Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Lennar Corporation (NYSE:LEN)

F1Q10 (Qtr End 02/28/10) Earnings Call Transcript

March 24, 2010 11:00 am ET

Executives

Scott Shipley – Director, IR

Stuart Miller – President and CEO

Rick Beckwitt – EVP

Jeff Krasnoff – CEO, Rialto

Bruce Gross – VP and CFO

Analysts

David Goldberg – UBS

Dennis McGill – Zelman & Associates

Joshua Pollard – Goldman Sachs & Co.

Adam Rudiger – Wells Fargo

Ray [ph] – JP Morgan

Josh Levin – Citi

Steven East – Ticonderoga Securities

Jonathan Ellis – Banc of America/Merrill Lynch

Nishu Sood – Deutsche Bank

Dan Oppenheim – Credit Suisse

Operator

Thank you for standing by and welcome to Lennar’s first quarter earnings conference call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today’s conference call is being recorded. If you have any objections, please disconnect. I will now turn the call over to Mr. Scott Shipley, Director of Investor Relations, for the reading of the forward-looking statement.

Scott Shipley

Good morning. Today’s conference call may include forward-looking statements that are subject to risks and uncertainties relating to Lennar’s future business and financial performance. These forward-looking statements may include statements regarding Lennar’s business, financial condition, results of operations, cash flows, strategies and prospects. Forward-looking statements represent only Lennar’s estimates on the date of this conference call and are not intended to give any assurance to actual future results.

Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could cause Lennar’s actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described under the caption Risk Factors contained in Lennar’s annual report on Form 10-K most recently filed with the SEC. Please note that Lennar assumes no obligation to update any forward-looking statements.

Operator

I would like to introduce your speaker for today’s call, Mr. Stuart Miller, President and CEO. Mr. Miller, you may begin.

Stuart Miller

Thank you and good morning everyone. I would like to thank you first for joining us for our first quarter 2010 update. This morning, I am joined as always by Bruce Gross, our Chief Financial Officer; Diane Bessette, our Vice President and Treasurer; and David Collins, our Controller. Additionally, I am joined by Rick Beckwitt, our Executive Vice President; and Jeff Krasnoff, the Chief Executive Officer of our Rialto segment.

I’m going to begin this morning with some brief opening remarks about the current housing market in general and the progress we’ve made on managing our balance sheet and joint ventures. Since we have just finished our quarterly operations review with our Regional President here in Miami, Rick Beckwitt who stayed over to participate in this call will overview our homebuilding operations, while Jon Jaffe, our Chief Operating Officer is back in California. And then Jeff Krasnoff will comment on our Rialto segment positioning for 2010 and beyond.

Finally, Bruce will provide additional detail on our numbers, and then we will open the phones to your questions. And as always, I would like to request that in our Q&A period, everyone please limit to just one question and one follow-up, so that we can be as fair as possible to all of our participants.

So, let me make a few overview comments about the market and our first quarter. While the new home market and housing in general still faced serious headwinds from current economic and legislative conditions, the market and overall economy appear to be continuing to stabilize and are generally in recovery. As we have expected, at least as it relates to housing, the recovery is not presenting itself as a V shape, return to better times, but instead is proving to be a rocky, stabilizing bottom with visibility obscured by more questions than clear answers.

The overhang of foreclosures and the prospects of additional delinquencies ahead continued to moderate recovery, as shadow inventory continues to be absorbed and then even replenished. Unemployment and a generally sluggish economic bounce back combined to full demand at traditionally low levels. And the prospects of a pullback driven by elimination of legislative and fiscal incentives limit visibility and create pending uncertainties about the immediate future of the strength of the market.

And finally, the debate over whether inflation or deflation lies ahead and the impact of sovereign credit risks add uncertainty to the view ahead of interest rate. Nevertheless, as we reviewed our operations from the field geography-by-geography, there are some common themes that appear to be validating the current trend.

First, prices are not free-falling and in fact in many markets are continuing to stabilize and even recover. In most of our divisions, there continues to be a meaningful reduction in the incentives used and the sales process and that fact is reflecting itself in higher gross margins. For the company overall, incentives were 12.5%, down from 13.2% last quarter and 17.1% last year. And margins improved on a pre-impairment basis to 20.3% from 17.8% last quarter and 14.3% last year. While these trends are vulnerable to the upcoming elimination of the $8,000 tax credit and the elimination of fiscal stimulus to the lending market in the short term, it feels that the momentum provided by consumer confidence and home affordability will likely equalize their impact over a short period of time.

These government programs work very well as a kick-start to a free-falling housing market, but it now seems that the free market is positioned to take over in orderly fashion. Second, inventories of new homes remains significantly reduced. While there has been a great deal of talk about potential spec building of new homes to beat the end of the tax credit, we are finding that, that as limited. In most markets, new homes are still being built to order and for the segment of the market that wants a new home, there are limited immediate opportunities to choose from, and that is helping to reduce incentives.

Next, while foreclosures continue to be a significant driver of absorption and pricing, the effect is continuing to decline as the bulk of foreclosure activities is situated in areas that do not compete with new home construction, such as the inner city or the extreme outskirts of markets in which we operate. The better situated foreclosure homes are being absorbed in an orderly fashion and the market is clearly in the inventory overhang in many locations. The $8,000 tax credit has facilitated that clearing process and has helped enable a return to normalcy. In our operating meetings, we found that a number of our markets were no longer effective at all by foreclosure homes as they had already been absorbed.

I have noted many times that housing is a localized business and inventories in micro markets, not broad geographic markets are most important in considering demand trends. Finally, we have heard that unemployment rates in many of our markets is at least stabilizing and in some instances beginning to recover. Accordingly, a general sense of confidence has returned to the consumer and there is a tangible sense that with prices and interest rates low, now is the right time to purchase a home for future security.

This is perhaps the most important element driving the future of the housing markets as the threat of losing one’s job has deterred many from the housing market for some time now. With the ground now firming beneath us, and with solid foundation of our balance sheet, we are able to find new acquisitions of home sites to build new communities where homes can be delivered at responsible profit levels at today’s price level and given zero market appreciation and Rick will give further color on our operations will talk about our acquisitions.

