Lennar net earnings rise, beat 4Q estimates

Mortgage and title operations boost profitability

Lennar (LEN) posted net earnings of $245.3 million, or $1.07 per diluted share, in the fourth quarter of 2014, compared to $164.1 million, or $0.73 per diluted share, in the fourth quarter of 2013.

Total revenue increased 35% to $2.58 billion in the fourth quarter, up from $1.92 billion in the third quarter of 2014.

Earnings per share beat estimates by $0.11, while revenue missed by $10 million.

For the Lennar Financial Services segment, operating earnings were $30.2 million in the fourth quarter of 2014, compared to $17.0 million in the fourth quarter of 2013. The increase in profitability was primarily due to higher volume and higher profit per transaction in the segment's mortgage and title operations.

Revenues from home sales increased 32% in the fourth quarter of 2014 to $2.3 billion from $1.7 billion in the fourth quarter of 2013. Revenues were higher primarily due to a 23% increase in the number of home deliveries, excluding unconsolidated entities and a 7% increase in the average sales price of homes delivered.

"As the housing market has continued its slow but steady recovery, we are extremely pleased with our fourth quarter and fiscal 2014 results, as we achieved a 50% and 33% year-over-year increase in net earnings, respectively. The recovery has been, and will continue to be, driven forward by years of production deficit that has limited supply in both the "for sale" and "for rent" markets, while it has been constrained by reduced access to credit availability," said Stuart Miller, CEO of Lennar Corporation.

Miller continued, "While a number of macroeconomic factors have contributed to ongoing choppiness in the recovery, with more pressure on sales prices and gross margins, we remain optimistic about the continuation of the recovery based on the following factors:”

  • Recent changes to down payments, guaranty fees and underwriting standards articulated by FHFA and HUD
  • Consumer stimulus provided by lower gasoline prices
  • Greater affordability driven by lower interest rates
  • General improvements seen in the national employment environment.

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