By Dhirendra Tripathi
Investing.com – Lennar Corporation stock (NYSE:LEN) fell 5% in Thursday’s premarket trading after the company’s fourth-quarter earnings and sales fell short of estimates.
High labor costs and expensive raw materials weighed on the earnings that otherwise rose 35% to $1.2 billion, or $3.91 per share, lower than the $4.15 analysts estimated.
Use of lumber the company had purchased when prices were high also weighed on the earnings. Profit would have been higher if not for mark-to-market losses on account of investments in technology.
Labor and supply chain issues constrained the company’s home-building efforts in the quarter ended November 30, the company said, even as deliveries rose 11%, to 17,819 homes.
The company closed the month with a backlog of 23,771 homes worth $11.4 billion, up 26% and 45%, respectively.
The company made progress on its strategy of being “land-light.” The number of years of owned homesites improved to 3 from 3.5 last year. The land-light approach helped improve cash flows, which the company used for share repurchases and debt repayment, the company said.
Revenue rose 24%, to $8.4 billion on the back of an 11% increase in the number of home deliveries and a 14% rise in the average sales price.
As a percentage of revenue from home sales, selling, general and administrative expenses improved to 6% from 7.5% in the fourth quarter of last year. The company attributed this to lower commissions paid to brokers and its efforts to use more technology in its processes.
In the ongoing quarter, the company expects new orders for 14,800 of 15,100 units and deliveries to be about 12,500.
For the full year, it sees deliveries at about 67,000 units while it sees the average sales price to be around $460,000 in the quarter as well as in the year.