Home-builder Lennar Corp. (LEN, LEN.B) reported Tuesday that its fourth-quarter profit more than quadrupled with higher deliveries and sale prices, reflecting the recovery in housing. Both earnings per share and revenues topped market estimates. Looking ahead, the company projects that fiscal 2013 promises to be another year of strong profitability.
For the fourth quarter, net earnings attributable to the company surged to $124.34 million or $0.56 per share from last year's $30.28 million or $0.16 per share.
On average, 24 analysts polled by Thomson Reuters expected earnings of $0.44 per share for the quarter. Analysts' estimates typically exclude one-time items.
Revenues climbed 42 percent to $1.35 billion from $952.65 million a year before. Analysts estimated revenues of $1.31 billion for the quarter.
Chief Executive Officer Stuart Miller said, "During our fourth quarter, the housing industry took further steps toward a sustained recovery. Low mortgage rates, affordable home prices, reduced foreclosures and an extremely favorable 'rent vs. own' comparison continue to drive the recovery."
Revenues from home sales increased 41 percent with a 32 percent increase in the number of home deliveries to 4,443 homes, and a 7 percent increase in the average sales price of homes delivered to $261 thousand.
New orders grew 32 percent to 3,983 homes for the quarter. Backlog of 4,053 homes surged 87 percent, with backlog dollar value increasing 107 percent to $1.2 billion.
"Our homebuilding machine continues to improve and be our primary driver of profitability, fueled by our opportunistic land acquisitions and increasing operating leverage due to higher absorption per community and overall deliveries," the company stated.
Lennar said its gross margin on home sales improved 410 basis points to 23.5 percent primarily due to a decrease in sales incentives, higher sales price and lower valuation adjustments. Operating margin on home sales grew 660 basis points to 12.2 percent.
Lennar Financial Services segment's operating earnings more than tripled, benefited from growing homebuilding operations and by participating in the robust refinancing market. Rialto Investments's operating earnings meanwhile declined.
For fiscal 2012, attributable net earnings were $679.1 million or $3.11 per share, including a partial reversal of the deferred tax asset valuation allowance of $491.5 million or $2.25 per share. Last year's earnings were $92.2 million or $0.48 per share. Revenues climbed 33 percent to $4.1 billion, with higher deliveries and new orders.
Analysts expected earnings of $3 per share on revenues of $4.06 billion for the year.
The company added that housing should continue to assume its traditional role in the broader economic recovery, driving employment upward, increasing consumer confidence and helping new homeowners accumulate wealth through home ownership, thus helping to accelerate economic growth.
Lennar shares closed Monday's trading at $41.02, up $0.07 or 0.17 percent.
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