Lennar Corporation (NYSE: LEN) stock fell 1.13% on October 4th, 2018 (Source: Google finance) though the company beat the earnings estimate for the third quarter of FY 18. On February 12, 2018, the company completed the acquisition of CalAtlantic through a transaction in which CalAtlantic was merged with and into a wholly-owned subsidiary of the Company (‘Merger Sub’), with Merger Sub continuing as the surviving corporation and a subsidiary of the Company. During the third quarter, the company redeemed $250 million aggregate principal amount of 6.95% senior notes due 2018.
LEN in the third quarter of FY 18 has reported the adjusted earnings per share of $1.40, beating the analysts’ estimates for the adjusted earnings per share of $1.19. The reported figure mainly excludes acquisition and integration costs related to CalAtlantic Group, Inc. Including these items as well as backlog/construction in progress write-up related to purchase accounting, the reported figure came in at $1.37 per share in the quarter, increasing considerably from the year-ago profit level of $1.04 per share. The improvement was primarily attributable to greater demand, courtesy of strong housing market fundamentals, given low unemployment, higher wages and lower inventory levels. The company had reported the adjusted revenue growth of 74 percent to $5.67 billion in the third quarter of FY 18, which is in line with the analysts’ estimates for revenue of $5.67 billion.
Moreover, in the third quarter, revenues from home sales increased 83% to $5.2 billion in the third quarter of 2017. Revenues were higher primarily due to a 66% increase in the number of home deliveries, excluding unconsolidated entities, and a 10% increase in the average sales price of homes delivered. New home deliveries, excluding unconsolidated entities, increased to 12,600 homes in the third quarter of 2018 from 7,588 homes in the third quarter of 2017, primarilyas a result of the significant increase in volume resulting from the CalAtlantic acquisition. The average sales price of homes delivered was $415,000 in the third quarter of 2018, compared to $375,000 in the third quarter of 2017. The increase in average sales price was primarily resulting from the CalAtlantic acquisition. Sales incentives offered to homebuyers were $22,900 per home delivered in the third quarter of 2018, or 5.2% as a percentage of home sales revenue, compared to $21,800 per home delivered in the third quarter of 2017, or 5.5% as a percentage of home sales revenue, and $23,000 per home delivered in the second quarter of 2018, or 5.3% as a percentage of home sales revenue.