As you can see from our press release this morning, at Lennar, we have continued to position our company to return to fundamental profitability in 2010. We have made meaningful progress in preparing our company for a stabilized and ultimately recovering housing markets. That preparation is primarily reflected in our balance sheet and is now – that is now well positioned for the future. Through the end of last year, we aggressively impaired or disposed of assets that would not add to our profitability in the future. This process enabled us to both clean up our balance sheet, while maximizing the tax benefits derived from the net operating loss carry-back extension that Congress enacted last year.

This in turn has enabled us to move forward with additional liquidity to make strategic purchases and to begin to add back jobs that were lost as the markets deteriorated. In the first quarter, we made meaningful investments that we believe are positioning our company for success. After a rather long four-and-a-half years of mending process, we are pleased to finally be using our cash again to invest for future profitability rather than support impaired property.

Our balance sheet remains fortified with a homebuilding and Rialto debt-to-total cap ratio net of cash of 45.9% and homebuilding cash of approximately 1.15 billion, which includes the 230 [ph] in cash taken in two days after the end of the quarter. The number of joint ventures has fallen to 58 currently and that’s down from 62 last quarter. Many of the remaining ventures are good ventures that have already been reworked and have solid access to the position for the future. We expect to continue to reduce this number as we go forward into 2010. Additionally, we have continued to reduce our maximum recourse debt for the company to $279 million.

Finally, on the opportunity side, we have made our first strategic investments in the Rialto segment of our business. As I noted in prior quarters, we have been preparing to be a significant participant in the distress opportunities that naturally present themselves in down cycles. We have been incubating and operating team of experienced professionals for the past few years. The team is now formed and we have begun the process of actively investing in unique distressed investments. Mid-quarter, we announced the acquisition of over $3 billion of face value of loan in partnership with the FDIC, and we described our progress no our PPIP program with AllianceBernstein.

While I will let Jeff Krasnoff update you on those programs, I will note that we have made meaningful investments that we believe will add significant shareholder value. This is a tough business, but we do it exceptionally well. Yesterday evening, we had our weakly asset managers meeting, and as I reviewed assets with our managers from around the country, I was enthusiastic to see just how comfortably we operate and manage this very unique segment. We are clearly beginning to see more opportunities present themselves in this area and with our unique expertise, we expect to be an active participant in this part of the market recovery, as we feel these investments can add outsized return to our recovering homebuilding operations.

At the end of the day, we are very pleased with the progress that we have made to date and the very exciting position that our company is currently in. Our balance sheet is strong and positioned with adequate liquidity to support investment for our future. Our core homebuilding operations are positioned for success and beginning to grow again, adding communities and leveraging our right-sized overhead. And our Rialto Investments segment is now fully operational and investing capital to create strong returns as we build profitability.

While we have recognized that the current economic environment is fragile at best, we feel today that we are extremely well positioned to navigate the rocky bottom and ultimate recovery that lies ahead. With that, let me turn it over to Rick Beckwitt to give you color on our homebuilding operations.

Rick Beckwitt

Thanks Stuart. During our Regional Presidents’ meeting yesterday, we reviewed the operating performance and market position of our 24 homebuilding divisions. While there is always room for improvement, I am pleased to say that the homebuilding group as a whole in 75% of our division are exceeding business plans for the first quarter. Our actual performance exceeded internal plans in several categories, be it gross margins, SG&A, operating income, or new sales order.

Across the board, our divisions are positioned in 2010 for substantial improvement over last year. We have home designs and floor plans that are positioned for success in this extremely price-sensitive and value-oriented markets. More importantly, our unrelenting focus on value engineering, construction costs, and cycle times has enabled us to reduce our per foot build costs to levels we haven’t seen in over a decade. With that in mind, I would like to drill down and give you some additional color on our individual markets.

Keep in mind as I discuss the current market trends that even some of the weakest markets, we are in some of the most recent troubled markets, we are positioned to make money given our reduced SG&A, low cost plans, and the new land deals we have signed in these distressed areas. Let’s start in Florida. The strongest markets in Florida are Miami-Dade, parts of Broward, Sarasota, Naples, Orlando and Tampa. These markets affirm due to increased affordability. Foreclosures and resell listings on the MLS are down significantly in each of these markets.

We have seen increased traffic and have been able to increase prices or reduce sales. In addition, new sales for community are in the rise. There are different things driving the improvement in each of these markets, be it the lack of entry level product in Miami-Dade, the return of value-oriented out-of-state second-time buyers in Sarasota County, active adult buyers scenting a low point in pricing in Naples, or increased financing available for foreign buyers in Orlando. We are extremely well positioned in each of these markets.

Despite the huge overhang of high-rise condo product in Miami, the single family size market is doing extremely well. The weakest markets in Florida continue to be Palm Beach, Port St. Lucie, Fort Myers, although we have seen some recent stabilization in Fort Myers. Unemployment foreclosures in resells will cause these markets to take a while to recover. Most of the builders in these markets have gone bust or left the market. This has created a unique opportunity of us to do extremely well in a troubled market.

In the Mid-Atlantic, Maryland and Virginia are some of the best markets in the country, notwithstanding the poor recent weather there in those markets. These markets bounced back quickly, with government spending in the region. We have been able to increase prices in both markets with Maryland as a much more price-sensitive markets than Virginia.

New Jersey is a very stable market. It’s blind constrained with no foreclosures or resale issues, and we have been able to slowly increase pricing and absorption. We have a strong active adult position in this market and it has performed extremely well. The Carolinas are a mixed bag. Charlotte is a tough market with 13% unemployment, tied foreclosures and a large number of homes on the MLS. The market is very volatile with pricing continuing to edge down. We don’t see that market returning until the banking sector starts to revive. Raleigh on the other hand is an extremely hot market. Foreclosures have been absorbed by the market and resales are decreasing. We have seen strong traffic and have been able to increase pricing. Our team in Raleigh is at the top of their game.

Myrtle Beach is in the early stages of recovery and Charleston have seen some pricing strength given the employment growth in the area. In the Mid-West, Minnesota is starting to stabilize, with Chicago continuing to be a very weak market. We have seen no signs of recovery in the Chicago market anytime soon. The labor unions have created a cost to price equation that makes this market very problematic. Fortunately, we have got a lean team in Chicago, that’s focused only on cash flow.

