Financial Highlights
First Quarter
* Record revenues of $1.9 billion -- up 16%
* Record EPS of $0.84 per share -- up 24%
* Gross margin % on sales of homes of 22.5% -- up 70 basis points
* Record homebuilding operating earnings of $229.4 million -- up
$71.3 million
* Financial services operating earnings of $23.0 million -- down
$11.4 million
* Net debt to total capital decreased from 36.2% to 23.1%
* Return on net capital of 22.5%
* Record new orders of 8,704 -- up 30%
* Record backlog dollar value of $4.5 billion -- up 30%
2004 Goal
* Fiscal 2004 EPS goal increased to $5.30 from $5.25 per share
MIAMI, March 16 /PRNewswire-FirstCall/ -- Lennar Corporation
(NYSE: LEN and LEN.B), 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 Company and 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
expand future 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 Financial Services 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 both buyers 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 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 areas
where 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 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 $249,061 200,994
(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 land is 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).
SOURCE Lennar Corporation
-0- 03/16/2004
/CONTACT: Marshall Ames, Investor Relations, Lennar Corporation,
+1-305-485-2092/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020423/LENNARLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com /
/Company News On-Call: http://www.prnewswire.com/comp/507038.html /
/Web site: http://www.lennar.com /
(LEN LENB)
CO: Lennar Corporation
ST: Florida
IN: CST RLT FIN
SU: ERN ERP CCA
CH-KW
-- FLTU008 --
0483 03/16/2004 18:59 EST http://www.prnewswire.com
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