Lennar Corporation, one of the nation's largest homebuilders, reported results for its second quarter ended May 31, 2013. Second quarter net earnings attributable to Lennar in 2013 were $137.4 million which included a partial reversal of the state deferred tax asset valuation allowance of $41.3 million, compared to second quarter 2012 net earnings attributable to Lennar of $452.7 million, which included a partial reversal of the deferred tax asset valuation allowance of $403.0 million.
Stuart Miller, Chief Executive Officer of Lennar Corporation, said, "Against the backdrop of recent investor concerns over mortgage rate increases, we believe that our second quarter results together with real time feedback from our field associates continue to point towards a solid housing recovery. Our second quarter results reflect significant improvement in all of our key homebuilding and financial services metrics. Demand in all of our markets continues to outpace supply which is constrained by limited land availability and fewer competing homebuilders. At the same time, affordability remains high and despite recent interest rate increases, we have seen very little impact on sales or pricing."
"As we have discussed on prior calls, conflicting macroeconomic data and interest rates reverting to normal levels can create headline risk to an otherwise straight-line recovery. However, the fundamentals of the homebuilding industry continue to be primarily driven by high affordability levels, favorable monthly payment comparisons to rentals, and overall supply shortages."
Mr. Miller continued, "New home production lagged population growth and household formation during the recent economic downturn. New development activity is just starting to accelerate, but land availability will continue to be a constraint for some time, given the length of the downturn. Fortunately, Lennar has been an active buyer of land over the last several years and we are well positioned to succeed in this environment."
"During the second quarter, our gross margin percentage on home sales improved to 24.1%, while our S, G&A % of home sales came in under 11% for the first time since our third quarter of 2006. Our operating leverage should continue to improve, driven by our higher new orders . During the quarter, our El Toro joint venture, which is managed by FivePoint Communities, contributed $13.0 million of earnings to our bottom line. Meanwhile, our financial services business generated $29.2 million of earnings during the quarter, as the refinance business continued its strong performance."
Mr. Miller concluded, "Our homebuilding and financial services businesses are performing at a high level, while our ancillary businesses continue to mature. With a strong backlog at quarter-end, growing demand, and the next phase of the housing recovery continuing to show strength, we are well positioned for another year of solid housing profitability."