Financial Highlights
2005 Fourth Quarter
* Revenues from continuing operations of $5.0 billion - up 42%
* EPS from continuing operations of $3.54 - up 55%
* Homebuilding operating earnings of $962.5 million - up 54%
* Gross margin on home sales of 27.0% - up 140 basis points
* New orders of 10,236 homes - up 25%
2005 Fiscal Year
* Revenues from continuing operations of $13.9 billion - up 32%
* EPS from continuing operations of $8.17 - up 43% (includes $0.13 per
share charge on the redemption of the Company's 9.95% senior notes)
* Homebuilding operating earnings of $2.3 billion - up 47%
* Gross margin on home sales of 26.0% - up 210 basis points
* Gross profit on land sales for fiscal 2005 of $200.8 million - up
$41.5 million
* Debt to total capital of 33.1% and cash of $910 million
* Deliveries of 42,359 homes - up 17%
* Backlog dollar value of $6.9 billion - up 36%
2006 Goal
* Fiscal 2006 EPS goal of $9.25 reaffirmed
MIAMI, Dec. 15 /PRNewswire-FirstCall/ -- Lennar Corporation
(NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today
reported earnings for its fourth quarter and fiscal year ended November 30,
2005. Fourth quarter net earnings from continuing operations in 2005 were
$581.2 million, or $3.54 per share diluted, compared to net earnings from
continuing operations of $379.4 million, or $2.29 per share diluted, in 2004.
Stuart Miller, President and Chief Executive Officer of Lennar
Corporation, said, "The intense focus on the fundamentals of our homebuilding
process allowed us to achieve record results once again in fiscal 2005, as we
exceeded our target and delivered a record 42,359 homes despite the 400 to 500
deliveries delayed due to the significant disruption caused by Hurricane
Wilma. Overall, we are very pleased with our performance in fiscal 2005, which
resulted in strong revenue growth and a 210 basis point increase in gross
margin percentage on new home deliveries."
Mr. Miller continued, "While the industry continues to be influenced by
increased regulation, we expect our homebuilding operations to continue to
benefit substantially from our access to homesites in land-constrained
markets. Despite signs nationally of a more normalized level of activity with
regards to sales pace and price appreciation, our capital investments in these
strategic markets afford us a significant competitive advantage and allow us
to be well positioned for future success."
Mr. Miller concluded, "As we enter fiscal 2006, our record-level
$6.9 billion backlog, strong balance sheet and strategic access to homesites
position us well to achieve our previously announced fiscal 2006 earnings per
share goal of $9.25."
RESULTS OF OPERATIONS
THREE MONTHS ENDED NOVEMBER 30, 2005 COMPARED TO
THREE MONTHS ENDED NOVEMBER 30, 2004
Homebuilding
Revenues from home sales increased 39% in the fourth quarter of 2005 to
$4.7 billion from $3.4 billion in 2004. Revenues were higher primarily due to
an 18% increase in the number of home deliveries and an 18% increase in the
average sales price of homes delivered in the fourth quarter of 2005. New
home deliveries, excluding unconsolidated entities, increased to 13,851 homes
in the fourth quarter of 2005 from 11,716 homes last year. In the fourth
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 $338,000 in the fourth quarter of 2005 from $287,000 in 2004.
Gross margins on home sales were $1.3 billion, or 27.0%, in the fourth
quarter of 2005, compared to $860.4 million, or 25.6%, in 2004. Gross margin
percentage on home sales increased 140 basis points primarily due to a product
mix favoring our higher margin states, as well as a significant gross margin
percentage improvement in Arizona and Florida.
Selling, general and administrative expenses as a percentage of revenues
from home sales were 9.6% in both the fourth quarter of 2005 and 2004.
