Lennar Corp., Miami (NYSE:LEN) surprised Wall Street Tuesday morning with a report of a $27.4 million profit, $0.14 per diluted share, for the company's fiscal first quarter ended Feb. 28. The profit compared with a first-quarter net loss of $6.5 million, or ($0.04) per share, in 2010 and beat analyst expectations for a loss of five cents a share.

It was the company's fourth consecutive quarterly profit. Still, the profit was based on a pair of one-time gains, including $35.7 million related to legal settlements and $15.4 million from retirement of JV debt, the latter partly offset by a $4.5 million write-down of assets of unconsolidated operations.

Operationally, the numbers were down across the board. Home building revenues fell 11% in the quarter to $457.9 million as deliveries, excluding joint ventures, dropped to 1,903 from 1,988 in the year-earlier period and the average sales price declined 7% to $240,000 from $258,000. Sales incentives also declined, dropping to $33,100 per home this quarter from $37,100 in the comparable period last year.

New orders declined 12% to 2,267 homes; new-order dollars fell 10.7% to$561.5 million. The cancellation rate was 17%, up from 13% in last year's quarter.

Backlog at quarter's end was 1,948 homes, down 12% from the 2010 quarter.Backlog value was down 14.4% to $497.4 million.

Gross margins on home sales were 20.0% up from 19.2%, in the first quarter of 2010. SG&A was down 7% to $75.1 million, or 16.4% of home sales revenue, up from 15.8% in the first quarter of 2010.

Lennar's JVs produced a profit of $8.7 million, including the $15.4 million gain on debt extinguishment and $4.5 million in impairments, compared to a loss of $8.9 million in last year's quarter.

The company's Rialto land unit contributed $11 million to the bottom line during the quarter, compared to a loss of $1 million in last year's quarter.Financial Services generated operating earnings of $1.2 million, compared to a loss of $0.9 million in the prior-year quarter.

The company ended the quarter with $1 billion in cash and cash equivalents.Net debt-to-capital was 44.5%.

"We were able to achieve these positive results, despite operating in a challenging housing market," said Stuart Miller, president and CEO. "Our strong balance sheet and significant liquidity puts us in an excellent position to purchase new strategic high margin land deals for our homebuilding business and distressed opportunities for our Rialto business.While it is unclear whether the spring selling season will gain momentum or continue its sluggish recovery, we are confident that our company is well positioned for a profitable year in 2011."

Stephen East, home building analyst at Ticonderoga Securities, was disappointed despite the surprise profit. "LEN results look very strong with positive earnings, but our concern heading into the release was on the homebuilding side of the business, and generally, that was disappointing,"he wrote in an investor note. "Rialto did well again, but the homebuilding operations look much like other builders."

Shares of Lennar were trading down 2.4% at $19.27 late Tuesday morning.