Lennar Corp. (LEN) swung to a fiscal third-quarter profit on higher closings and fewer incentives, but orders declined in the wake of the expiration of a government tax credit.
Results handily topped analysts' estimates, and shares rose 2.6% to $14.36 in light premarket trading. As of Friday's close, the stock had fallen 15% in the past year.
"As expected, our sales pace declined as a result of the expiration of the Federal homebuyer tax credit at the end of April," said Chairman and Chief Executive Stuart Miller. "Although high unemployment and foreclosures have continued to present challenges for the national housing market, our communities have been less impacted than the broader market."
Builders, Lennar included, have seen improved results in recent quarters, boosted by a rush of buyers trying to get the government's first-time homebuyer tax credit before its expiration. But since the credit ended in April, home purchases have slid, and builders have seen orders slump--though by more than what Lennar reported Monday.
For the quarter ended Aug. 31, the company reported a profit of $30 million, or 16 cents a share, compared with a year-earlier loss of $171.6 million, or 97 cents a share, which included 76 cents of write-downs. Revenue jumped 14% to $825 million.
Analysts polled by Thomson Reuters had most recently forecast earnings of 6 cents on $777 million in revenue.
Gross margin on home sales surged to 21.1% from 7.8%.
New orders fell 15% to 2,624, while deliveries rose 10% to 2,950 and the cancellation rate declined to 18% from 19%. The average sale price of a home edged higher to $240,000 from $239,000 as incentives as a percentage of home-sales revenue declined to 11.3% from 15%.
The builder's backlog declined 12% to 2,173 homes.
-By Nathan Becker, Dow Jones Newswires; 212-416-2855; firstname.lastname@example.org;