DOW JONES NEWSWIRES
Lennar Corp.'s (LEN) fiscal second-quarter loss widened on
increased write-downs and charges as revenue continued to fall,
though by a lesser amount that many other home builders.
President and Chief Executive Stuart Miller noted the housing
market has seen higher new-home sales in recent months than early
this year amid falling prices, low interest rates and government
stimulus programs.
"While we are sensing pent-up demand in the market, rising
unemployment, increased foreclosures and tighter credit standards
continue to present challenges for the industry," he noted. Miller
added it is difficult to project when the market might turn the
corner.
Home builders suffered as the housing bubble deflated and then
popped, leading to a credit crisis that only reinforced an
extremely difficult dynamic in the housing market. Data released
Wednesday from the U.S. Commerce Department showed new-home sales
unexpectedly fell in May as Americans afraid of losing their jobs
stayed out of the market or settled for a cheaper house discounted
by foreclosure.
For the period ended May 31, Lennar posted a loss of $125.2
million, or 76 cents a share, compared with a year-earlier loss of
$120.9 million, or 76 cents a share. There were 3.9% more shares
outstanding in the more recent period. The latest results included
65 cents in write-downs and tax-valuation allowance charges,
compared with 60 cents a year earlier.
Revenue dropped 21% to $891.9 million.
Analysts surveyed by Thomson Reuters expected a loss of 64 cents
and revenue of $597 million.
Gross margin on home sales, excluding valuation adjustments,
fell to 14% from 15.9%.
Orders fell 19% to 3,564 from a year earlier, although they grew
63% from the first quarter. The cancellation rate improved to 15%
from 22% a year ago and 21% in the prior quarter. During the
quarter, inventories tumbled 53%.
In April, Moody's Investors Service cut its credit ratings on
Lennar further into junk territory, saying the company's debt
repayments plus possible new land investments in the next three
years will likely exceed its current cash position.
The company in March retired its $281 million 7.625% senior
notes due that month. In April, it issued $400 million of 12.25%
eight-year notes in a private placement. Last month, as part of its
plan to raise capital, the company issued 12.8 million common
shares, raising $126.3 million in gross proceeds.
Lennar's shares closed Wednesday at $7.82 and haven't traded
premarket. The stock is off 17% in the last month and 46% in the
last year.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com