Lennar: 'No Tangible Evidence' of Housing Recovery
Lennar Corporation, one of the nation's largest homebuilders, said today that it is projecting a loss of $0.88 per share to $1.28 per share during the fourth quarter. "Market conditions continued to weaken throughout the fourth quarter and we have not yet seen tangible evidence of a market recovery," said Lennar CEO Stuart Miller. "While we are hopeful that low interest rates, strong employment and a healthy economy will help stimulate a recovery in 2007, we have continued to focus on strengthening our balance sheet by delivering our backlog, selling inventory aggressively and renegotiating our land positions. "Given the steep decline in many of our markets, we are completing our asset-by-asset review and will adjust asset balances to reflect fair value in the current market environment. Accordingly, we expect to record pretax impairment charges of $400 million to $500 million." During the quarter and fiscal year ended November 30, 2006, Lennar said it delivered 14,006 homes and a record 49,568 homes, respectively, compared to 14,403 homes and 42,359 homes in the same periods last year, an increase of 17 percent for fiscal year 2006. New orders for the quarter and fiscal year ended November 30, 2006 were 9,606 and 42,212, respectively, down 6 percent and 3 percent compared to the same periods last year. The company's total dollar value of homes in backlog as of November 30, 2006 was $4.0 billion, compared to $6.9 billion as of November 30, 2005. Although deliveries increased during the fiscal year, Lennar said it experienced materially lower gross margins on home sales during the quarter and year ended November 30, 2006, compared to the same periods as last year, as a result of deteriorating market conditions in the homebuilding industry.