Home builder Lennar Corp. this week reported a net loss of $513.9 million, or $3.25 per diluted share, in the third quarter, compared with net earnings of $206.7 million, or $1.30 per diluted share, in third-quarter 2006.
Stuart Miller, Lennar president and CEO, said in a statement that the company has slashed its workforce by about 35 percent and expects “continued reductions in the fourth quarter.”
Home orders dropped about 48 percent and home deliveries fell 41 percent in the third quarter compared to third-quarter 2006. The company had a cancellation rate of 32 percent in the third quarter, according to the announcement.
“It is already well documented that the housing market has continued to deteriorate throughout our third quarter. Heavy discounting by builders, and now the existing-home market as well, has continued to drive pricing downward. Consumer confidence in housing has remained low, while the mortgage market has continued to redefine itself, creating higher cancellation rates,” Miller stated.
“The combination of moving our stated inventory to current market valuations, ‘right-sizing’ our overhead to reduced volume levels and a stabilization of market conditions should ultimately bring us back to profitability.”
Revenues from home sales fell 44 percent in the third quarter to $2.2 billion, compared with $3.9 billion in third-quarter 2006, the company reported, attributing that decline to the drop in home deliveries and a 6 percent decline in the average sales price of its homes delivered in 2007.
The average sales price of homes delivered decreased to $296,000 in the third quarter compared with $316,000 in third-quarter 2006, and the company offered an average of $46,000 worth of incentives per home delivered in the quarter compared with $35,900 per home in third-quarter 2006.
New-home deliveries, excluding unconsolidated entities, decreased to 7,266 homes in the third quarter of 2007 from 12,337 homes in third-quarter 2006, the company reported.
The company reported that it reduced its selling, general and administrative expenses by $122.3 million, or 29 percent, year-over-year in the third quarter, “primarily due to reductions in associate headcount and variable compensation expense.”
The company announced a $344.7 million loss on land sales in the third quarter, including $242.5 million in write-offs of deposits and pre-acquisition costs related to 15,000 home sites under option that the company does not plan to purchase. In third-quarter 2006, the company reported a $300,000 loss on land sales.
Lennar’s financial services segment reported a $5.2 million loss in the third quarter, compared with operating earnings of $61.7 million in third-quarter 2006, and the decrease “was primarily due to a decline in profitability from both the segment’s mortgage and title operations,” the company reported.
Home-sales revenue fell 31 percent for the nine months ended Aug. 31 compared to the same period last year. And selling, general and administrative expenses were reduced by $211.1 million during that nine-month period compared to the same period last year.
A replay of the company’s earnings conference call on Tuesday is available on the company’s Web site at www.lennar.com.