Homebuilder Lennar Reports First Quarterly Profit Since 2007

Lennar Corporation today reported fourth quarter net earnings in 2009 of $35.6 million. In taking advantage of a tax change in the way it accounts for land sales, the company’s Q4 $285 million operating loss was overshadowed by a $320 million tax gain, because U.S. law now allows builders to carry back losses for five years. Like much of the U.S. homebuilding industry, Lennar is struggling to sell houses at a profit while competing with foreclosures and other distressed real estate. 

Despite what many observers say is the heavy completion Lennar and other builders are experiencing from the foreclosure market, a few bright spots emerged in the news: 

• Lennar experienced the first year-over-year increase in new orders since its first quarter of 2006. 

• According to CEO Stuart Miller, the firm ended the year with $1.3 billion in cash, will receive a tax refund of approximately $320 million in early 2010, and will continue to capitalize on distressed land-buying opportunities, to improve our operating results in the future. 

• News of the earnings drove the company’s shares up as much as 12 percent. 

• Some analysts expect orders to continue to increase, aided by the tax credit and recovering housing markets.

“The overall housing market continued to move towards stabilization as more confident homebuyers took advantage of increased affordability,” added CEO Miller.