Lennar (LEN) will report second quarter (May) results tomorrow morning and host a call at 11:00.
This will be the first call for CEO Rick Benckwitt, who has been President since 2011. Lennar also appointed Diane Bessette as CFO in April after serving as Treasurer since 2008.
Lennar is expected to report second quarter EPS down 50% to $0.44 (impacted by purchase accounting headwinds) with revenue up 56% to $5.1 billion. This will be the first full quarter including the CalAtlantic acquisition, which may result in a somewhat hairy quarter.
The CalAtlantic deal made Lennar the largest US homebuilder in terms of revenue and market value.
Last quarter, Lennar narrowly missed sales estimates for the first time in almost three years, but reported a strong quarter overall. Revenue growth of 34% came from a 24% increase in deliveries with the average selling price (ASP) of homes up 8%. New orders were up 30% or 38% in dollars. Lennar reaffirmed guidance for 32,000-32,500 deliveries, a 22% gross margin, and an operating margin matching 12.9% from last year.
Lennar remained optimistic on the new home market but noted that demand and pricing power would be offset by higher costs.
Lennar's stock has been weak along with the rest of the homebuilders (ETF: ITB) year-to-date on concerns over rising costs (lumber, labor shortages) and to a lesser extent, higher rates.
Former CEO Stuart Miller said "Although these results do not include 2 ½ months of CalAtlantic's operations, all company metrics have performed as expected or better and we have grown more confident in our ability to exceed our $100 million synergy target in 2018 and we are on track to meet our $365 million synergy target in 2019." "We continue to remain positive on the outlook of the housing industry in general... Against a backdrop of higher demand, the production shortage over the past years has in fact resulted in supply shortages that are the underpinnings of at least stability and probably continued expansion of this housing recovery."
This morning, we learned that New Home Sales rose 7% month-over-month and 14% year-over-year in May. The backward-looking S&P Case-Shiller home price index will be out tomorrow morning and the Briefing.com Consensus expects the 20-city index to have grown 6.8% year-over-year in April.
Lennar has a $16.5 billion market cap and trades at 10x earnings or 1.8x book value.