Lennar Corporation (LEN)’s 4th Quarter 2014 Financial Results Conference Call Transcript

Multi-family is transitioning in 2015 into a profit center in the full year we are expecting five buildings to be sold all in the second half of the year with 2015 profit expected to be between 15 and 18 million. In 2016 we expect to have building sales coming from this segment in each quarter. During rancher in land sales the El-Toro joint venture which Stewart highlighted will result in profit to Lennar Corporation [NYSE:LEN]of approximately 30 million in the first quarter and additionally 10 million in the second quarter. We are not expecting other significant transactions and therefore the 3^rd and 4^th quarters for all of our JB’s are expected to be about flat.

We are expected in approximately 25 million of Apollio owned land sale profit in 2015 with the majority forecasted for the second half of the year. Our 2015 affected tax rate is expected to be approximately 34.5 to 35% and our net community count is expected to increase approximately 8% to 675 active communities by the end of 2015. With these goals in mind we are well positioned to deliver strong top line and bottom line growth throughout the year and with that let me turn it back to the operator for questions.

Operator

Fine if you would like to ask a question from the phone line please press * then 1 on your Touchstone phone press *2 to withdraw your request. Our first question comes from Steven East with Evercore ISI, your line is open.

Steven East, Evercore ISI.

Good morning thank you guys lost line the question I have been getting, line lost

Presenter

Steve I think we lost you

Operator

Yes that line has disconnected I apologize. Our next question comes from Steven Kim with Barkley’s. Kim with Barkley’s your line is open.

Steven King, Barkley’s

Thank you very much guys a lot of things to talk about, I did want to talk a little bit about the gross margin for the year, you talk about for the year there will be some improvement sequentially which is pretty normal but I’m guessing probably that the year in comparison will probably the decline will probably intensify in the back half of the year and you can probably confirm that’s the right way to be looking at it and also if you could talk about, you mentioned bringing back the Moth ball communities. Can you elaborate on that, sort of where, why now and what kind of margin at front do these project usually have? Thanks.

Rick Beckwitt, President

Hey Steve its Rick, I’ll answer this on the gross margin comparison year over year we sort of get into a 4% climb year over year going from 24 to 25%. In a typical year you would see the normal sequential improvement throughout the year, starting low and ending up higher and probably he peek to trough won’t be as dramatic with regards to the Moth Ball communities this has been something that we have been doing all, over the last couple of years evaluating when they are right to bring back on and this is just a continuation of our asset monetization program. They are really spread across the country not anything dominated in one particular area. If we were to look at 2015 probably in an order of magnitude of about 10% percent of our deliveries will come from things that were taking out of that mothball bucket and the margin differential is 200 basis points, 300 basis points plus or minus between what the average margin is for the company and those communities.

Jon Jaffe, Vice President & Chief Operating Officer

Hey Steve its John just to clarify that the 10% out of moth ball communities also open in 2014 and what will also open in 2015 if that represent that whole universe and relatively timely to the margin in your question as you know in our first quarter is always out lightest quarter for delivery, so we have field expense that’s impacting the margin there so it’s not really back end load in terms of the quantic. I think you will see pretty consistent throughout the year the differential we spoke about.