Home-builder Lennar Corp. (LEN,LEN.B) reported Wednesday higher profit in its third quarter as revenues were benefited by increased home deliveries and average sales prices. Both earnings per share and top line beat market estimates.
In pre-market activity, Lennar shares were gaining $2.12 or 5.42 percent, and trading at $41.25.
Chief Executive Officer Stuart Miller said, "Our core homebuilding business continues to drive earnings, with strong sales, deliveries and margins... The housing market in general has continued its slow and steady recovery. This recovery has been driven by years of production deficit that has limited supply while demand has come back to the market."
For the quarter, net earnings attributable to the company increased to $177.76 million or $0.78 per share from $120.66 million or $0.54 per share a year ago. On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.67 per share for the quarter. Analysts' estimates typically exclude special items.
The company said it achieved solid profitability in each of its reporting segments.
In the quarter, Homebuilding operating earnings grew to $261.9 million from last year's $208.4 million. Lennar Financial Services as well as Rialto Investments also posted strong growth in earnings.
Gross margin on home sales of 25.2 percent improved 30 basis points, primarily on higher average sales price and a decrease in sales incentives as a percentage of revenue from home sales, partially offset by an increase in materials, labor and land costs. Operating margin on home sales of 14.8 percent improved 10 basis points.
Total revenues for the quarter climbed 26 percent to $2.01 billion from $1.60 billion in the previous year. Wall Street expected revenues of $1.96 billion.
Revenues from home sales increased 25 percent to $1.8 billion from $1.4 billion in 2013. New home deliveries, excluding unconsolidated entities, increased 10 percent to 5,450 homes from 4,972 homes last year, with growth in all of its Homebuilding segments and Homebuilding Other.
The average sales price of homes delivered increased 14 percent to $332 thousand from $291 thousand a year ago. Sales incentives offered to homebuyers were 5.8 percent as a percentage of home sales revenue, compared to 6 percent last year.
New orders increased 23 percent to 5,889 homes, and new orders dollar value grew 28 percent to $1.9 billion.
Backlog was 7,290 homes or $2.5 billion in dollar value, a growth of 22 percent and 29 percent, respectively, from last year.
Miller concluded, "While our homebuilding business continues to be the primary driver of our quarterly earnings, we are extremely well positioned across all of our platforms to continue to produce industry-leading results."
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