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Lennar Corp.’s revenue drops

CEO attributes 45-percent plunge to decreases in home deliveries, average sales prices of homes

Posted: March 31, 2009 11:58 p.m.
Updated: April 1, 2009 4:55 a.m.
Lennar Corp.'s CEO Stuart Miller said Tuesday some signs suggest the housing market is beginning to stabilize, but he's not projecting significant improvement for some time.

Miller made the remarks during a conference call with analysts, a day after the Miami-based builder reported Monday its net losses sank to $155.9 million in the fiscal first quarter compared to its first quarter 2008 loss of $88.2 million.

Lennar, one of the nation's largest homebuilders, reported a 44-percent revenue loss for its first-quarter 2009, which ended Feb. 28.

"The housing market continued its downward trend throughout our first quarter. Despite historically low interest rates and some indicators pointing toward market stabilization, low consumer confidence, increased unemployment and growing foreclosure rates negatively impacted new home sales in most of our markets," Miller said.

"While we are hopeful that the recent actions taken by the federal government will help stimulate housing demand and restore consumer confidence, we continue to adjust our business to adapt to market conditions."

Lennar reported a 45-percent drop in home-sales revenues compared to first-quarter 2008 number.

They attributed the decrease to a 38 percent decrease in the number of home deliveries and a 12-percent decrease in the average sales price of homes delivered in 2009.

New home deliveries, excluding unconsolidated entities, decreased to 2,136 homes in the first quarter of 2009 from 3,437 homes last year.

The average sales price of homes delivered decreased to $244,000 from $278,000 in the same period last year, primarily due to reduced pricing, the company reported.

Sales incentives offered to homebuyers were $50,500 per home delivered in the first quarter of 2009, compared to $48,000 per home delivered in the first quarter of 2008.

Miller said the company focused on returning to profitability through the basics of home-building operations.

He said the company did this by re-positioning its product to meet consumer demand by increasing affordability, reducing construction costs and restructuring operations, which involved consolidating operating divisions in response to declined volume levels.

"We remain focused on maintaining strong liquidity as we ended our first quarter with $1.1 billion in cash, no outstanding borrowings under our credit facility and a responsible home-building debt-to-total capital ratio, net of homebuilding cash, of 37.4 precent.

"We also reduced the number of our unconsolidated joint ventures to 95 from 116 at Nov. 30, 2008 and reduced our maximum unconsolidated joint-venture recourse debt to $474 million from $520 million at Nov. 30, 2008."

"As we continue to focus on homebuilding profitability and on cash generation, we are well positioned to weather the current challenges and to take advantage of opportunities as they present themselves," Miller added.


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