Lennar Corp.'s (LEN) fiscal fourth-quarter profit dropped 10% following prior-year results that were buoyed by a hefty tax gain, but results beat expectations as margins soared on a reduction in incentives.
Builders have seen improved results in recent quarters but have seen orders slump since the government's first-time homebuyer tax credit expired last spring. Lennar's Rialto unit, focused on distressed loans and real estate, has been a bright spot of late and swung to the black in the latest period.
For the quarter ended Nov. 30, Lennar posted a profit of $32 million, or 17 cents a share, down from a year-earlier profit of $35.6 million, or 19 cents a share. The prior-year period included a $320.5 million tax benefit. Revenue slid 5.9% to $860.1 million.
Analysts polled by Thomson Reuters most recently forecast a profit of 3 cents on $760 million in revenue.
Gross margin on home sales widened to 17.7% from 11.1%, including valuation adjustments.
New orders declined 5% to 2,520, while deliveries dropped 12% to 3,089. The average sale price of a home was flat at $238,000 as incentives as a percentage of home-sales revenue dropped to 12.4% from 13.2%.
The builder's backlog dipped 1.7% to 1,604 homes.
Class A shares closed Monday at $18.90 and were inactive premarket. The stock has gained 16% over the past year.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; email@example.com