi-bin/prnh/20040604/LENLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
Company News On-Call:
http://www.prnewswire.com/comp/507038.html
CONTACT:
Marshall Ames, Investor Relations, Lennar
Corporation, +1-305-485-2092
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