Lennar Reports First Quarter Results

Monday, March 30, 2009 8:19 PM

MIAMI, March 30 /PRNewswire-FirstCall/ --

Revenues of $593.1 million - down 44%
Loss per share of $0.98 (includes a $0.35 per share charge related to valuation adjustments and other write-offs; and a $0.36 per share charge related to a non-cash deferred tax asset valuation allowance)
Gross margin on home sales:
- 14.3% (excluding SFAS 144 valuation adjustments of $40.8 million) - down 280 basis points
- 6.5% (including SFAS 144 valuation adjustments) - down 780 basis points
S, G & A expenses as a % of revenues from home sales of 19.4% - up 100 basis points
Homebuilding cash of $1.1 billion as of February 28, 2009
No outstanding balance under the Company's credit facility as of February 28, 2009
Homebuilding debt to total capital, net of homebuilding cash, of 37.4%
Maximum recourse indebtedness related to the Company's unconsolidated entities of $474.0 million - reduced $45.9 million since Q4 2008 and $1.3 billion since the peak in 2006
Number of unconsolidated joint ventures reduced to 95 - down from 116 unconsolidated joint ventures at Q4 2008 and 270 unconsolidated joint ventures at the peak in 2006
Simultaneous with this press release, the Company has filed a Form 8-K providing additional unconsolidated joint venture disclosures
Deliveries of 2,142 homes - down 40%
New orders of 2,190 homes - down 28%; cancellation rate of 21%
Backlog of 1,647 homes - down 52%

Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's largest homebuilders, today reported results for its first quarter ended February 28, 2009. First quarter net loss in 2009 was $155.9 million, or $0.98 per diluted share, compared to first quarter net loss of $88.2 million, or $0.56 per diluted share, in 2008.

Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, 'The housing market continued its downward trend throughout our first quarter. Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets. While we are hopeful that the recent actions taken by the Federal government will help stimulate housing demand and restore consumer confidence, we continue to adjust our business to adapt to market conditions.'

Mr. Miller continued, 'During the first quarter, we continued to focus on returning to profitability by concentrating on the basics of our homebuilding operations. We remained focused on repositioning our product to meet today's consumer demand for more affordable product. We reduced our construction costs by re-bidding and re-tooling our product and eliminated S, G & A expenses by restructuring our operations and consolidating operating divisions in the wake of declining volume levels.'

'We remain focused on maintaining strong liquidity as we ended our first quarter with $1.1 billion in cash, no outstanding borrowings under our credit facility and a responsible homebuilding debt-to-total capital ratio, net of homebuilding cash, of 37.4%. We also reduced the number of our unconsolidated joint ventures to 95 from 116 at November 30, 2008 and reduced our maximum unconsolidated joint venture recourse debt to $474 million from $520 million at November 30, 2008.'

Mr. Miller concluded, 'As we continue to focus on homebuilding profitability and on cash generation, we are well positioned to weather the current challenges and to take advantage of opportunities as they present themselves.'

                              RESULTS OF OPERATIONS
                 THREE MONTHS ENDED FEBRUARY 28, 2009 COMPARED TO
                       THREE MONTHS ENDED FEBRUARY 29, 2008

Homebuilding

Revenues from home sales decreased 45% in the first quarter of 2009 to $522.8 million from $953.1 million in 2008. Revenues were lower primarily due to a 38% decrease in the number of home deliveries and a 12% decrease in the average sales price of homes delivered in 2009. New home deliveries, excluding unconsolidated entities, decreased to 2,136 homes in the first quarter of 2009 from 3,437 homes last year. In the first quarter of 2009, new home deliveries were lower in each of the Company's homebuilding segments and Homebuilding Other, compared to 2008. The average sales price of homes delivered decreased to $244,000 in the first quarter of 2009 from $278,000 in the same period last year, primarily due to reduced pricing. Sales incentives offered to homebuyers were $50,500 per home delivered in the first quarter of 2009, compared to $48,000 per home delivered in the first quarter of 2008.

Gross margins on home sales excluding SFAS 144 valuation adjustments were $75.0 million, or 14.3%, in the first quarter of 2009, compared to $162.9 million, or 17.1%, in 2008. Gross margin percentage on home sales, excluding SFAS 144 valuation adjustments, decreased compared to last year, primarily due to higher sales incentives offered to homebuyers as a percentage of revenues from home sales. Gross margins on home sales were $34.2 million, or 6.5%, in the first quarter of 2009, which included $40.8 million of SFAS 144 valuation adjustments, compared to gross margins on home sales of $136.7 million, or 14.3%, in the first quarter of 2008, which included $26.2 million of SFAS 144 valuation adjustments. Gross margins on home sales excluding SFAS 144 valuation adjustments is a non-GAAP financial measure. This financial measure is disclosed by certain of the Company's competitors. The Company finds it useful and important in evaluating its performance because it discloses the Company's gross margins with regard to new homes the Company actually delivers in the periods presented. The Company believes that disclosing this information is helpful to readers of its financial statements by enabling them to compare the gross margins of new homes the Company actually delivers during the periods presented with those of its competitors.

Selling, general and administrative expenses were reduced by $73.8 million, or 42%, in the first quarter of 2009, compared to the same period last year, primarily due to reduction in associate headcount, variable selling expenses and fixed costs. As a percentage of revenues from home sales, selling, general and administrative expenses increased to 19.4% in the first quarter of 2009, from 18.4% in the first quarter of 2008, due to lower revenues.

Losses on land sales totaled $10.5 million in the first quarter of 2009, which included $0.2 million of SFAS 144 valuation adjustments and $10.2 million of write-offs of deposits and pre-acquisition costs related to approximately 1,100 homesites under option that the Company does not intend to purchase.

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