Lennar Reports 31% Increase in Net Earnings for First Quarter 2004
Financial Highlights MIAMI, March 16 /PRNewswire-FirstCall/ --
Lennar Corporation , one of the nation's largest homebuilders,
today reported earnings for its first quarter ended February 29,
2004. First quarter net earnings in 2004 were $139.3 million, or
$0.84 per share diluted, compared to net earnings of $106.3
million, or $0.68 per share diluted, in 2003. Stuart Miller,
President and Chief Executive Officer of Lennar Corporation, said,
"We are pleased to report another record quarter of revenues and
earnings. We are even more pleased with our record new orders and
record backlog, both growing 30% over last year, closing the
acquisition of The Newhall Land and Farming Companyand improving
prospects for our financial services operations -- all combining to
set us up for another record year in 2004 and positioning us well
for 2005 and beyond." Mr. Miller continued, "Three basic concepts
will help support and possibly expandfuture earnings: First,
Homebuilding Industry Fundamentals -- Positive demographic trends,
favorable interest rates and supply constraints continue to drive
the underpinnings of a strong housing market. Second, Strong Gross
Margins -- Gross margins remain strong for the industry in general
and for Lennar in particular. As demand exceeds supply in strategic
markets, pricing power continues to enhance margins. While price
increases may be somewhat offset by increases in lumber and other
materials costs, in the long-term, we, as well as others in the
industry, continue to use our size to reduce costs overall while
also improving quality. Third, Industry Consolidation -- We
continue to target unique opportunities within the industry by
increasing market share organically and by the consolidation of
small and large homebuilders. Consolidation results in greater cost
savings, increased access to the capital markets and growth of
ancillary services." "Additionally, we remain a growth-focused
company and, therefore, we employ a diversified growth strategy to
enhance future opportunities for our Company. Our diversified
growth strategy focuses on organic growth augmented by strategic
acquisitions to capitalize on market inefficiencies. One exciting
example of this strategy is our previously announced and now closed
acquisition, through a joint venture, of The Newhall Land and
Farming Company, located in Los Angeles County, California. This
unique transaction gives us access to well-positioned, owned or
controlled homesites in one of the most supply-constrained markets
in the country. This strategic opportunity will not only allow us
to enhance our existing homebuilding operations in Los Angeles
County, but will also give us the opportunity to establish a dual
marketing division in this land-constrained market which should
further enhance our return on capital." Mr. Miller concluded, "The
combination of our excellent land position and record-level $4.5
billion backlog gives us confidence to meet our goal of 37,000
deliveries in 2004. This position also allows us to maximize our
pricing power by slowing our sales pace to match our construction
pace. Given the continued strength in our program and assuming
overall housing and general economic conditions remain consistent
with current trends, we are comfortable increasing our 2004
earnings per share goal to $5.30 from $5.25 per share." RESULTS OF
OPERATIONS THREE MONTHS ENDED FEBRUARY 29, 2004 COMPARED TO THREE
MONTHS ENDED FEBRUARY 28, 2003 Homebuilding Revenues from sales of
homes increased 15% in the first quarter of 2004 to $1.7 billion
from $1.4 billion in 2003. Revenues were higher due primarily to a
15% increase in the number of home deliveries. New home deliveries
increased to 6,495 homes in the first quarter of 2004 from 5,642
homes last year. In the first quarter of 2004, new home deliveries
were higher in each of the Company's regions, compared to 2003. The
average sales price on homes delivered increased to $256,000 in the
first quarter of 2004 from $255,000 in 2003. Gross margins on home
sales were $373.8 million, or 22.5%, in the first quarter of 2004,
compared to $314.2 million, or 21.8%, in 2003.Margins were
positively impacted by a greater improvement in each of the
Company's regions, with the largest increases in the East and West
Regions, combined with lower interest costs due to a lower debt
leverage ratio while the Company continued to grow. Selling,
general and administrative expenses as a percentage of revenues
from home sales were 12.2% in the first quarter of 2004, compared
to 12.1% in 2003. Gross profits on land sales totaled $35.6 million
in the first quarter of 2004, compared to $4.4 million in 2003.
Profits were positively impacted by each of the Company's regions,
with a strong contribution from the Company's West Region. Equity
in earnings from unconsolidated partnerships was $5.3 million in
the first quarter of 2004, compared to $8.6 million last year.
