Lennar 1Q loss widens to $155.9M as revenue drops

[March 31, 2009]  BANGKOK (AP) -- Homebuilder Lennar Corp. said Monday it's fiscal first-quarter losses ballooned 77 percent as it booked charges to adjust land and inventory values, while home deliveries and new orders plunged despite stepped-up buyer incentives.

Chief Executive Stuart Miller said the company, one of the nation's largest homebuilders, continued to face negative housing market and economic trends during the quarter.

"Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets," Miller said in a statement.

The Miami-based company said it lost $155.9 million, or 98 cents a share, for the quarter that ended Feb. 28. That compares with a loss of $88.2 million, or 56 cents a share, in the same period last year.

The latest results included 35 cents a share for write-offs and valuation adjustments and 36 cents a share for a tax asset valuation allowance. Excluding those adjustments, Lennar's loss was 27 cents a share.

Revenue plunged by about 44 percent to $593.1 million, but that did top the $530.4 million expected by analysts polled by Thomson Reuters.

Home deliveries in the quarter tumbled 40 percent from the prior-year quarter to 2,142, while the average selling price of those homes fell 12 percent to $244,000, Lennar said.

New orders declined 28 percent to 2,190 versus a year ago. That was a much smaller drop than the 46 percent decline the builder saw in the fourth quarter and the third quarter's 42 percent drop, but isn't quite the upswing investors saw last week from rival homebuilder KB Home, which reported a 26 percent jump in new home orders in its fiscal first quarter.

Still, it's evident Lennar went after sales hard, stepping up incentives to court reluctant buyers.

During the quarter, it offered to cover mortgage payments for a limited time if a buyer loses their job. More recently, the builder began letting buyers put off payments for 12 months and has offered a fixed rate of about 3.6 percent through its mortgage financing arm on certain homes.

As a result, sales incentives Lennar offered to homebuyers totaled $50,500 for every home it delivered in the first quarter. By comparison, sales incentives totaled $48,000 for every home delivered in the same quarter last year.

Lennar's backlog of new orders at the end of the quarter stood at 1,647 homes valued at $450.1 million. That's down from 3,398 homes worth about $1.15 billion in the year-ago quarter.

Customers canceled orders during the quarter at a rate of 21 percent, Lennar said.

The builder closed the quarter with $1.1 billion in cash and no outstanding balance on its credit line. It also said it reduced the number of its unconsolidated joint ventures to 95 from 116 at the end of the fourth quarter. Lennar reaped big benefits from those joint-venture agreements with real estate and investment entities in healther economic times, but Lennar later came under fire from shareholders and analysts as the joint ventures proved to be a major source of risk as the housing crisis widened.

Lennar shares climbed 9 cents to $8.80 in aftermarket trading following the release of the earnings report, which had been expected Tuesday morning. In the regular session, the stock had slipped $1.55, or about 15 percent, to close at $8.71.

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On the Net:

Lennar Corp: http://www.lennar.com/

[Associated Press; By ALEX VEIGA]

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