Gross profit on land sales totaled $58.2 million in the fourth quarter of
2005, compared to $13.3 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 $11.2 million and $3.0 million, respectively,
in the fourth quarter of 2005 and 2004 and is included in management fees and
other income, net. Management fees and other income, net, totaled
$14.2 million in the fourth quarter of 2005, compared to $11.5 million in
2004. Equity in earnings from unconsolidated entities was $79.1 million in
the fourth quarter of 2005, compared to $61.8 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 $34.6 million in the fourth quarter of 2005, compared to
$33.1 million last year. The increase was primarily due to the Division's
title operations, which generated higher profit per transaction in the fourth
quarter of 2005, compared to 2004. This increase was partially offset by
reduced profitability from the Division's mortgage operations due to a more
competitive mortgage environment.
Corporate General and Administrative Expenses
Corporate general and administrative expenses as a percentage of total
revenues from continuing operations were 1.3% in both the fourth quarter of
2005 and 2004.
YEAR ENDED NOVEMBER 30, 2005 COMPARED TO
YEAR ENDED NOVEMBER 30, 2004
Homebuilding
Revenues from home sales increased 33% in the year ended November 30, 2005
to $12.7 billion from $9.6 billion in 2004. Revenues were higher primarily
due to a 16% increase in the number of home deliveries and a 15% increase in
the average sales price of homes delivered in 2005. New home deliveries,
excluding unconsolidated entities, increased to 40,882 homes in the year ended
November 30, 2005 from 35,189 homes last year. In the year ended November 30,
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
$311,000 in the year ended November 30, 2005 from $272,000 in 2004.
Gross margins on home sales were $3.3 billion, or 26.0%, in the year ended
November 30, 2005, compared to $2.3 billion, or 23.9%, in 2004. Gross margin
percentage on home sales increased 210 basis points primarily due to a product
mix favoring our higher margin states, as well as a significant gross margin
percentage improvement in Arizona, California and Florida.
Selling, general and administrative expenses as a percentage of revenues
from home sales were 10.8% in the year ended November 30, 2005, compared to
10.9% in 2004.
Gross profit on land sales totaled $200.8 million in the year ended
November 30, 2005, compared to $159.4 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 $45.0 million and
$10.8 million, respectively, in the years ended November 30, 2005 and 2004 and
is included in management fees and other income, net. Management fees and
other income, net, totaled $16.5 million in the year ended November 30, 2005,
compared to $58.5 million in 2004. Equity in earnings from unconsolidated
entities was $133.8 million in the year ended November 30, 2005, compared to
$90.7 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 $104.8 million in the year ended November 30, 2005, compared to
$110.7 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 the year ended November 30,
2005, compared to 1.3% in 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, net of tax.
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 year
ended November 30, 2005 were $10.7 million, or $0.06 per share diluted,
compared to $1.0 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, as amended on Form 10-K/A, 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 fourth quarter earnings will be
held at 11:00 AM Eastern time on Thursday, December 15, 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 805917 as the confirmation number.
LENNAR CORPORATION AND SUBSIDIARIES
Selected Revenues and Earnings Information
(In thousands, except per share amounts)
Three Months Ended Years Ended
November 30, November 30,
2005 2004 2005 2004
Revenues:
Homebuilding $4,867,338 3,411,089 13,304,599 10,000,632
Financial services 162,596 138,338 562,372 500,336
Total revenues $5,029,934 3,549,427 13,866,971 10,500,968
Homebuilding operating
earnings $ 962,534 623,918 2,277,091 1,548,488
Financial services
operating earnings 34,580 33,120 104,768 110,731
Corporate general and
administrative expenses 63,526 47,609 187,257 141,722
Loss on redemption of 9.95%
senior notes -- -- 34,908 --
Earnings from continuing
operations before
provision for income taxes 933,588 609,429 2,159,694 1,517,497
