Limping Lennar: Fool by Numbers
By Anders Bylund
September 25, 2007
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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