Lennar Corp. (NYSE:LEN) posted a net loss of $89 million, or $0.56 per share, for its fiscal third quarter ended Aug. 31, the company announced Tuesday morning. The loss was slightly above the average -$0.52-per-share expected by analysts who follow the company.
The loss included $132.2 million in write-downs and valuation adjustments without which the loss would have narrowed to $0.03 per share.
Revenues from home sales decreased 54% to $995.7 million, primarily due to a 49% decrease in the number of home deliveries to 3,694 and a 9% decrease in the average sales price of homes delivered to $270,000. The company attributed the drop to price cuts and average per-home sales incentives of $45,900.
New orders fell 42% from the same period last year to 3,387 homes . The cancellation rate rose to 27% from 22% in the previous fiscal quarter. The dollar value of homes in backlog fell 53% to $1 billion.
"While we expected the housing market to remain constrained throughout the third quarter, the weakness in the market actually accelerated as a result of increased foreclosures, weakened consumer confidence and tightened mortgage lending standards," said Stuart Miller, president and CEO of Lennar. "Although the Federal government has recognized that stabilizing the housing market is critical to solving the current credit crisis, the government has yet to act meaningfully to help stabilize home prices. While we were encouraged that Congress passed the July housing stimulus bill as a first step, additional government actions will be necessary to help facilitate housing market stabilization, which in turn will help stabilize the financial markets as well."
Lennar managed to increase its gross margins on home sales to 18% in the quarter from 14% in last year's fiscal third quarter. It attributed the rise to a lower inventory basis, product repositioning and a reduction in construction costs.
SG&A rose to 15.7% of revenues from home sales from 14% in 2007 due to lower revenues. SG&A was cut by $148.0 million, or 49%, in the quarter by cuts in staff, selling expense and fixed costs.
The company ended the quarter with $857 million in cash and no outstanding borrowings under its credit facility. It also reduced maximum unconsolidated joint venture recourse debt to $630 million, a decrease of 22% from the end of the fiscal second quarter.
Its debt-to-capital ratio increased to 40.5% at the end of the quarter from 33.5% at the same time last year. Net debt-to-capital, which includes home building cash on hand, fell to 30.2% from 32.4%.
Shares of Lennar were up 22 cents at $13.96 in early trading on the New York Stock Exchange.