Lennar Corporation (LEN) showed a loss per share of 26 cents (before special items) for the fourth quarter of the fiscal year ended November 30, 2009, compared to an earnings per share of 43 cents (before special items) in the same quarter a year ago. However, the loss was better than the Zacks Consensus Estimate of a loss of 56 cents per share.

Lennar benefited from a 3% increase in home orders to 2,652 homes during the quarter. This is, in fact, the homebuilder’s first year-over-year gain in new orders since the first quarter of fiscal 2006. However, revenue went down 29% to $913.7 million as home deliveries declined 23% to 3,496 homes.

Homebuilding

Revenues in the homebuilding segment declined 30% to $830.2 million. This was attributable to a 22% decrease in home deliveries to 3,488 homes, excluding unconsolidated entities, and a 9% decrease in the average sales price of delivered homes to $238,000 in the reported quarter.

Sales incentives offered to homebuyers reduced to $36,300 per home from $51,400 per home in the fourth quarter of last year. It also declined sequentially from $42,200 per home delivered in the previous quarter.

Financial Services

Lennar reported an operating profit of $7.8 million for the Financial Services segment in the quarter in sharp contrast to an operating loss of $5.4 million in the same period last year. The increase was attributable to lower fixed costs due to successful cost reduction initiatives implemented by the company throughout the downturn.

Annual Results

Lennar reported a loss per share of 85 cents (before special items) in fiscal 2009 compared to earnings per share of 2 cents (before special items) in fiscal 2008. However, the loss is much narrower than the Zacks Consensus Estimate of a loss of $2.02 per share. Revenues slipped 32% to $3.1 billion as home orders went down 14% to11,510 homes and home deliveries declined 27% to 11,478 homes.

Homebuilding

Revenues in the homebuilding segment fell 33% to $2.8 billion in fiscal 2009. This was attributable to a 26% decrease in home deliveries to 11,422 homes, excluding unconsolidated entities, and a 10% decrease in the average sales price of delivered homes to $243,000. Sales incentives offered to homebuyers reduced to $44,800 per delivered home from $48,700 per delivered home in the previous fiscal.

Financial Services

Lennar has revealed an operating profit of $36 million in fiscal 2009, compared to an operating loss of $31 million in the prior fiscal year. This was attributable to lower fixed costs following successful cost reduction measures undertaken by the company throughout the recession.

Financial Position

Lennar had cash and cash equivalents of $1.33 billion as of November 30, 2009. Total debt amounted to $2.76 billion as of that date. The debt to capitalization ratio stood at 53%.

Lennar Corporation is a Miami, Florida-based homebuilder, which engages in the construction and sale of single-family attached and detached homes, and to a lesser extent multi-level residential buildings, as well as the purchase, development and sale of residential land. The company also offers various financial services Incorporatedluding mortgage financing. It serves customers in Florida, Maryland, New Jersey, Virginia, Arizona, Colorado, Texas, California, Nevada, Illinois, Minnesota, New York, North Carolina and South Carolina.

Despite the improved results, we continue to recommend the shares of Lennar as Neutral, as the homebuilding industry has yet to recover from the economic downturn with a decline in the unemployment rate.

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