In the Texas markets, Dallas is the weakest part of the market. Foreclosures and resales remain at elevated levels, while the banks have started to slow down foreclosures and have shifted with short sales, the market is not poised to improve until the end of 2010. That said, we are seeing good profitable sales activity in our well located communities in Dallas. Houston is the most stable part of the Texas market and our largest market. Resales and foreclosures have declined, our master plan communities are doing extremely well, and we have been able to slowly increase pricing. Austin and San Antonio have stabilized, traffic is up especially at the low price points and in the better located communities. Military spending and the troops returning to the area will continue to drive this market.

In Colorado, we are starting to see real market recovery in Denver. Traffic has improved significantly with real qualified buyers. We are beginning to see some pricing power. In the desert areas, let’s talk about Arizona. Arizona continues to be soft, but it’s improving. Phoenix in better shape and Tucson at both markets, the activity is very community-specific. Traffic for the most part is flat and we have seen a modest improvement in foreclosures and resale listing. As you would expect, the lower price points are performing better than the higher and the further you get out of town, the weaker the markets go.

Las Vegas is very similar to Arizona. It’s a tough market. With unemployment at 13%, the market will take some time to recover. While foreclosures and resales are trending down, pricing is extremely tough. The high end is dead and the entry level has improved. We are fortunate to have almost no legacy assets in this market and have been able to secure some incredible, new distressed deals that will make money even in this down market.

In California, the well-located communities have bounced back very quickly. In the Inland Empire, there is great affordability. Our communities in Corona, Murrieta, Rancho Cucamonga, and San Bernardino are doing extremely well. But the outline areas of Hemet, Belmont, Palm Springs are lifeless. Fortunately, we had very little presence in these areas. The LA and Valencia market is improving, but they are a little softer than the Inland Empire. This area has stabilized with buyers chasing the new affordable products. Orange County, Irvine, Buena Park are pretty good markets, traffics set significantly, and we have been able to raise prices.

Bakersfield and Fresno markets are still hurting, with fine impact of high unemployment, foreclosures and resales, have made this the toughest areas in California. Finally, Northern California, the Bay Area is extremely strong, while Sacramento is still sluggish. While it’s off to close, Sacramento won’t see a meaningful growth until the state government starts to grow as well. But as in other soft markets, our downsized product and restructured operations will allow us to be profitable in this market. I hope that gives you a better read of how things are geographically and how market and community-specific this recovery truly is.

Neighboring and micro markets have completely different prospects. In that context, I would like to now focus on our land acquisition strategy. We have been extremely active pursuing new land opportunities since the beginning of 2009. Our primary focus has been on finished home sites that we can acquire on an auction-basis, with little or no upfront deposits. As you can imagine the financial returns from these low risks, properly priced deals are extremely attractive due to the short time between the time we buy the land and when we deliver the homes.

Recently, we have used our balance sheet to cash some distressed opportunities that provide significant margins. These purchases range from buying land directly from banks, cash-strapped developers and builders for closure sales, short sales and even backing into assets by purchasing loans directly or by acquiring CDD obligations.

Yesterday Stuart and I reviewed each new land deal we had signed since the beginning of 2009. All of these deals were underwritten with extremely conservative assumptions. It assumes no price increases, slow sales phase and with price to yield gross margins and IRRs exceeding 20%. I am pleased to report that almost all of these deals are exceeding underwriting. Our underwriting and review process is extremely tight. Jon and I are reviewing every transaction and no money leaves this company without a thumbs up from me, Jon, or Stuart.

In the last quarter, we were very opportunistic and selective with our new transactions. We put under contract approximately 4,000 home sites located in 73 new communities. While I can’t give you too much color on all of these deals, I can tell you that they are all high margin opportunities. As you can imagine, our focus is to leverage our existing operations and take advantage of the market distress. I would like to highlight one of the more interesting deals we put together in the last quarter. We have a great working relationship with Starwood Capital. They were selected as the stalking-horse bidder for TOUSA’s Florida assets in the bankruptcy process.

These landholdings constituted one of the most desirable real estate portfolios to come to market in the years. We worked with Starwood to create a truly win-win transaction. We helped Starwood underwrite these assets in exchange for an auction to purchase these assets if they were the successful bidder in the bankruptcy. The great thing about the deal is we had an auction contract in place before the auction started, so that Starwood could go into the auction with precision about their financial returns and we had locked in pricing before the auction started. We are thrilled with the outcome. We now have an option to purchase 1,400 home sites located in 38 communities in Jacksonville, Tampa, Orlando, and southeast Florida over the next 24 months.

In addition, we have secured a first offer on an additional 1,348 home sites after the 24-month period. These auctions have flexible takedown schedules, produce gross margins in excess of 20%, have IRRs north of 20% and allow us to leverage our existing SG&A to produce increased process.

Before I turn it over to Jeff, I would like to thank our folks in the divisions for the hard work and focus they have had during these difficult times. It’s their attention to detail that allows us to return to profitability.

Jeff Krasnoff

Good morning. It’s been a while since I have had an opportunity to participate in one of these conference calls. It’s great to be back and thank you Stuart and Rick for the invitation. On the Rialto side, we have now been at this now for over two years, building the team here inside and alongside Lennar.

And our team contains a lot of familiar faces, a number of whom who were here a couple of decades ago, but we did something very similar. We have also had an opportunity to set our systems, levering off of Lennar’s infrastructure and it’s had an opportunity to get deep into the markets, thanks to the unique view that only Lennar’s operating team could provide. We have also focused on opportunities, patiently evaluating tens of billions of dollars of distressed real estate loans securities and properties.

As expected for quite some time, owners of troubled assets could not afford to part with those assets at the prices appropriate for those who might be better equipped to maximize values. So, similar to what we have seen in prior real estate downturns of this magnitude, we expect of the US government to act as a catalyst to help kick-start the clearing of assets and to create price discovery. We have initially pursued opportunities to partner with the government in programs similar to those that we saw in the early 1990s. For example, last summer, we became a sub advisor to our old friends at AllianceBernstein in the treasury’s legacy securities Public Private Investment Program or PPIP and became one of eight sponsors selected to participate.

Together, we raised over $1 billion of private equity commitment that is being matched by treasury equity and advantageous match term financing from treasury. Lennar has made a $75 million commitment to that program, and just over half of that has been funded today. We also have closely watched the activities at the FDIC and as you are aware, we are now partnered with them in two entities that acquired about $3 billion of real estate loans.

