Limping Lennar: Fool by Numbers

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On Sept. 25, homebuilding giant Lennar (NYSE: LEN) released earnings for the third quarter ended Aug. 31.

• The net loss includes a staggering $856.8 million of non-cash write-offs, as unsold homes, land in inventory, and option deposits lose some value every day. These write-offs are a fact of life in the industry, but the year-ago hit was just $76.2 million.
• Come one, come all, and marvel at Lennar's incredible shrinking order backlog: $5.6 billion last year, $2.8 billion last quarter, and $2.2 billion today. Amazing!
• And you should expect that trend to continue: the 5,800 new orders coming in during the quarter can't match the 7,600 homes completed at the same time.
• If you were hoping for some positive regional data that might recommend a more localized homebuilder like Brookfield Homes (NYSE: BHS), you're out of luck. Lennar's weakness was spread in a rather uniform layer across the country, region by region.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q3 2007	Q3 2006	Change
Sales	$2,342	$4,182	(44.0%)
Net Profit	($514)	$207	N/A
EPS	($3.25)	$1.30	N/A
Diluted Shares	158.0	159.2	(0.8%)

Get back to basics with the income statement.

Margin Checkup

	Q3 2007	Q3 2006	Change*
Operating Margin	2.5%	11.1%	(8.6)
Net Margin	(21.9%)	4.9%	(26.8)

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q3 2007	Q3 2006	Change
Cash + ST Invest.	$128	$144	(10.9%)
Total Capital	$7,669	$8,715	(12.0%)

The balance sheet reflects the company's health.

Cash Flow Highlights

The info didn't include a cash flow statement.

Free cash flow is a Fool's best friend.

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• Housing's Direction Not Hazy