Lennar Corporation (LEN – Free Report) surpassed expectations on both counts for the seventh time in a row.
The company’s third-quarter fiscal 2017 adjusted earnings of $1.06 per share surpassed both the Zacks Consensus Estimate and the year-ago level of $1.01 by 5%.
Solid demand for homes, favorable job market and interest rates along with increased consumer confidence helped the homebuilder post higher numbers.
Total revenues of $3.26 billion beat the Zacks Consensus Estimate of $3.22 billion by 1.3%. Revenues also grew 15% year over year as the homebuilding, financial services and multi-family segments performed significantly well.
Lennar Corporation Price, Consensus and EPS Surprise
Lennar Corporation Price, Consensus and EPS Surprise | Lennar Corporation Quote
Segment Details
Homebuilding: Segment revenues increased 15.5% year over year to $2.89 billion, driven by higher number of homes delivered. Within this, home sales constituted $2.85 billion (up 16.6% year over year) and land sales accounted for $37.5 million (down 30%).
New home orders increased 8% year over year to 7,610 in the fiscal third quarter. The potential value of net orders increased 14% year over year to $2.9 billion.
Home deliveries increased 12% year over year to 7,598, buoyed by higher number of homes delivered across all homebuilding segments, barring Central.
The average selling price (ASP) of homes delivered was $376,000, reflecting an increase of 3.6% year over year.
In the quarter under review, backlog grew 10% year over year to 10,212 homes. Potential housing revenues from backlog increased 18% year over year to $4.1 billion.
Margins
Gross margin on home sales improved 20 basis points (bps) to 22.8%. This was because insurance recoveries of $10.3 million positively impacted gross margin by 30 bps.
As a percentage of home sales, SG&A (selling, general and administrative) expenses declined 10 bps to 9.2% from 9.3% a year ago. The improvement was due to enhanced operating leverage as a result of an increase in home deliveries.
