Lennar, KB Home Profits Top Estimates Amid Housing Recovery--2nd Update

By Austen Hufford and Tess Stynes 

Home builder Lennar Corp. posted another quarter of gains in key metrics as the U.S. housing market continues to recover.

The company's third-quarter results came in above analysts' expectations.

Fellow builder KB Home also reported continued growth in the latest quarter on Tuesday afternoon, with its per-share earnings beating analysts' expectations. The Los Angeles company's shares, up 21% this year, rose 3.5% to $15.45 in recent after-hours trading.

Lennar Chief Executive Stuart Miller said "the housing market's recovery has continued to progress on a slow, steady and sometimes, choppy path."

Still, its margin fell and metrics for Miami-based Lennar, one of the largest U.S. home builders by houses constructed, posted slower growth than in recent quarters.

Lennar shares, which fell 3.5% to $43.50 on Tuesday and are down 11% this year, were inactive after hours.

Gross margin on home sales fell to 22.6% from 24.1% on rising land costs.

The number and average price of homes delivered rose in the quarter, driving revenue growth. The number of deliveries rose 7% for the third quarter from a year before as the average price of a delivered home increased 3.7% to $363,000. The number of new orders increased 8% as backlogs increased 12%.

The company's results were hurt by its Houston segment whose large energy sector has been challenged by low energy prices in recent quarters.

Lennar reported a quarterly profit of $235.8 million, or $1.01 a share, up from $223.3 million, or 96 cents a share, a year prior. Revenue grew 13.7% to $2.83 billion.

Analysts polled by Thomson Reuters projected 89 cents in per-share profit on $2.68 billion in revenue.

Separately, KB Home reported a profit of $39.4 million, or 42 cents a share, up from $23.3 million, or 23 cents a share, a year earlier. Total revenue increased 8.3% to $913.3 million. Home-building revenue grew 14% thanks to an 11% increase in deliveries and a 2% rise in average selling prices.

Analysts polled by Thomson Reuters expected per-share profit of 39 cents and revenue of $945 million.

Net orders grew 16% to 2,508 and net order value improved by 20% to $930 million.

Write to Austen Hufford at [e-mail] and Tess Stynes at [e-mail]

(END) Dow Jones Newswires

September 20, 2016 18:50 ET (22:50 GMT)

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