Lennar Post 2Q Loss

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Lennar Post 2Q Loss

Miami, FL, June 26, 2007--Homebuilder Lennar swung to a loss in the second quarter as the housing downturn continues. The company also warned that it would likely post a loss in the third quarter as well.

 

Losses totaled $244.2 million, or $1.55 per share, versus profit of $324.7 million, or $2 per share, in the previous year.

 

The company said results were hurt by a charge of $1.33 per share related to valuation adjustments and write-offs of option deposits and pre-acquisition costs.

 

Analysts surveyed by Thomson Financial forecast a profit of 5 cents per share. The estimates typically exclude one-time charges.

 

Quarterly revenue slid 37 percent to $2.88 billion from $4.58 billion in the prior-year period, which beat the analysts' consensus of $2.58 billion.

 

"The housing market has continued to deteriorate throughout the second quarter. The supply of new and existing homes has continued to increase resulting in declining home prices across our markets," President and Chief Executive Stuart Miller said in a statement.

 

Lennar said new home deliveries, excluding unconsolidated entities, fell to 8,940 homes from 12,506 homes in the year-ago period. The average sales price of homes delivered slipped to $298,000 from $322,000 due to higher sales incentives offered to buyers.

 

Gross margins, including $171.6 million in valuation adjustments, were $193.2 million, or 7.2 percent, versus $946.5 million, or 23.5 percent. The prior-year period included $8.7 million in valuation adjustments.

 

Gross margins excluding valuation adjustments were $364.8 million, or 13.6 percent, compared with $955.2 million, or 23.7 percent, in the previous year. Lennar attributed the decline to more sales incentives.

 

Loss on land sales totaled $108.8 million, including $69.4 million of valuation adjustments and $48.9 million of write-offs of deposits and pre-acquisition costs related to approximately 5,400 homesites under option that the company does not intend to buy.

 

Miller said the company anticipates a third-quarter loss due to uncertain market conditions.