Management fees and other income, net totaled $18.0 million in the
first quarter of 2004, compared to $5.4 million in 2003. Land
sales, equity in earnings from unconsolidated partnerships and
management fees and other income, net may vary significantly from
quarter to quarter depending on the timing of land sales and other
transactions by the Company and unconsolidated partnerships in
which it has investments. Financial Services Operating earnings for
the FinancialServices Division were $23.0 million in the first
quarter of 2004, compared to $34.3 million last year. The decline
in operating earnings in 2004 was primarily due to a decrease in
refinance transactions, which resulted in reduced profitability
from the Division's mortgage and title operations, compared to
2003. Corporate General and Administrative Expenses Corporate
general and administrative expenses as a percentage of total
revenues were 1.5% in the first quarter of 2004, compared to 1.4%
last year. Other Information Earnings per share amounts and average
shares outstanding for 2003 have been adjusted to reflect the
effect of the Company's April 2003 10% Class B common stock
distribution and January 2004 two-for-one stock split.
Additionally, diluted earnings per share for the first quarter of
2004 included 9.0 million shares related to the Company's 5.125%
contingent convertible debt securities. These shares were not
included in diluted earnings per share in the first quarter of 2003
because the contingencies were not met. Prior year amounts contain
reclassifications to conform to the 2004 presentation. These
reclassifications had no impact on reported net earnings. In the
three months ended February 28, 2003, homebuilding results reflect
reclassifications that have been made to interest expense (now
included in cost of homes sold and cost of land sold), equity in
earnings from unconsolidated partnerships and management fees and
other income, net. Lennar Corporation, founded in 1954, is
headquartered in Miami, Florida and is one of the nation's leading
builders of quality homes for all generations, building affordable,
move-up and retirement homes. Under the Lennar Family of Builders
banner, the Company includes the following brand names: Lennar
Homes, U.S. Home, Greystone Homes, Village Builders, Renaissance
Homes, Orrin Thompson Homes, Lundgren Bros., Winncrest Homes,
Patriot Homes, NuHome, Barry Andrews Homes, Concord Homes,
Cambridge Homes, Coleman Homes and Rutenberg Homes. The Company's
active adult communities are primarily marketed under the Heritage
and Greenbriar brand names. Lennar's Financial Services Division
provides mortgage financing, title insurance, closing services and
insurance agency services for bothbuyers of the Company's homes and
others. Its Strategic Technologies Division provides high-speed
Internet access, cable television and alarm installation and
monitoring services to residents of the Company's communities and
others. Previous press releases may be obtained at
http://www.lennar.com/. Some of the statements contained in this
press release are "forward- looking statements" as that term is
defined in the Private Securities Litigation Reform Act of 1995. By
their nature, forward-looking statements involve risks,
uncertainties and other factors that may cause actual results to
differ materially from those which the statements anticipate.
Forward- looking statements can be identified by the fact that they
do not relate strictly to historical or current facts. They contain
words such as "anticipate," "estimate," "expect," "project,"
"intend," "plan," "believe," "may," "can," "could," "might,"
"guidance," "goal," "visibility," and other words or phrases of
similar meaning in connection with any discussion of future
operating or financial performance. Factors which may affect the
Company's results include, but are not limited to, changes in
general economic conditions, the market for homes and prices for
homes generally and in areaswhere the Company has developments, the
availability and cost of land suitable for residential development,
materials prices, labor costs, interest rates, consumer confidence,
competition, terrorist acts or other acts of war, environmental
factors and government regulations affecting the Company's
operations. See the Company's Annual Report on Form 10-K for the
year ended November 30, 2003 for a further discussion of these and
other risks and uncertainties applicable to the Company's business.
A conference call to discuss the Company's first quarter earnings
will be held at 11:00 AM Eastern time on Wednesday, March 17, 2004.
The call will be broadcast live over the Internet and can be
accessed through the Company's web site at http://www.lennar.com/.
