Home-builder Lennar Corp. (LEN,LEN.B) reported Wednesday that its first-quarter profit nearly quadrupled from last year, as deliveries and prices climbed amid improved market conditions. Both earnings per share and top line beat analysts' estimates.
Looking ahead, Chief Executive Officer Stuart Miller said, "We are well positioned for 2013 and 2014 so our land focus is now primarily on homesites for 2015 and beyond."
Commenting on the quarterly results, Miller said, "Current market conditions are driven by strong demand resulting from low interest rates and attractive home prices, which have led to very affordable monthly payments, compared to increasing rental rates. Supply continues to be limited by low home inventories and fewer competing homebuilders. Accordingly, pricing trends have been positive..."
In its recently concluded first quarter, net earnings attributable to the company were $57.49 million or $0.26 per share, significantly higher than last year's $14.97 million or $0.08 per share.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues grew 37 percent to $989.9 million from last year's $724.86 million. Analysts were looking for revenues of $897.99 million for the quarter.
Revenues from home sales increased 40 percent to $855.1 million, primarily due to a 28 percent increase in the number of home deliveries, excluding unconsolidated entities, to 3,186 homes. Also, a 9 percent increase in the average sales price of homes delivered at $269,000 benefited the results.
Gross margin on home sales improved 120 basis points to 22.1 percent, primarily due to a greater percentage of deliveries from the company's new higher margin communities, and a decrease in sales incentives offered to homebuyers, among other things. These were partially offset by an increase in materials and labor costs. Operating margin on home sales improved 410 basis points to 10.1 percent.
Operating earnings for the Financial Services segment climbed from last year, primarily due to increased volume and margins in the mortgage operations. Meanwhile, operating earnings for the Rialto Investments segment plunged primarily due to lower interest income as a result of a decrease in the portfolio of loans.
In the quarter, new home deliveries, excluding unconsolidated entities, increased to 3,174 homes in the first quarter of 2013, from 2,472 homes in the first quarter of 2012.
New orders climbed 34 percent to 4,055 homes, with a dollar value of $1.16 billion. Cancellation rate was 15 percent. Backlog of 4,922 homes surged 82 percent from last year, and backlog dollar value of $1.5 billion grew 105 percent.
Looking ahead, the company noted that the homebuilding business together with financial services operations continue to be the primary drivers of its quarterly results and earnings growth. "Concurrently, our businesses of Rialto, Lennar Multi-Family and FivePoint Communities continue to mature and position our company for even stronger, long-term value creation," Miller said.
In pre-market activity, Lennar shares are currently trading at $42.40, up $0.98 or 2.37 percent.
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