Despite softer home sales, Lennar revealed on Tuesday a first-quarter profit over a year ago loss on improvements in its distressed real estate business.
The company posted net earnings of $27.4 million, or 14 cents a share, compared with a loss of $6.5 million, or 4 cents a share, in the same quarter last year, widely ahead of average analyst estimates polled by Thomson Reuters of a 5-cent loss.
Revenue was $558 million, down 3% from $574.4 million a year ago, beating the Street’s view of $508.23 million.
Lennar, one of the nation’s largest homebuilders, saw significant improvements in its Rialto Investments segment, which invests in distressed real estate, offset by a drop in homebuilding sales to $466.7 million from $520.7 million the year-earlier period.
The company has struggled to widen its profit since the expiration of a federal tax credit for home buyers last year. A weak economic environment has kept unemployment high and consumers afraid of purchasing new homes.
Despite the weaker sales, though, the company’s homebuilding segment still improved operating earnings by a whopping 550%. Lennar’s chief executive, Stuart Miller, said the organization is pleased with the results, which mark its fourth consecutive quarter of profitability.
Builder KB Home’s fiscal first-quarter loss widened sharply as plunging orders fueled a steep revenue drop and charges weighed on the bottom line, according to earnings reported today.
KB Home is based in Los Angeles and builds in cities nationwide, including in seven Colorado communities.
Like most builders, Los Angeles-based KB Home faced a tough year-over-year comparison because the federal tax credit that expired in early 2010 pulled demand forward.
Since then, the industry has seen sales fall off dramatically.In the latest period, KB Home’s deliveries tumbled 28 percent, while net orders dropped 32 percent.
Still, builders say they’re optimistic because consumer visits to model homes and sales centers have picked up recently.
“As this year’s spring selling season has commenced, we are encouraged by the higher traffic we experienced in the first quarter compared to a year ago,” Chief Executive Jeff Mezger said in the pre-market release.
For the quarter ended Feb. 28, KB Home reported a loss of $114.5 million, or $1.49 a share, compared with a year-earlier loss of $54.7 million, or 71 cents a share.
The Bloomfield Hills, Mich., home builder says it lost $696.1 million, or $2.75 per share, in the first three months of the year. That compares with a loss of $85.7 million, or 34 cents per share, in the same period last year.
The latest quarter includes pretax charges of $663.6 million to write down the value of inventory and land on its books.
Revenue declined 23 percent to $1.45 billion from $1.87 billion in 2007’s first quarter.
“The difficult housing environment continued to erode during the first quarter of 2008,” Richard J. Dugas Jr., president and chief executive, said in a statement. “Buyer demand for new homes continues to be soft, home prices remain under pressure, and overall buyer confidence is weak.”