Homebuilder Lennar Q2 2009 Revenue Exceeds Estimates

2009 June 25

June 26 2009 - Lennar Corp., the third-largest U.S. homebuilder, rose as much as 14 percent in New York trading after second quarter revenue exceeded analysts’ estimates and the company bolstered its cash.

Sales were $891.9 million, higher than the median estimate of $596 million in a Bloomberg survey of analysts. Lennar said home deliveries and new orders rose 47 percent and 67 percent, respectively, from the first quarter.,

Lennar ended the quarter with $1.4 billion in homebuilding cash, up from $882.4 million a year earlier, and said today it had no outstanding borrowing under the company’s credit line. Chief Executive Officer Stuart Miller said the housing market “experienced an uptick in sales” in the quarter while not yet recovering from the slump.

“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,” Miller said in a statement. “This combined with a recent spike in mortgage rates has made it difficult to predict when the market will ultimately turn the corner.”

New Home Purchases Decline

New U.S. home purchases unexpectedly fell in May as builder discounts failed to keep pace with the foreclosure-driven decline in existing house prices. Sales dropped 0.6 percent to an annual pace of 342,000, the Commerce Department said yesterday. Existing home sales climbed 2.4 percent, driven by a 17 percent drop in prices, the National Association of Realtors said June 23.

Builders including Lennar are competing with a glut of repossessed homes up for sale. Foreclosure filings, including default and auction notices as well as property seizures, climbed 18 percent in May from a year earlier, according to Irvine, California-based RealtyTrac Inc.

The number topped 300,000 for the third consecutive month, with an estimated one in every 398 homes in some stage of foreclosure.

Additional U.S. home foreclosures will probably total 6.4 million by mid-2011, and inventories of foreclosed homes awaiting sale will probably peak in mid-2010 at about 2 million properties, JPMorgan Chase & Co. analysts led by John Sim wrote in a June 5 report.

Lennar Jumps After Second-Quarter Revenue Exceeds Estimates

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