Real estate firm Lennar Corp. (LEN) reported an increase in third-quarter earnings as strong homebuilding operations and contributions from the recently acquired CalAltantic business pushed up revenues. The results exceeded market expectations, driving the company’s stock up in premarket trading Wednesday.
Net income attributable to shareholders was $453.21 million or $1.37 per share in the August quarter, higher than $249.17 million or $1.04 per share reported a year earlier. Analysts had forecast a slower increase. Adjusted earnings, excluding special items, were $1.61 per share.
Driving the earnings growth, revenues surged 74% year-over-year to $5.67 billion during the three-month period, exceeding estimates. Homebuilding, the company’s core segment, registered an 83% growth.
The Miami-based homebuilder sold 12,613 residential units during the period, reflecting a 66% growth from the third quarter of 2017. New orders climbed 62% annually to 12,319 units, suggesting a marked increase in sales during the remainder of the year.
New orders climbed 62%, suggesting a marked increase in sales during the remainder of the year
Home sales got a boost from the strong fundamentals of the industry and the upbeat employment and wage condition, which more than offset the impact of rising prices and higher interest rates.
“With a solid balance sheet, strong cash flow generation and continued execution of our core operating strategies, we believe that we are very well positioned to continue our strong performance as we head towards the end of 2018 and into 2019,” said Stuart Miller, executive chairman of Lennar.
During the third quarter, Lennar incurred about $12 million in costs related to the acquisition of homebuilding company CalAltantic earlier this year. It also recorded an additional $140 million of integration costs in connection with the merger.
Losing about 16%, Lennar shares have been in a free fall since the beginning of the year. The stock closed the last trading session lower but jumped nearly 6% after the earnings announcement Wednesday.