A replay of the conference call will be available later that day by
calling 320-365-3844 and entering 723412 as the confirmation
number. LENNAR CORPORATION Selected Revenues and Earnings
Information (In thousands, except per share amounts) (Unaudited)
Three Months Ended February 29, February 28, 2004 2003(1) Revenues:
Homebuilding $1,757,382 1,472,335 Financial services 105,525
128,135 Total revenues $1,862,907 1,600,470 Homebuilding operating
earnings $229,381 158,111 Financial services operating earnings
22,995 34,345 Corporate general and administrative expenses 28,678
21,664 Earnings before provision for income taxes 223,698 170,792
Provision for income taxes 84,446 64,474 Net earnings $139,252
106,318 Average shares outstanding: Basic 155,528 141,266 Diluted
167,905 157,752 Earnings per share: Basic $0.90 0.75 Diluted $0.84
0.68 Supplemental information: Interest incurred(2) $31,532 32,943
EBIT(3): Earnings before provision for income taxes $223,698
170,792 Interest 25,363 30,202 EBIT $249,061200,994 (1) Certain
prior year amounts have been reclassified to conform to the 2004
presentation. (2) Homebuilding interest incurred is capitalized to
inventories and relieved as cost of sales when homes are delivered
or landis sold. (3) EBIT is a non-GAAP financial measure derived by
adding back previously capitalized interest amortized to cost of
sales that was reflected in earnings before provision for income
taxes. LENNAR CORPORATION Homebuilding Segment Information (In
thousands) (Unaudited) Three Months Ended February 29, February 28,
2004 2003(1) Revenues: Sales of homes $1,663,097 1,440,159 Sales of
land 94,285 32,176 Total revenues 1,757,382 1,472,335 Costs and
expenses: Cost of homes sold 1,289,299 1,125,937 Cost of land sold
58,652 27,790 Selling, general and administrative 203,363 174,529
Total costs and expenses 1,551,314 1,328,256 Equity in earnings
from unconsolidated partnerships 5,277 8,602 Management fees and
other income, net 18,036 5,430 Operating earnings $229,381 158,111
(1) Certain prior year amounts have been reclassified to conform to
the 2004 presentation. LENNAR CORPORATION Summary of Deliveries,
New Orders and Backlog By Region (Dollars in thousands) (Unaudited)
At or for the Three Months Ended February 29, February 28, 2004
2003 Deliveries: East 2,176 1,728 Central 1,989 1,854 West 2,489
2,248 Total 6,654 5,830 Of the deliveries listed above, 159
deliveries relate to unconsolidated partnerships for the three
months ended February 29, 2004 compared to 188 deliveries last
year. New Orders: East 3,340 2,591 Central 2,219 2,104 West 3,145
2,016 Total 8,704 6,711 Of the new orders listed above, 321 new
orders relate to unconsolidated partnerships for the three months
ended February 29, 2004 compared to 185 new orders last year.
Backlog - Homes: East 7,285 5,692 Central 2,646 2,963 West 5,867
4,383 Total 15,798 13,038 Of the homes in backlog listed above,
1,255 homes in backlog relate to unconsolidated partnerships at
February 29, 2004, compared to 442 homes in backlog at February 28,
2003. Backlog Dollar Value (including unconsolidated partnerships)
$4,516,797 3,468,002 Lennar's market regions consist of
homebuilding divisions in the following states: East: Florida,
Maryland, Virginia, New Jersey, North Carolina and South Carolina
Central: Texas, Illinois and Minnesota West: California, Colorado,
Arizona and Nevada LENNAR CORPORATION Supplemental Data (Dollars in
thousands) (Unaudited) February 29, February 28, 2004 2003 Senior
notes and other debts payable $1,531,846 1,826,790 Less: cash and
cash equivalents 545,522 500,227 Net homebuilding debt 986,324
1,326,563 Net homebuilding debt 986,324 1,326,563 Stockholders'
equity 3,278,490 2,333,789 Total capital 4,264,814 3,660,352 Net
debt to total capital(1) 23.1% 36.2% (1) Net debt to total capital
consists of net homebuilding debt (homebuilding debt less
homebuilding cash and cash equivalents) divided by total
capital(net homebuilding debt plus stockholders' equity).
http://www.newscom.com/cgi-bin/prnh/20020423/LENNARLOGO
http://photoarchive.ap.org/ DATASOURCE: Lennar Corporation CONTACT:
Marshall Ames, Investor Relations, Lennar Corporation,
+1-305-485-2092 Web site: http://www.lennar.com/ Company News
On-Call: http://www.prnewswire.com/comp/507038.html
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