Provision for income taxes 352,429 230,060 815,284 572,855
Earnings from continuing
operations 581,159 379,369 1,344,410 944,642
Discontinued operations:
Earnings from discontinued
operations before
provision for income
taxes (1) -- 586 17,261 1,570
Provision for income taxes -- 221 6,516 593
Earnings from discontinued
operations -- 365 10,745 977
Net earnings $ 581,159 379,734 1,355,155 945,619
Average shares outstanding:
Basic 157,108 155,644 155,398 155,398
Diluted 164,604 167,127 165,522 167,340
Earnings per share:
Basic:
Earnings from continuing
operations $ 3.70 2.44 8.65 6.08
Earnings from
discontinued operations 0.00 0.00 0.07 0.01
Net earnings $ 3.70 2.44 8.72 6.09
Diluted:
Earnings from continuing
operations $ 3.54 2.29 8.17 5.70
Earnings from
discontinued operations 0.00 0.00 0.06 0.00
Net earnings $ 3.54 2.29 8.23 5.70
Supplemental information:
Interest incurred (2) $ 50,027 38,381 172,898 137,921
EBIT (3):
Earnings from continuing
operations before
provision
for income taxes $ 933,588 609,429 2,159,694 1,517,497
Earnings from
discontinued operations
before provision
for income taxes (1) -- 586 17,261 1,570
Interest 65,360 45,022 187,154 134,193
EBIT $ 998,948 655,037 2,364,109 1,653,260
(1) Earnings from discontinued operations before provision for income
taxes includes a gain of $15.8 million for the year ended November
30, 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)
Three Months Ended Years Ended
November 30, November 30,
2005 2004 2005 2004
Revenues:
Sales of homes $4,658,684 3,357,688 12,711,789 9,559,847
Sales of land 208,654 53,401 592,810 440,785
Total revenues 4,867,338 3,411,089 13,304,599 10,000,632
Costs and expenses:
Cost of homes sold 3,402,211 2,497,331 9,410,343 7,275,446
Cost of land sold 150,442 40,116 391,984 281,409
Selling, general and
administrative 445,478 323,003 1,375,480 1,044,483
Total costs and
expenses 3,998,131 2,860,450 11,177,807 8,601,338
Equity in earnings from
unconsolidated entities 79,135 61,819 133,814 90,739
Management fees and other
income, net 14,192 11,460 16,485 58,455
Operating earnings $ 962,534 623,918 2,277,091 1,548,488
LENNAR CORPORATION AND SUBSIDIARIES
Summary of Deliveries, New Orders and Backlog By Region
(Dollars in thousands)
At or for the
Three Months Ended Years Ended
November 30, November 30,
2005 2004 2005 2004
Deliveries:
East 4,389 4,030 12,467 11,323
Central 4,283 3,535 13,074 11,122
West 5,731 4,643 16,818 13,759
Total 14,403 12,208 42,359 36,204
Of the total deliveries listed above, 552 and 1,477, respectively,
represent deliveries from unconsolidated entities for the three months and
year ended November 30, 2005, compared to 492 and 1,015 deliveries in the
same periods last year.
New Orders:
East 2,914 2,304 12,577 12,467
Central 3,585 2,813 13,793 11,192
West 3,737 3,043 17,035 14,008
Total 10,236 8,160 43,405 37,667
Of the total new orders listed above, 283 and 1,254, respectively,
represent new orders from unconsolidated entities for the three months and
year ended November 30, 2005, compared to 349 and 1,700 new orders in the
same periods last year.
Backlog - Homes:
East 8,128 7,327
Central 3,286 2,567
West 7,151 5,652
Total 18,565 15,546
Of the total homes in backlog listed above, 1,359 represents homes in
backlog from unconsolidated entities at November 30, 2005, compared to
1,585 homes in backlog at November 30, 2004.
Backlog - Dollar Value:
East $2,931,247 2,177,884
Central 775,505 633,703
West 3,177,486 2,243,686
Total $6,884,238 5,055,273
Of the total dollar value of homes in backlog listed above, $590,129
represents the backlog dollar value from unconsolidated entities at
November 30, 2005, compared to $644,839 of backlog dollar value at
November 30, 2004.
Lennar's market regions consist of homebuilding divisions located in the
following states:
East: Florida, Maryland, 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)
November 30,
2005 2004
Homebuilding debt $2,592,772 2,021,014
Stockholders' equity 5,251,411 4,052,972
Total capital $7,844,183 6,073,986
Homebuilding debt to total capital 33.1% 33.3%
SOURCE Lennar Corporation
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Related links:
http://www.lennar.com
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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:
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CONTACT:
Marshall Ames, Investor Relations, Lennar
Corporation, +1-305-485-2092
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