Homebuilder Lennar Posts Surprise First-Quarter Profit

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LennarLennar Corp. (LEN) posted a surprise fiscal first-quarter profit as the homebuilder controlled costs and hedged against housing woes by purchasing troubled loans and properties from banks.

But the Miami company delivered fewer homes and reported a decline in new home orders.

Homebuilders are a bellwether for the housing market and the economy. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal authorities, by some estimates.

Lennar said Tuesday that it earned $27.4 million, or 14 cents per share, for the period ended Feb. 28. That compares with a loss of $6.5 million, or 4 cents per share, a year ago.

Analysts surveyed by FactSet expected a loss of 5 cents per share.

Lennar said its performance marked its fourth straight quarter of profitability. The company cut costs and expenses for its homebuilding division to $447.8 million from $502 million during the period. Its selling, general and administrative expenses fell 7 percent.

Homebuilders are hoping to see improved sales this spring after a dismal 2010 that marked the fifth consecutive year that new home sales declined. Lennar President and CEO Stuart Miller remains cautious on the spring, but is upbeat about the company's prospects for the year.

"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," he said in a statement.

Lennar's quarterly revenue dropped 3 percent to $558 million from $574.4 million, but topped Wall Street's $514.6 million.

The average sales price of homes delivered fell 7 percent, while the number of home deliveries dropped 4 percent, excluding unconsolidated entities, to 1,903 homes from 1,988 homes in the prior-year period.

Lennar trimmed sales incentives to $33,100 per home delivered in the first quarter compared with $37,100 per home delivered a year earlier. Reducing incentives has helped Lennar to drive up gross margins and increase its bottom line.

The company's Rialto unit, which buys troubled loans and properties from banks, posted a $23 million operating profit compared with a loss of $1 million a year earlier.

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inasctg56

reply to tj1108: No but what is a sign are the manufacturing and export gains we've had for the last 19 months.

March 29 2011 at 9:58 PM Report abuse +1 rate up rate down Reply
inasctg56

In February 2004, the Bush administration preempted national banks from state laws regulating mortgage credit, including state anti-predatory lending laws. State attorney generals began to notice a marked increase in predatory lending practices by mortgage lenders. Even though predatory lending was becoming a national problem, Bush looked the other way and did nothing to protect American homeowners. In fact, the govt chose to align itself with the banks that were victimizing consumers. Of the many errors of judgment and decisions of the Bush administration, this probably had the most damaging effect on our housing and economy.

March 29 2011 at 9:58 PM Report abuse +1 rate up rate down Reply
tj1108

Profits are not an indicator of an expanding economy. It just means companies are operating efficiently with less workers (IE ther got rid of the dead weight) and are running lean. Not to many will invest in a Socialist Economy. Companies will spend what they have to but risk they will not take untill the political climate shifts towrds less goverment and budgets stabilize and trend downward.

March 29 2011 at 5:07 PM Report abuse rate up rate down Reply
inasctg56

Why do you folks bother coming to daily finance when all you do is put down every positive economic report that comes out? Spoken like a true republican - all you can do is discredit the other side, but have no idea what is working to get our economy back on track.

March 29 2011 at 11:18 AM Report abuse rate up rate down Reply
1 reply to inasctg56's comment
inasctg56

And what got us in this mess? In February 2004, the Bush White House, working through the OCC officially preempted national banks from state laws regulating mortgage credit, including state anti-predatory lending laws. State attorney generals and consumer advocates began to notice an increase in predatory lending by mortgage lenders. Even though predatory lending was becoming a national problem, the Bush administration looked the other way and did nothing to protect American homeowners. In fact, the government chose instead to align itself with the banks that were victimizing consumers. Of the many errors of judgment of the Bush administration, this probably has the most significant and damaging effects that led to our housing and economic crisis.

March 29 2011 at 11:16 AM Report abuse -2 rate up rate down Reply
1 reply to inasctg56's comment
fboutup

Same ship different day from you inasctg56. Get a life.
How do you spot the BS - when something starts "The Bush White House". Go back on the politico pages and leave the financial stuff alone. Now if you were to blame Wall Street, financiers, hedge funds then maybe you have a point- but all in all the political parties contribute nothing to the financial matters of this country. In that the banking policy issues started even prior to Bush you need to get your history straight, and the administrations effects were minimal - the traders developed CDO's. Weak policy doesn't create the problems though it does allow the environment for them.

March 29 2011 at 6:29 PM Report abuse -1 rate up rate down Reply
okayfind2011

so cool i like it www 38dollar com i like it

March 29 2011 at 9:59 AM Report abuse -1 rate up rate down Reply
palyzuc

Cooking the books brought to a new level !!

March 29 2011 at 8:31 AM Report abuse rate up rate down Reply