A Look At KB Home, Lennar Q2 Results [Housing Tracker]

Off the Wall Quote of the Day 

“Mike we are very clever here. We know that you have now asked three questions and that third question had six parts to it. We see you.” – Lennar Corp. CEO Stuart Miller to Mike Rehaut, JP Morgan’s homebuilder analyst.” (Lennar Corp. F2Q08 (Qtr End 05/31/08) Earnings Call Transcript in Seeking Alpha, June 26^th)

Lennar, KB Home Q2 Results 

KB Home's Loss Widens as Inventory Of Unsold Houses Mounts.  “KB Home’s Q2 results… included write-downs of $201.1 million, down from $223.9M in Q1 and $308.2M a year ago… Sales fell 55% to $639.1M, [and] it delivered 41% fewer homes in Q2’08 vs. Q2’07. Average selling prices dropped 17% to $226,000. Net orders for new homes tumbled 42%. The [Q2] cancellation rate improved to 27% from 53% in Q1… KB reported positive cash flow from operations in H2’08 and expects the trend will continue… KBH has been aggressively reducing its supply of land and had $1.31 billion in cash on its balance sheet, and is focusing on marketing to first-time home buyers and building smaller, lower-cost houses.”  (Wall St. Journal, June 28^th)

Homebuilders Get Demolished.  “In Q2, Lennar lost $120.9 million, or $0.76/share. While this represents an “improvement” over the $244.2M or $1.55/share it lost during the comparable period last year, it’s still substantially more than the $0.59-cent per-share loss analysts had been expecting. Lennar’s total revenue offered little solace, plummeting to roughly $1.1 billion - 61% less than the $2.9 billion in revenue posted in the same period last year. The only good news in Lennar’s report was very bad news for its employees: Selling, general and administrative expenses were down 60% from last year, thanks in large part to headcount reductions.”  (Minyanville, June 27^th)

KB Home F2Q08 (Qtr End 05/31/08) Earnings Call Transcript.  “KB Home CFO Domenico Cicere: Government and conforming loans were used in 97% of our [Q2] deliveries. Over two-thirds of our backlog of sold homes were qualified with an FHA loan. There has also been some recent press on down payment assistant programs. It is not a meaningful portion of our business, representing only 74 deliveries in our most recent quarter… KB Home CEO Jeffrey Mezger: A few years ago we… stopped offering… down-payment assistance altogether. There is a lot of pressure as you’ve seen in the news from congress to eliminate the program… so we don’t want to create a business that relies on something that could possibly go away in the future.”  (Seeking Alpha, June 27^th)

Lennar Corp. F2Q08 (Qtr End 05/31/08) Earnings Call Transcript.  “Lennar CEO Stuart Miller: “Inventory of finished homes is coming down. The number of open, competing, new home communities is declining and the number of builders is also declining… We have seen tremendous results in reducing construction costs… We have revamped our purchasing efforts to benefit from regional and national efficiencies as we have moved across all divisions to disassemble labor and material contracts and begun purchasing on a unit basis for labor and materials separately. We are seeing costs come down by as much as 20%... Our divisions are on track to achieve the future annualized SG&A run rate of 10% by the end of our fiscal year.”  (Seeking Alpha, June 26^th)

 

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Comments

[notsosmart]

some guy on this web site said lennar would be bankrupt by now.havent heard much from him.so many experts(????) so wrong so often.dont believe a word you hear,read.