We worked for over four months on the underlying due diligence and because of the high content of loans made to developers, having Lennar’s unique view, we believe gave us the distinctive advantage in our evaluation of those assets. We closed the transactions with the FDIC just six weeks ago and just about completed the task of bringing all of the loans in from the 22 different receiverships. In addition, during the short time, we have already had contact with a majority of the larger borrowers, borrower meetings are going on as we speak, a few of the loans have already been resolved and are being documented and cash is being collected. We see the potential opportunity as being extremely large. Looking at the FDIC alone, there have been almost 200 banks seized during this cycle and another 700 are on the watch list.

The 22 institutions included in these first few structured transactions made up over $4 billion of unpaid principal balance alone just to kind of give you a perspective for the size of this opportunity. Many of the remaining troubled institutions have loans similar to the ones in the two transactions we just closed, and we are up and running and continue to have that unique Lennar advantage. We also anticipate that our involvement in sourcing and evaluating these assets will continue to yield one-off opportunities for the Lennar homebuilding operation. The Rialto team is very excited about how we are positioned and look forward to reporting to you on our progress in future quarters.

I am going to turn it over to Bruce.

Bruce Gross

Thank you Jeff and good morning. As we indicated in our fourth quarter conference call, we expected a first quarter loss due to low projected deliveries. For the quarter, we reported a loss of $0.04 per diluted share compared with a $0.98 loss per share in the prior year. Revenues from home sales decreased 2% to $513 million. That was due to a 7% decrease in home deliveries excluding JVs, partially offset by a 6% increase in the average sales price to $258,000.

The overall average sales price increase was partially due to a larger percent of deliveries from California. The average sales price changed regionally year-over-year as follows. The east region was $229,000, up 2%; the central region was $208,000, up 7%; the west region was $375,000, up 8%; Houston was $213,000, up 10%; and the other category was $255,000, down 12%. Our pre-impairment gross margin improvement to 20.3% compared to 14.3% in the prior year was driven by a couple of items. Primarily it was due to a significant reduction in sales incentives of $14,000 per home as it declined from $51,000 in the prior year’s quarter to $37,000 per home in this quarter. So, that was a reduction from 17.1% of home sales to 12.5% in the current quarter.

The lower sales incentives per home is the result of the improved selling environment, our repositioned product strategy as well as fewer completed unsold homes. Additionally, our gross margins were favorably impacted from the progress in reducing construction costs per square foot that Rick talked about.

Turning to impairment, we had a very significant reduction in impairments this quarter. It was 10.1 million compared with 88.5 million in the prior year and approximately half of that number in the current year was related to homebuilding-related impairments. We are now realizing the benefits from our aggressive cost-cutting measures, as we reduced SG&A costs by $20 million or 20% year-over-year. SG&A as a percentage of revenue from home sales was 15.8%, which decreased 360 basis points from the prior year and 40 basis points sequentially from our fourth quarter.

Our financial services segment had a small loss of 900,000 versus 492,000 of costs last year as a result of lower volumes in both our mortgage and title operations. Mortgage pretax was a profit of 2.9 million versus 6.2 million in the prior year and our title company reduced its loss to 3.4 million versus 5 million in the prior year’s quarter.

Turning to the Rialto segment, with the investments we made this quarter in Rialto, we wanted to provide investors full transparency and we established a new – it was $1 million operating loss during the quarter compared with $600,000 in the prior year. Revenues during the quarter included $300,000 for PPIP advisory fees. There were no revenues recorded during the quarter relating to the partnership with FDIC, as most of the loans acquired had not been transferred from the FDIC’s existing servicers prior to the end of the first quarter.

Our investment in the FDIC partnership will begin contributing to revenue in the second quarter. We did recognize 1.4 million of expenses in this segment in the first quarter, and these were costs for due diligence costs in connection with the acquisition of the real estate loan portfolios and the partnership with FDIC as well as Rialto general and administrative expenses. We also recognized $143,000 of equity in earnings which is primarily our investment in PPIP, as Jeff mentioned, we actually invested $41 million of our $75 million PPIP investment commitment throughout the first quarter.

We recognized a tax benefit during the quarter of approximately $12 million and this related to a reversal of the state tax item that we provided in adopting FIN 48 back on December 1st of 2007. This item was recorded in 2007, because it did not meet the more likely than not standard required by FIN 48, and in the first quarter, we reached an agreement with the state resulting in its reversal.

In the first quarter, we continued with a strong balance sheet, and while we strategically invested approximately $0.5 billion between new land acquisitions and Rialto investments, we still focus on maintaining a strong balance sheet. Stuart mentioned the combination of our homebuilding cash, restricted cash and tax receivables totaled 1.15 billion at quarter end and the tax receivable we talked about in our fourth quarter came in two pieces, 92 million came in during the quarter and the remainder 230 million was actually received on March 2nd.

We terminated the company’s credit facility in February and we entered into cash collateralized Letter of Credit facilities which will result in 8 million of annual savings. Our leverage remained low as our homebuilding and Rialto’s debt-to-total capital amount of cash was 45.9%, and we also retired 90 million of homebuilding debt during the quarter, with the majority of this debt having a maturity that came due in 2010.

We continued to carefully manage our inventory as we reduced wholly-owned completed unsold homes year-over-year from 1,321 to 572. We closed on approximately 3,300 home sites during the quarter, totaling 154 million of new land acquisitions. Inventory declined from 3.9 billion in the prior year to 3.6 billion in the current quarter, and that excludes consolidated inventory not owned. We had just over 3,000 starts during the quarter, which was up 46% year-over-year, and there were 83,000 home sites owned and 21,000 controlled at quarter-end, totaling 104,000 owned and controlled.

Of the remaining 58 joint ventures that Stuart mentioned, only 21 have recourse debt, 15 have non-recourse debt and 22 have new debt. Additionally, we reduced our maximum recourse indebtedness to 279 million at the end of the quarter and our recourse net of reimbursement agreement fell to 186 million. We continue to be successful in extending joint venture loans upon maturity as we extended an additional six during the quarter.

In our first quarter, there was new accounting standard 810 that requires companies to include minatory interest in equity, and as a result, we included 544 million of non-controlling interest in the equity section of our balance sheet. In conclusion, the company is financially strong and our strategies have positioned us well. Our operating margins are at the highest level in four years, with a strong improvement in our gross margins.

