01—Abstract
Summary
Summary of the 10-K filed January 30, 2012. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation reported net earnings attributable to Lennar of $92.2 milliona, or $0.48 per diluted share, for the fiscal year ended November 30, 2011, compared to $95.3 million, or $0.51 per diluted share, in 2010.
The company delivered 10,845 homes in 2011 at an average sales price of $244,000,b and its Lennar Homebuilding cash and cash equivalents stood at $1.0 billion at year end. Homebuilding operating earnings were $109.0 million in 2011, against $100.1 million in 2010, while Financial Services operating earnings declined to $20.7 million from $31.3 million, primarily on lower mortgage volume. The Rialto Investments segment produced operating earnings of $63.5 million, including $28.9 million attributable to noncontrolling interests.
Balance sheet leverage rose during the year. Lennar Homebuilding debt was $3.36 billionc, and the Lennar Homebuilding debt-to-total-capital ratio was 55.5%, up from 54.5%. The company issued $350 million of 3.25% convertible senior notes due 2021, with an additional $50 million sold after year end, and retired $249.0 million of senior notes and other debt.
Stockholders' equity was $2.70 billiond, or $14.31 per share. The company stated it no longer holds investment-grade credit ratings and has no corporate credit line, having terminated its $1.1 billion revolving facility in February 2010. Management described the housing market as stabilizing, citing a 15% year-over-year increase in new orders during the second half of 2011 and a 20% increase in fourth-quarter new orders.
It stated that its homebuilding operations are on track to achieve profitability in 2012. Joint venture exposure has been reduced to 35 unconsolidated entities from 270 at the 2006 peak, with maximum recourse debt exposure of $108.7 million, down from $1,764.4 million at that peak.
02—Key points
Key Highlights
- Net earnings attributable to Lennar of $92.2 million, or $0.48 per diluted share, in 2011, versus $95.3 million, or $0.51 per diluted share, in 2010
- Deliveries of 10,845 homes in 2011 at an average sales price of $244,000; new orders rose 15% year over year in the second half of 2011
- Lennar Homebuilding gross margin on home sales of 19.9% including valuation adjustments, and 21.3% excluding them
- Lennar Homebuilding debt of $3.36 billion, a debt-to-total-capital ratio of 55.5%, and $1.0 billion of Lennar Homebuilding cash and cash equivalents at year end
- Rialto Investments operating earnings of $63.5 million, with the AB PPIP fund and the Rialto Real Estate Fund as key investments
- Financial Services operating earnings fell to $20.7 million from $31.3 million, driven by lower mortgage volume; mortgage originations were $2.9 billion
- Joint venture count reduced to 35 from 270 at the 2006 peak, with maximum recourse exposure of $108.7 million versus $1,764.4 million at the peak
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2011filed January 30, 2012Financial Statements
FY2011 against FY2010
| Line item | FY2011FY2010 | Change |
|---|---|---|
| Revenue | $3.10B$3.07B | +0.7% |
| Operating Expenses | $2.99B$2.95B | +1.4% |
| Operating Income | $193.23M$188.65M | +2.4% |
| Interest Expense | $162.97M$143.95M | +13.2% |
| Net Income | $92.20M$95.26M | −3.2% |
| EPS (Basic) | $0.49$0.51 | −3.9% |
| EPS (Diluted) | $0.48$0.51 | −5.9% |
| Shares Outstanding (Diluted) | 195.19M188.86M | +3.4% |
05—Questions
Frequently Asked Questions
How did Lennar's profitability change in fiscal 2011?
Net earnings attributable to Lennar were $92.2 million, or $0.48 per diluted share, compared with $95.3 million, or $0.51 per diluted share, in 2010. Homebuilding operating earnings rose to $109.0 million from $100.1 million, while Financial Services earnings declined and Rialto contributed $63.5 million.
Is Lennar's debt load increasing?
Lennar Homebuilding debt rose to $3.36 billion from $3.13 billion, and the debt-to-total-capital ratio increased to 55.5% from 54.5%. The company issued $350 million of 3.25% convertible senior notes due 2021, with an additional $50 million sold after year end, and retired $249.0 million of senior notes and other debt during the year.
Does Lennar have a corporate credit facility?
No. The company terminated its $1.1 billion senior unsecured revolving credit facility in February 2010 to eliminate its cost and has maintained letter of credit facilities instead. It also states that it does not have an investment-grade credit rating, which raises the cost of selling debt securities.
What is management's outlook for the housing market and the company?
Management said the housing market has started to stabilize, supported by low home prices and low interest rates, with more traffic and a more consistent sales pace. It expects its homebuilding operations to achieve profitability in 2012, and says all segments are well positioned.
What is the risk from Lennar's Stuart A. Miller's voting control?
Stuart A. Miller, Chief Executive Officer and a Director, controls approximately 46% of the voting power of the Class A and Class B common stock combined. This gives him effective control over director elections and stockholder votes, which could discourage an acquisition of the company.
06—Continue