Lennar’s Q3 results beat expectations

Lennar Corporation (NYSE: LEN) beat revenue and earnings estimates for the third quarter of 2019, allowing shares to gain 3% in premarket hours on Wednesday.

Total revenues rose 3% year-over-year to $5.9 billion, surpassing estimates of $5.4 billion.  

Net earnings were $513.4 million, or $1.59 per share, compared to $453.2 million, or $1.37 per share, in the prior-year period. Analysts had forecast EPS of $1.32.

During the quarter, new orders rose 9% year-over-year to 13,369 homes while new orders dollar value increased 3% to $5.2 billion. Backlog fell 2% to 18,908 homes while backlog dollar value fell 9% to $7.6 billion.

Rick Beckwitt, CEO, said, “We’ve clearly focused our attention on becoming a land lighter company. Regarding our forward-looking 40% goal of controlled homesites (versus owned), during the quarter, we made great progress by increasing our controlled homesites from 25% to 30%. We expect to continue making significant progress on this goal by entering into deals with regional and national land platforms. During the quarter, we also made progress on reducing our years owned supply of homesites from 4.5 to 4.4 years and continue to target a goal of 3.0 years. As we reach these goals, it will enable us to generate significant cash flow by reducing our land spend, driving meaningfully greater returns over time.”

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Homebuilding revenue increased 3% year-over-year to $5.4 billion. Revenues from home sales grew 2% to $5.3 billion, mainly due to a 7% increase in the number of home deliveries. New home deliveries, excluding unconsolidated entities, totaled 13,513 homes. The average sales price of homes delivered dropped to $394,000 from $415,000 last year, due to a shift to lower-priced communities as well as higher sales incentives.

Financial Services revenue fell 13% year-over-year to $224.5 million. Multifamily revenues increased 81% to $183 million. Revenues in Lennar Other totaled $9.6 million in the quarter.

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