Our sales incentives are at the lowest percent of home sales since 2006. Impairments were reduced by about 90% during the quarter. Our SG&A is now right sized and has declined as a percentage of home sales, even though home sales declined. Our backlog is up 34%, that’s the largest year-over-year in percent increase since 2002. Additionally, our cancellation rate of 13% is the lowest we have seen in many years. We will see positive contributions from the new land acquisitions that Rick talked about as new communities open and as Jeff’s crew continues to work through the FDIC investment that we made in the first quarter, Rialto will begin contributing revenues from the FDIC partnership in the second quarter.

We are clearly on our way back to profitability. With that, let me turn it over for questions.

Question-and-Answer Session

Operator

(Operator instructions) Our first question is coming from David Goldberg, UBS. Your line is open.

David Goldberg – UBS

Thanks, good afternoon everybody.

Stuart Miller

It’s still morning, David.

David Goldberg – UBS

That’s almost noon.

Stuart Miller

Right.

David Goldberg – UBS

Not bad. The first question I wanted to talk a little bit about was, if we could talk about buyer quality, I am nearly trying to get an idea if you are seeing any follow-off in buyer quality in terms of groups coming into the community as a factor of kind of where it is on, I mean, you have seen, FICO scores coming down and all, you have seen LTVs increase, and how do you kind of think about with the tax credit, maybe we just pull forward too much demand and what’s left out there in your market?

Rick Beckwitt

This is Rick, I will take this one. With regard to the quality of the bars coming through the community, I would say it has remained relatively high. Folks out there are not just shopping or looking for furniture, they are looking to buy a home, those prices are in the affordable range. Credit score has really varied dramatically by market. So, it would be tough to really give you an overall view as to whether they are on the rise or on the fall because they really vary by market. With regard to the tax credit accelerating demand, we think some demand has been accelerated, there is no question of that, because there is a follow-off between when they get that opportunity back from the government, but it’s really difficult to assess, you know, what the impact of the elimination of that is going to be.

David Goldberg – UBS

Got it. Quick follow-up question here, are you guys seeing more opportunities for M&A with private builders as a way to access land and maybe pricing becoming more reasonable on those opportunities?

Rick Beckwitt

It might be out there, David, but it’s not our focus right now. We are really looking for kind of off-the-beaten-path opportunities. We don’t want to go into the head-to-head environment. You know, there is still lot of developed home site opportunities out there that are either on the market or have not yet hit the market, and right now, we are finding organic ways to expand our footprint within our operating divisions, leveraging overheads, one real carefully underwritten deal at a time.

David Goldberg – UBS

All right. Thanks very much, have a good morning.

Rick Beckwitt

Okay, thank you.

Operator

Our next question is coming from Dennis McGill, Zelman & Associates. Your line is open.

Dennis McGill – Zelman & Associates

Good morning everybody.

Stuart Miller

Good morning.

Dennis McGill – Zelman & Associates

First question, just with some of the macro numbers that are both around on the new home sales side, it’s not a data point, we have put a lot of – but can you just talk about the orders in the quarter and how it’s trended relative to your expectations and any color you can provide on March as well would be helpful?

Stuart Miller

Throughout the quarter, you know, first of all, Dennis, we generally don’t give the mid-quarter update, but throughout the quarter, I think you will note that it followed the typical seasonal trend. December tends to be a little slower, because you have the holidays, and it starts to pick up as you get closer to the Super Bowl and I would say that has followed the typical seasonal trend.

Dennis McGill – Zelman & Associates

And that trend relative to your expectations was larger in line?

Stuart Miller

Yes, it was absolutely in line.

Dennis McGill – Zelman & Associates

Okay. And then secondly, just as we talk about some of the lot opportunities that you have capitalized on, can you scale what you put either under contract or officially closed on realized let’s say five quarters or so relative to the whole 104,000 lots that you control?

Rick Beckwitt

Well, clearly, the margins in the more recent transactions, deals that we have signed or actually have closed on are much stronger than the totality of the balance. We have been taking advantage of the distress that’s out there. And you will start to see, you know, the benefit of the margins associated with those deals as we increase the building activity.

Stuart Miller

But with that in mind, we have been very regimented in how we deal with our existing inventory and as you know, we were early to the game with regard to taking the appropriate impairments and we have seen that move through the system.

Dennis McGill – Zelman & Associates

I guess what I am trying to get a size of the percentage of the lots that would fall in that first category of lots?

Stuart Miller

I don’t think we have it broken out, but I guess the newer home sites are increasing. It’s probably closer to 10% of the total now. But we are clearly depleting some of the older communities and replacing with newer well-positioned higher gross margin communities and that’s a trend.

Dennis McGill – Zelman & Associates

Okay, that’s helpful. Good luck guys.

Stuart Miller

Okay, thanks Dennis.

Operator

Our next question is coming from Joshua Pollard, Goldman Sachs. Your line is open.

Joshua Pollard – Goldman Sachs & Co.

Good morning.

Operator

Joshua, you may need to un-mute your lines.

Joshua Pollard – Goldman Sachs & Co.

There you go, mute button is working very well. Thank you. My first question is on the FDIC, I am ultimately trying to understand how revenues will ramp up in Rialto in addition to try to ultimately understand how the cost will ramp up there as well, it’s pretty clear. You guys that have the senior management team sort of compensation there, but as the revenue start to ramp through as you guys get some more cash from those loans, what should we be thinking about as far as modeling that out?

Stuart Miller

Well, let me start with the cost side. We are, you know, first of all looking at the growth of that business as having, as we buy or participate in new acquisitions and investment opportunities embedded in these deals is an offset of the cost side. So, there is a fee structure in just about any investment that we are making and each investment should be paying for itself on a current basis as we go. So, for example, the FDIC deal has a fee structure that will be funded from current cash flows that we are very comfortable, are already there and will continue to be there.

And that will be a direct offset to the overhead that is incurred. You know, there might be a minor adjustment one way or the other, but by and large, the deals will pay for themselves. In terms of the ramp up of revenues and profitability, you know, it’s always been that, that business is not modeled above the income and the resolution of assets in that business happen, I hate to say it this way kind of as they happen, but what we do envision is while overhead will be basically a zero or covered, we think that profitability will ramp up as we move forward. We generally find that as we touch and get involved in more and more of a loan portfolio, the resolution has happened in orderly course. And so, there will be a trajectory, but I don’t think that we can put our hands on a metric that gives us visibility, if they have quarter-by-quarter, those profits will come in.

