Lennar Corp. (NYSE:LEN), Miami, on Monday reported a loss of $171.6 million ($-0.97 per share) for its fiscal third quarter ended Aug. 31, nearly double the $89.0 million loss (-$0.56 per share) for the same quarter last year and more than double the $-0.46 per share loss Wall Street was expecting. The results included $117.7 million in impairments and write-offs and a $49.4 million non-cash charge to deferred tax assets, which together added $-0.76 cents per share to the loss.
Lennar shares fell nearly 6% to $15.55 in early seesion trading Monday but had recovered to $16.05, down 2.9%, by mid afternoon.
Revenues were down 35% from the comparable period last year to $721 million as deliveries fell 29% to 2,691 homes. The average selling price decreased to $239,000 from $270,000 in the same period last year. Sales incentives fell to $42,200 per home from $45,900 in the same period last year and $52,600 in this year's second fiscal quarter.
New orders fell 8% to 3,104 homes with a total value of $761 million, down from $843.4 million in last year's quarter. The cancellation rate fell to 19% from 27% in last year's fiscal third quarter. Homes in backlog were down 30.3% from last year's quarter to 2,475. Backlog dollar value of $647 million improved 19% from the previous quarter but was 38.2% below the last-year quarter.
Gross margins on home sales excluding SFAS 144 charges were $98.9 million, or 15.6%, in the quarter compared to $179.4 million, or 18.0%, in the third quarter of 2008. Selling, general and administrative expenses were down 36% to $55.5 million, compared on staff reductions, variable selling expenses and fixed costs. As a percentage of revenues from home sales, selling, general and administrative expenses were 15.9% in the third quarter of 2009 and 15.7% in 2008.
Equity in loss from unconsolidated entities was $42.3 million in the third quarter of 2009, which included $31.0 million of SFAS 144 valuation adjustments related to joint ventures, up from $11.0 million in the third quarter of 2008, which included $2.9 million of SFAS 144 valuation adjustments.
Lennar ended the quarter with home-building cash of $1.34 billion and no outstanding borrowings under its revolver. Home-building debt to total capital net of cash was 35.6%.
During the quarter, Lennar issued 8.1 million shares for $99 million and invested $140 million for:a 15% equity interest in LandSource, the purchase of several communities previously owned by LandSource and the settlement and release of any claims related to LandSource. It also reduced its exposure to joint venture debt that is recourse to Lennar by $42 million to $380 million.
"During the third quarter, the overall housing market continued its road back to recovery as more confident homebuyers took advantage of increased affordability," said Stuart Miller, president and CEO, in a statement."While high unemployment and foreclosures will continue to present challenges, consumer sentiment has significantly improved as homebuyers have recognized that the residential housing market is stabilizing.."
Miller saw significant positives in the results. "While our new orders in the third quarter were down by 8% from the prior year, this is the smallest percentage year over year decline since November 2006," he said. "More importantly, our new orders increased sequentially each month during the quarter and we ended the quarter with our highest backlog since August 2008.In order to capitalize on the improvement in our sales pace, we increased our home starts during the quarter, which will lead to higher deliveries in the fourth quarter."
He added, "Assuming the economy continues to stabilize, we believe our improved sales environment, increasing pre-impairment gross margins and ability to leverage SG&A should enable us to return to profitability in fiscal 2010."