LONDON, UK / ACCESSWIRE / October 16, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Lennar Corp. (NYSE: LEN), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=LEN, following the Company's posting of its third quarter fiscal 2017 financial results on October 03, 2017. The United States' second largest homebuilder surpassed top- and bottom-line expectations and posted its lowest sales incentives per home delivery since 2006. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at: http://protraderdaily.com/register/.
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For its third quarter ended August 31, 2017, Lennar recorded revenues of $3.26 billion compared to $2.83 billion for Q3 FY16. The Company's revenue numbers topped analysts' estimates of $3.24 billion.
During Q3 FY17, Lennar's home deliveries totaled 7,598 homes, up 12% on a y-o-y basis, while new orders increased 8% to 7,610 homes. The Company's gross and operating margins were 22.8% and 13.6%, respectively, for the reported quarter. The Company's sales incentives per home delivery in the reported quarter were 5.5%, its lowest percentage since 2006. Lennar also reported record low third quarter selling, general, and administrative (SG&A) percentage of home sales revenues of 9.2%.
For Q3 FY17, net earnings attributable to Lennar were $249.2 million, or $1.06 per diluted share, compared to net earnings attributable to Lennar of $235.8 million, or $1.01 per diluted share, in Q3 FY16. The Company's earnings exceeded Wall Street's expectations of $1.00 per share.
At the end of Q3 FY17, Lennar had backlog of 10,212 homes, up 10% on a y-o-y basis. The Company's backlog dollar value totaled $4.1 billion, up 18% on a y-o-y basis.
Lennar's Segment Results
Lennar Homebuilding - During Q3 FY17, Lennar's revenues from home sales jumped 17% to $2.89 billion from $2.50 billion in Q3 FY16, primarily driven by a 12% increase in the number of home deliveries, excluding unconsolidated entities, and a 4% increase in the average sales price of homes delivered.
For Q3 FY17, Lennar Homebuilding's new home deliveries, excluding unconsolidated entities, increased to 7,588 homes, versus 6,758 homes in Q3 FY16. The Company reported growth in home deliveries in all of the Company's Homebuilding segments and Homebuilding Other, except in Homebuilding Central that was slightly down on a y-o-y basis due to Hurricane Harvey which impacted approximately 120 deliveries in Q3 FY17.
The average sales price of homes delivered was $375,000 in Q3 FY17 compared to $362,000 in Q3 FY16. The Company noted that sales incentives offered to homebuyers were $21,800 per home delivered in the reported quarter, or 5.5% as a percentage of home sales revenue, compared to $22,500 per home delivered in Q3 FY16, or 5.9% as a percentage of home sales revenue.
During Q3 FY17, gross margins on home sales were $650.4 million, or 22.8%, compared to $551.7 million, or 22.6%, in Q3 FY16. Gross margin percentage on home sales increased on a y-o-y basis, primarily due to insurance recoveries of $10.3 million that positively impacted gross margin percentage by 30 basis points.
Lennar Financial Services - During Q3 FY17, Lennar's Financial Services generated revenue of $215.06 million compared to $191.44 million in Q3 FY16. Operating earnings for the Lennar Financial Services segment were $49.1 million in the reported quarter compared to $53.2 million in the year ago corresponding period. The Company noted that operating earnings were impacted by a significant decrease in refinance transactions, partially offset by higher profit per transaction in the segment's title operations.
Rialto - For Q3 FY17, Rialto segment recorded revenue of $57.81 million versus revenue of $63.89 million in Q3 FY16. Operating earnings for the Rialto segment were $3.2 million in the reported quarter compared to operating earnings of $5.9 million in the year ago same period. The decrease in operating earnings was primarily due to a decrease in Rialto Mortgage Finance ("RMF") securitization revenues as a result of lower volume and an increase in real estate owned impairments.
Lennar Multifamily - During Q3 FY17, Lennar Multifamily segment reported revenue of $103.42 million compared to $81.60 million in Q3 FY16. Operating earnings for the Lennar Multifamily segment were $9.1 million in the reported quarter, primarily due to the segment's $15.4 million share of gains as a result of the sale of two operating properties by its unconsolidated entities and management fee income. In Q3 FY16, the Lennar Multifamily segment had operating earnings of $2.6 million primarily due to the segment's $8.0 million share of a gain as a result of the sale of an operating property by one of its unconsolidated entities and management fee income.
At the end of Q3 FY17, Lennar had a net debt to total capital ratio of 39.6%, a decline of 30 basis points on a y-o-y basis. The Company had $565 million of cash and no outstanding borrowings on its $1.6 billion revolving credit facility. S&P upgraded Lennar's corporate credit rating during Q3 FY17 to BB+. The Company's stockholders' equity increased to $7.6 billion, and its book value per share grew to $32.11 per share.
On October 04, 2017, Lennar announced that its Board of Directors has declared a quarterly cash dividend of $0.04 per share for both Class A and Class B common stock payable on November 02, 2017, to holders of record at the close of business on October 19, 2017.
Lennar's share price finished last Friday's trading session at $56.02, marginally down 0.05%. A total volume of 1.46 million shares have exchanged hands. The Company's stock price skyrocketed 4.50% in the last three months, 7.01% in the past six months, and 36.77% in the previous twelve months. Additionally, the stock soared 30.49% since the start of the year. Shares of the Company have a PE ratio of 16.13 and have a dividend yield of 0.29%. The stock currently has a market cap of $12.91 billion.
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