Joshua Pollard – Goldman Sachs & Co.

Okay, the other side of that question is, I was out in California talking with some of your competitors where the FDIC step in, and the deal that they have won, you know, they sort of comment that the moment you get the (inaudible) there is a group of folks who write upfront up in the fed, hey, I would like to pay my loan off, I hadn’t been able to find anyone to work through this loan with, that there is a good chunk of dealing that happened in the first couple of weeks or months. Are you guys experiencing that upfront? And then my last sort of follow-up is for Bruce and maybe Stuart, the cash balance has come down pretty drastically, not that it’s a bad thing, because you guys won that here, but I would like to know, you know, sort of what you guys want to keep on the balance sheet at this point of the cycle?

Stuart Miller

Okay, to add to the first question, the first part, let’s say and we call it all one question.

Joshua Pollard – Goldman Sachs & Co.

Thank you.

Stuart Miller

But as to the first part, we are definitely activity as we start to speak to borrowers, and the activity is that people say I haven’t had someone to speak to, we like the payoff, but you have to temper the enthusiasm around that with some borrowers will say, we haven’t had someone to speak to and we wanted to pay off and then dot, dot, dot, at a discount. You know, there is a process involved here, and everybody would like a big discount and then maybe a little less of a discount, and the question is getting to the right number, so it takes a little bit of time even where people have been anxious to speak to someone.

So, it’s a process we have a lot of experience with us, and we know that as time goes forward, we are going to see more and more resolution at proper numbers. As it relates to the depletion of cash, as I said in my comments, it’s gratifying to be again investing capital in profitable opportunities for the future and we think that’s the mandate of the company. And so, as we look at our cash balance we invested as opposed to depleted, we are positively inclined towards that. I don’t think that it is in ours or our investors’ best interest to have a great deal of cash in our books earning 1% or less, and so, we are looking for strategic investment opportunities. To deploy capital, you are seeing some of that happened in the first quarter.

We are looking at as we look ahead at opportunities to deploy more of that capital while we maintain adequate reserves to fund our ongoing operations, now recognizing that we have eliminated our revolver in this past quarter.

Joshua Pollard – Goldman Sachs & Co.

There used to be sort of 40% to 45% net debt-to-cap ratios that you guys sort of got it to or at least the industry got it too, you guys are sitting there now as – is that something that you guys are focused on or not right here?

Stuart Miller

Yes, we have always tried to stay in kind of a range around that level recognizing that the Rialto investment is a large consolidated venture that has moved the needle there and under normal circumstances would not have. So, we think that we are comfortably in that range, especially as we in our own mind kind of take out that large debt component, non-recourse debt component that’s associated with that.

Joshua Pollard – Goldman Sachs & Co.

Okay, great. Thank you very much.

Stuart Miller

You are welcome.

Bruce Gross

And Josh, let me just say that, remember, as you are looking our debt to total capital, we have a $650 million deferred tax asset reserve that we do expect to come back into equity over the next four quarters give or take a quarter.

Joshua Pollard – Goldman Sachs & Co.

Four quarters, that’s relatively quick. Thank you.

Operator

Our next question is coming from Adam Rudiger, Wells Fargo. Your line is open.

Adam Rudiger – Wells Fargo

Hi good morning. I had a couple of questions on margins, both on a gross side and on the cost side. On the gross margin, how much of the $10 million impairment was in homebuilding cost of goods sold? I am just trying to get to a pre-impairment homebuilding gross margin this quarter. And then on the cost side, I was wondering both on the SG&A and on the corporate, you know, there is a significant downtick both sequentially year-over-year, so I was wondering how sustainable that was, if that’s kind of a new run rate do you think that is anything one-time in there?

Bruce Gross

Let me respond to the first question. We actually gave the pre-impairment margins, that was the 20.3%.

Adam Rudiger – Wells Fargo

Okay.

Bruce Gross

So, just over half of the $10 million related to homebuilding and relative to the second question as far as the SG&A run rate, we have really taken quite a few hits over the past number of quarters relating to lease terminations, we have had legal expenses, so a lot of those were non-recurring costs. And as volume picks up as we expected to, we do expect to get leverage on our SG&A as a percentage of home sales as we go forward.

Adam Rudiger – Wells Fargo

Great, thank you. And then one housekeeping question, did you give, if you did, I missed it, the community count?

Bruce Gross

I did mention the community count was flattish with last quarter. Now, that doesn’t include some of the recent acquisitions that we made because we don’t add to community account until we open it for sales.

Adam Rudiger – Wells Fargo

Okay, thank you.

Operator

Our next question is coming from Michael Rehaut, JP Morgan. Your line is open.

Ray – JP Morgan

Hi guys, it’s actually Ray [ph] calling in for Mike. First question on the, just trying to drill down on the comments about 2010 profitability, you know, obviously the gross margins are seeing a pretty nice trajectory here up to 20.3% ex-charges. I was wondering if you had any guidance for 2010 on a quarterly basis, you know, if you expect that to continue to be up pretty solid here, year-over-year and maybe on a sequential basis versus the first quarter, you know, how you see that trending throughout the year?

Stuart Miller

We haven’t provided the quarterly guidance, but we are still comfortable that we will be profitable, we expect to be profitable for all of 2010. And I think if you listen to some of the comments that were made, a lot of the newer communities are opening maybe spring and into the middle part of this year with more deliveries in the back end of the year, and I think the contribution from Rialto will be greater as the year continues. So, I would expect that the second half of the year will have a greater percentage of adding to that profitability, we expect for this year.

Ray – JP Morgan

Okay. And then kind of just follow-up on that, given that you know, the tax credit expire in April, what are you guys doing in terms of a spec management and you know, is that higher level of specs in the second quarter potentially going to you know, kind of offset that gross margin permit at all?

Bruce Gross

Well, as you can imagine with the initiation of the tax credit and the expiration of it, we have really geared our inventory position and start schedule to fall within the hash marks of those two days. Right now, we are not carrying what I would say is a large level of spec to the inventory. We are really focused on trying to do build to sell side of opportunity to pre-sell. We are actually accomplishing some, what I call in the business sales right now, and that we feel relatively comfortable with our inventory.

