Lennar Corporation, one of the nation's largest homebuilders, reported a third quarter net loss of $171.6 million, which was wider than what the company lost during the same period a year earlier. The company's homebuilding operations generated $635 million during the quarter, a decrease of 28 percent.
For the quarter, Lennar delivered 2,660 homes, compared with 3,694 a year earlier. The company said its average selling price was$239,000 in the third quarter of 2009, down from $270,000 in the same period last year.
Stuart Miller, President and Chief Executive Officer of Lennar Corporation, said, "During the third quarter, the overall housing market continued its road back to recovery as more confident homebuyers took advantage of increased affordability. While high unemployment and foreclosures will continue to present challenges, consumer sentiment has significantly improved as homebuyers have recognized that the residential housing market is stabilizing."
Mr. Miller continued, "We continued to strategically reduce the number of completed, unsold homes and reposition our product to target first-time and value-focused homebuyers. The execution of this strategy has led to an improved selling environment for the Company. While our new orders in the third quarter were down by 8% from the prior year, this is the smallest percentage year over year decline since November 2006. More importantly, our new orders increased sequentially each month during the quarter and we ended the quarter with our highest backlog since August 2008. In order to capitalize on the improvement in our sales pace, we increased our home starts during the quarter, which will lead to higher deliveries in the fourth quarter. We are also encouraged by the continued improvement in our cancellation rate. Additionally, our third quarter results reflect both a sequential improvement in pre-impairment gross margins of 160 basis points, driven by lower construction costs and declining sales incentives, and a $56 million decrease in S,G&A expenses year-over-year as a result of right-sizing our business."
"During the quarter, we generated proceeds of $99 million from the issuance of common stock under an equity draw-down program and ended the quarter with $1.3 billion in cash and a homebuilding debt-to-total capital ratio, net of homebuilding cash, of 35.6%. Our ample liquidity enabled us to re-invest in the LandSource joint venture, and our 15% interest should create significant, long-term shareholder value."
Mr. Miller concluded, "Assuming the economy continues to stabilize, we believe our improved sales environment, increasing pre-impairment gross margins and ability to leverage S,G&A should enable us to return to profitability in fiscal 2010."
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