Post Earnings Coverage as Lennar’s Quarterly Revenue Jumped 18%

Upcoming AWS Coverage on PulteGroup

LONDON, UK / ACCESSWIRE / March 31, 2017 / Active Wall St. announces its post-earnings coverage on Lennar Corp. (NYSE: LEN). The Company announced its first quarter fiscal 2017 results on March 21, 2017. The Homebuilder outperformed top- and bottom-line expectations. On February 10, 2017, Lennar completed its acquisition of WCI. Register with us now for your free membership at:

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One of Lennar’s competitors within the Residential Construction space, PulteGroup, Inc. (NYSE: PHM), is estimated to report earnings on April 20, 2017. AWS will be initiating a research report on PulteGroup following the release of its next earnings results.

Today, AWS is promoting its earnings coverage on LEN; touching on PHM. Get our free coverage by signing up to:

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Earnings Reviewed

For its first quarter ended February 28, 2017, Lennar recorded revenue of $2.34 billion compared to revenue of $1.99 billion in Q1 FY16. The Company’s reported numbers topped analysts’ consensus of $2.17 billion.

For Q1 FY17 net earnings attributable to Lennar were $130.8 million, or $0.56 per diluted share, which included a net loss related to WCI of $0.03 per diluted share. This compared to Q1 FY16 net earnings attributable to Lennar were $144.1 million, or $0.63 per diluted share. On an adjusted basis, the Company posted earnings of $0.59 per share which exceeded Wall Street’s estimates for earnings of $0.56 per share.

Lennar Homebuilding revenues from home sales increased 13% in Q1 FY17 to $2.0 billion compared to $1.8 billion in Q1 FY16. Revenues were higher primarily due to a 13% increase in the number of home deliveries, excluding unconsolidated entities. New home deliveries, excluding unconsolidated entities, increased to 5,433 homes in the reported quarter from 4,806 homes in the year ago comparable period.

The average sales price of homes delivered was $365,000 in Q1 FY17, consistent with the Q1 FY16. Sales incentives offered to homebuyers were $22,700 per home delivered in the reported quarter, or 5.9% as a percentage of home sales revenue, compared to $21,600 per home delivered in the year earlier same quarter, or 5.6% as a percentage of home sales revenue, and $23,700 per home delivered in Q4 FY16, or 6.2% as a percentage of home sales revenue.

For Q1 FY17, gross margins on home sales were $419.2 million, or 21.1% compared to $398.9 million, or 22.7%, in Q1 FY16. Gross margin percentage declined primarily due to an increase in land and construction costs per home. Gross profits on land sales were $2.0 million in Q1 FY17 compared to $9.2 million in Q1 FY16.

Lennar Homebuilding interest expense was $52.4 million in Q1 FY17, where $48.7 million was included in costs of homes sold, $2.4 million in costs of land sold, and $1.2 million in other income (expense) compared to $45.2 million in Q1 FY16 where $43.4 million was included in costs of homes sold, $0.7 million in costs of land sold, and $1.2 million in other income (expense).

Lennar Financial Services

Operating earnings for the Lennar Financial Services segment were $20.7 million in Q1 FY17 compared to $14.9 million in Q1 FY16. The increase in profitability was primarily due to increased volume and profitability in the segment’s title operations.

Operating earnings for the Rialto segment were $12.0 million in Q1 FY17 which included a $0.8 million operating loss and an add back of $12.9 million of net loss attributable to non-controlling interests. Operating earnings in Q1 FY16 were $1.9 million which included $1.6 million of operating earnings and an add back of $0.3 million of net loss attributable to non-controlling interests. The increase in operating earnings is primarily related to an increase in Rialto Mortgage Finance earnings as a result of higher securitization volume and margins, partially offset by an increase in general and administrative expenses, loan impairments, and real estate owned impairments.

Lennar Multifamily

Operating earnings for the Lennar Multifamily segment were $19.2 million in Q1 FY17 compared to $12.2 million in Q1 FY16. The increase in profitability was primarily due to the segment’s $26.0 million share of gains related to the sale of two operating properties by Lennar Multifamily’s unconsolidated entities in the reported quarter compared to the segment’s $20.4 million share of a gain as a result of the sale of one operating property by one of its unconsolidated entities in the prior year’s same quarter.

Debt Issuance

During Q1 FY17, Lennar issued $600 million aggregate principal amount of 4.125% senior notes due 2022. The Company used the net proceeds from the sale of the 4.125% Senior Notes to fund a portion of the cash consideration for its acquisition of WCI, to pay costs and expenses related to the acquisition of WCI and for general corporate purposes.

Stock Performance

On Thursday, March 30, 2017, the stock closed the trading session at $51.30, slightly dropping 0.39% from its previous closing price of $51.50. A total volume of 1.58 million shares have exchanged hands. Lennar’s stock price rallied 2.58% in the last month, 18.96% in the past three months, and 18.96% in the previous six months. Furthermore, since the start of the year, shares of the Company have surged 19.60%. The stock is trading at a PE ratio of 13.09 and has a dividend yield of 0.31%.

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