Stuart Miller

Yes, let me just add to that and say that we know that there is a lot of enthusiasm of the end of the $8,000 tax credit. We have not allowed ourselves to get caught up in spec building in anticipation of its end. We think that, you know, with a slightly longer-term view that the end of that program is going to come in orderly fashion and not the quite as dramatic as some might think it will be.

Ray – JP Morgan

Okay. I appreciate that. Just one last question, I think you guys talked about the trends in the first quarter, but just wondering, I am not sure if you guys answered whether if you could get different color for what’s happened so far in the second quarter?

Stuart Miller

Traditionally and today as well, we just don’t, we don’t speak to any inner quarter results and we will just have to wait and see when we have our call at the end of the second quarter.

Ray – JP Morgan

All right. Thank you guys.

Operator

Our next question is coming from Josh Levin of Citi. Your line is open.

Josh Levin – Citi

Yes, good morning everybody.

Stuart Miller

Good morning.

Josh Levin – Citi

I wanted to revisit the question of what happens to demand when the tax cut goes away, but have you seen any specific trends in the past few weeks that gave you an insight to this question for example, are you seeing a shift away from preorder homes that may not close in time to qualify to spec homes that would actually close and qualify?

Rick Beckwitt

Well, with regard to people coming in, I think a lot of that depends on what their urgency factor is for a homeowner, to the extent that they are a relo buyer and moving to the market they want something to move into today to the extent that they have got more flexibility and want to have the specific home site in the community. They are more focused on the location and products than they are necessarily to tax credit. I think you need to keep in mind that affordability is at such a level in today’s market that you know, after the fact, rebate from the government, it’s not necessarily driving the purchase decision. And we are confident that, you know, over the long term, the elimination of the tax credit is not going to have a significant – not going to cause significant issues for us, and you know, depending on the type and the part of the market, people aren’t really even focused on the tax credit. It’s a nice thing to get but it’s not driving the decision.

Josh Levin – Citi

Okay. Different topic, do you have a sense of how the healthcare reform legislation is going to affect Lennar? Some business that are out there talking about incremental costs and have you guys done any internal work on this or just too early to know?

Stuart Miller

I just think it’s too early to know right now, Josh. I don’t think that, I think there is too much up in the air. So, I would just have to say not sure yet.

Josh Levin – Citi

Okay. Thank you very much.

Stuart Miller

Thank you.

Operator

Your next question is coming from Steven East, Ticonderoga Securities. Your line is open.

Steven East – Ticonderoga Securities

Thank you, good morning guys.

Stuart Miller

Hi Steven.

Steven East – Ticonderoga Securities

Bruce, in fact, to ask you on the accounting rule change, all of that minority interest that came along to your balance sheet, will the benefits accrue to Lennar or if not is there some type of counter accountant sitting out there? I guess what I am trying to understand is, is this is a real bob to book value or not?

Bruce Gross

Well, the way I would look at the accounting change, Steven, just really simplify it is the line that was between liabilities and equity is now just in the equity section, that’s the only change that occurred.

Steven East – Ticonderoga Securities

Okay, so just a reclassification, that’s it?

Bruce Gross

Exactly, just moved down essentially one line till it’s under equity where it used to be no man’s land between liabilities and equity.

Steven East – Ticonderoga Securities

Okay, I get that. And then the second thing for you all, on the financial services, are you seeing any increase in reserves and warranties for loans coming back etcetera?

Bruce Gross

No, we have not in the first quarter. As you look at our first quarter results for financial services, it’s always a low volume quarter for us and we did see a reduction in refinances and just low volume, but there were no reserves in the first quarter that we had to take.

Steven East – Ticonderoga Securities

Okay, and then just a last question, you talked about on the SG&A, some of the legal expenses etcetera, any update on the Chinese dry wall where you stand with that, is that an issue that’s pretty much behind you or from a cost perspective announced just a case of essentially getting recovery coming back to you all, in a situation?

Bruce Gross

If you remember at year-end, we had accrued for expected additional homes that we might try are affected with Chinese dry wall and we had an accrual that was approximately 80 million. So, that accrual not only that we believe at this time that, that was sufficient for what might still come to our attention as affected homes, but in addition, the receivable that we set up, we have been collecting from the insurance company under that receivable, and we feel comfortable that it’s behind us now.

Steven East – Ticonderoga Securities

All right. Thanks a lot guys.

Operator

Our next question is coming from Jonathan Ellis, Banc of America/Merrill Lynch. Your line is open.

Jonathan Ellis – Banc of America/Merrill Lynch

Thank you. My first question is about, you mentioned California or the west having an impact on average pricing this quarter, and could you talk a little bit about what actually caused the upside in deliveries in that region and why that’s not necessarily going to continue for the balance of the year?

Stuart Miller

Well, we sold more homes. Markets are recovering. There’s been an increased demand in the market, you know, the housing has gotten into a point where prices are very affordable and you are seeing the net impact of that close through the system. The delivered price was up because that was an increased part of our overall mix. You know, we are very, very well positioned in California, and it’s going to be interesting to see how the balance of the year goes. Stay tuned.

Jonathan Ellis – Banc of America/Merrill Lynch

Okay. My other question is, if you could talk a little bit, you mentioned the land purchases this quarter. Can you provide us with a target for the full year in terms of land spend and then also sort of a related question is, in terms of community count, any expectations that you would like to provide in terms of community count as of the end of this coming year?

Stuart Miller

I think our best instinct is really to more on what we have accomplished and leave open the questions of where we go from here. I think we are taking very opportunistic view of all of our investment opportunities and really trying to stay very close to the market conditions as they evolve. As I noted, it’s a pretty rocky bottom here. So, we are going to see what happens on a month-by-month and quarter-by-quarter basis and not try to project that.

Jonathan Ellis – Banc of America/Merrill Lynch

Okay. Maybe just a clarifying question though, in terms of the community count, are you anticipating scaling up over the course of the year just directionally?

Bruce Gross

Well, fairly the new communities that we brought on board are going to work their way into our community count as the year progresses. You know, we will have some communities that those are replacing, but I think it’s safe to say that the community count at the end of 2010 will be larger than it was at the beginning of ’09 [ph], at the beginning of the year.

Jonathan Ellis – Banc of America/Merrill Lynch

Okay. Thanks guys.

Bruce Gross

Okay.

Operator

Our next question is coming from Nishu Sood of Deutsche Bank. Your line is open.

