Lennar missed Wall Street's revenue expectations in its third quarter, with sales falling 8.7% year on year to $8.05 billion against analyst estimates of $8.31 billion, a 3.2% miss. Adjusted earnings per share came in at $1.23, 4.5% below the consensus estimate of $1.29, while operating margin dropped to 5.7% from 7.9% a year earlier and backlog declined 4.5% year on year to $6.3 billion. Chief Executive Officer Stuart Miller said interest rates and consumer confidence constrained the improvement the company had anticipated going into the quarter, and Lennar responded by increasing sales incentives and adjusting prices, particularly in its largest markets of Texas and Florida, where resale listings have grown and intensified price competition. Chief Financial Officer Diane Bessette said the company's metrics remain dependent on market conditions, and management expects margins to stay under pressure as it works through higher-cost land acquired in a more favorable market, calling land the one input it cannot reengineer. Lennar offset some of the pressure with record-low construction cycle times of 116 days, unsold inventory reduced to 1.8 homes per community, and a 12% year-over-year cut in divisional headcount, while its asset-light model leaves 98% of land controlled and 2% owned. The stock traded at $79.54, up from $78.12 just before the earnings.
Lennar CorporationLennar missed Q3 revenue and EPS estimates with operating margin falling to 5.7% from 7.9% and backlog down 4.5%.