Nishu Sood – Deutsche Bank

Thanks. I wanted to ask about kind of strategic thoughts behind the FDIC portfolio purchase. Now, you folks laid it out pretty well in terms of the circumstances out there with regards to all the regional banks, obviously there have been many more bank failures and many more that are on the watch list. And the portfolios that you folks purchased are among the first to be released in large scale. So, in terms of the kind of strategic thinking there, does that tell us that you think that the first move on these distressed portfolios was the best one that may be, there would be a lot more competition for subsequent portfolios, or does it tell us something more along the lines of, this is just the first of our purchases and there maybe others to come.

Stuart Miller

Yes, look, we have been underwriting portfolios for the past two years. Jeff has mobilized the team, and I don’t know, maybe I should let Jeff speak a little bit, take it first. Jeff has mobilized the team that has been operating in this space for quite some time. The way you should look at our purchase is not that the first mover is an important position because in fact, we have underwritten a number of portfolios and we have either just decided not to bid or we have not been a winning bidder for the past couple of years. What you should read it as is that pricing is starting to find its way to a point where acquisitions can be made, proper management applied and profits will naturally come from that. And that means that you have two things happening, pricing is coming down to an appropriate level, and you have what we call price-enabled sellers. That means a seller who is actually able to trade at the price where the market is willing to buy.

The government obviously is price-enabled and can sell at an appropriate level. Some of the banks have been reluctant or incapable of selling at those levels, even now getting to a point where the market has identified an appropriate price where buyers will buy and be able to make a profit. We have a great deal of expertise in this area. Our underwriting has been thorough in all of the portfolios we have underwritten. We have a great deal of confidence that what we are purchasing, we are going to be able to add some real value as the management team and make some good decisions that will yield us to good profit.

Jeff Krasnoff

Yes, this is Jeff, and I think the only thing I would add to that is the fact that you know these are really sort of the first of the acquisition development instruction type of portfolios as well, and we believe we have sort of the unique approach to that, because it does require a lot of infrastructure in order to be able to number one, just underwrite it, but also work it out after the fact and having that – and having Lennar’s footprint across the country, puts us in a great position to be able to bid on these. So, I think you had all of those things beginning to come together at one time. The pricing, the type of portfolio, the team that we put together, so on so forth, all sort of aligned.

Stuart Miller

And let me, wait, let me just say one more thing, Nishu, but the other thing to note is I don’t feel like there is a first mover advantage so much. I just don’t think that there are a lot of competitors for this business. This is a tough business that takes a great deal of expertise. You can’t just decided to get into this business and start buying some assets. It is a complex business that requires that really knows what it’s doing. So, rather than being a first mover, we know that we have the advantage of being a very unique team in this business and the fact that we are finding prices that makes sense is what’s more significant.

Nishu Sood – Deutsche Bank

Is the capacity of the Rialto team consumed pretty much completely by the portfolios you have already brought or is it you know, it wouldn’t or if there is room, to do more deals in the near term.

Jeff Krasnoff

I would say there is a lot of room, you know, from an instructor perspective and from a team perspective, there is a lot of room to expand and to do more. We have got the base and we have had the last couple of years really to put together really a great team here. And adding additional personnel as necessary on top of the existing infrastructure and so on, we believe is, I mean, again it’s all hard work, but we believe it’s something that we are pretty adapted doing and we have done it in the past.

Stuart Miller

Yes, we have done this before and we scaled from zero to 4 billion overtime. So, we have got a history of knowing how the scaling process works, and I think that we have a lot of capacity here.

Nishu Sood – Deutsche Bank

Thanks and a capacity for Bruce, in terms of, just following up on something that Joshua asked earlier. You said something that surprised me a little bit that the differed tax asset could come back on to the balance sheet, within I believe you said 12 months. I just wanted to get an understanding of how we can kind of analyze that from the outside. Is it going to be a one-time event, in other words, that you trigger some type of threshold and the entire $600 million plus balance comes back on. Is it going to come back on scale and what metric should we be thinking about from the outside, the timing and the flow of that?

Jeff Krasnoff

Well, these are the exact questions that the homebuilders are discussing with their auditors and it’s not perfectly clear. So, you have to keep in mind we don’t have perfect guidance from the accounting firms, but essentially once you have a year give or take of profitability and that profitability will continue. It’s like that you could have the discussion about taking in your tax asset reserve, and because of the way the reserve is embedded in the assets, it’s likely to come all at one time as opposed to in various components.

Nishu Sood – Deutsche Bank

Okay, thanks a lot.

Stuart Miller

Okay, and we will take one more question please.

Operator

And the next question is from Dan Oppenheim, Credit Suisse. Your line is open.

Dan Oppenheim – Credit Suisse

Thanks very much. You talked about the inspection thing, haven’t gotten carried away with the first time visit home, our tax credit here. Can you just give some quantification in terms of spec levels right now on a per community basis?

Bruce Gross

Our spec levels on a per community basis, and I could jump in and answer that, Dan, it’s running approximately one to two per community as far as completed unsold homes go.

Dan Oppenheim – Credit Suisse

Okay. And then second question, you talked a lot about the complexity of it in the expertise, getting critical mass, and having a lot of capacity there, what is your thought in terms of when you would like to really step up into that, how the way that you see opportunities would we see lot more activity coming in the next several quarters here or will that be more measured?

Stuart Miller

I don’t think, I don’t think we can think in terms of the next couple of quarters. It’s a very opportunistic consideration, Dan. The bids come up, bids are put out there. Some of them are one, some of them are just taken off the agenda. We continue to be very involved in the bidding process here. And we are – we have a fair amount of difference as to whether we are investing over the next month, quarter or year, we are going to be an active participant and be investing in this business for the next years to come. So, I can’t really give you any color as to what we think is going to be a ramp up and what the timing will be, but we are actively involved right now.

Dan Oppenheim – Credit Suisse

Thank you so much.

Stuart Miller

Okay. I want to thank everybody for joining us. We are pretty enthusiastic about where we are right now. We recognized that the current economic environment is turbulent and with that recognition and humble respect for the market conditions, we think that we are well positioned to be able to move forward. So, we look forward to reporting again the end of our second quarter. Thank you.

Operator

This will conclude today’s conference. All parties may disconnect at this time.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Lennar Corporation F1Q10 (Qtr End 02/28/10) Earnings Call Transcript

Check out Seeking Alpha’s new Earnings Center »

This Transcript
All Transcripts