Lennar Reports First Quarter 2024 Results
- Net earnings per diluted share increased by 25% to $2.57 compared to the prior year quarter.
- New orders surged by 28% to 18,176 homes, with a dollar value increase of 21% to $7.7 billion.
- Deliveries saw a 23% increase to 16,798 homes, contributing to a 13% rise in total revenues to $7.3 billion.
- Homebuilding operating earnings reached $1.0 billion, with a gross margin on home sales of 21.8%.
- The company repurchased 3.4 million shares of common stock for $506 million and increased its stock repurchase program by $5.0 billion.
- Lennar raised its annual dividend from $1.50 per share to $2.00 per share, showcasing confidence in future performance.
- None.
Insights
The reported increase in net earnings per diluted share by 25% and overall net earnings by 21% for Lennar Corporation is a strong indicator of the company's profitability and operational efficiency. The growth in new orders by 28% and the subsequent increase in the dollar value of these orders by 21% suggest a robust demand for the company's homes. Additionally, the 23% increase in deliveries reflects the company's ability to meet this demand effectively. The reported backlog, with a dollar value of $7.4 billion, provides a clear visibility into future revenues, which is a positive sign for investors.
From a financial standpoint, the company's strategic repurchase of shares, increase in dividend payouts and the reported strong balance sheet with $5.0 billion in cash and cash equivalents, coupled with no outstanding borrowings, demonstrate a solid financial position and a commitment to returning value to shareholders. The homebuilding debt to total capital ratio of 9.6% is particularly low for the industry, which typically sees higher leverage ratios, indicating a conservative approach to debt management that may appeal to risk-averse investors.
The detailed financial metrics provided, such as the gross margin on home sales of 21.8% and the net margin of 13.6%, are essential for evaluating the company's cost management and profitability. An increase in gross margin suggests that Lennar has been successful in managing construction costs and pricing strategies. The S,G&A expenses as a percentage of revenues from home sales at 8.2% reflect operational efficiency and cost control.
The company's capital allocation strategy, including the repurchase of $506 million of common stock and the authorization of an additional $5.0 billion stock repurchase program, indicates a bullish stance by management regarding the company's valuation. Increasing the annual dividend from $1.50 to $2.00 per share is a significant return to shareholders and may attract income-focused investors. The financial services operating earnings of $131 million provide diversification to the company's revenue streams, while the multifamily and Lennar Other operating losses are areas that require attention to improve overall profitability.
Lennar's report highlights several key factors influencing the real estate market, including interest rate fluctuations, strong employment and a persistent shortage of housing supply. The company's strategic focus on matching production pace with sales pace, despite the 8% decrease in the average sales price per home delivered, implies an operational shift towards volume over price maximization. This strategy may be in response to affordability challenges in the housing market, which is a significant factor for potential homebuyers.
The emphasis on a 'land light' strategy, with a reduction in years supply of owned homesites and an increase in the percentage of controlled homesites, suggests a move towards greater flexibility and reduced inventory risk. This approach can lead to improved capital efficiency and potentially higher returns on investment. The improvement in the company's return on inventory to 30.5% is a testament to the effectiveness of these operational strategies and could signal a competitive advantage in the industry.
First Quarter 2024 Highlights - comparisons to the prior year quarter
- Net earnings per diluted share increased
25% to$2.57 - Net earnings increased
21% to$719 million - New orders increased
28% to 18,176 homes; new orders dollar value increased21% to$7.7 billion - Backlog of 16,270 homes with a dollar value of
$7.4 billion - Deliveries increased
23% to 16,798 homes - Total revenues increased
13% to$7.3 billion - Homebuilding operating earnings of
$1.0 billion - Gross margin on home sales of
21.8% - S,G&A expenses as a % of revenues from home sales of
8.2% - Net margin on home sales of
13.6%
- Gross margin on home sales of
- Financial Services operating earnings of
$131 million - Multifamily operating loss of
$16 million - Lennar Other operating loss of
$40 million - Homebuilding cash and cash equivalents of
$5.0 billion - Years supply of owned homesites of 1.3 years and controlled homesites of
77% - No outstanding borrowings under the Company's
$2.6 billion - Homebuilding debt to total capital of
9.6% - Repurchased 3.4 million shares of Lennar common stock for
$506 million - Increased stock repurchase program up to an additional
$5.0 billion - Increased annual dividend from
$1.50 $2.00
Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, said, "We are pleased to report another strong quarter as we remained focused on consistent production pace driving sales pace, while using pricing, incentives, marketing spend, and margin informed by dynamic pricing to enable consistent sales volume in a fluctuating interest rate environment. Although affordability continued to be tested by interest rate movements, purchasers remained responsive to increased sales incentives, resulting in a
"The macroeconomic environment remained relatively consistent throughout our first quarter, with interest rates fluctuating within a manageable range, employment remaining strong, housing supply remaining chronically short due to production deficits over a decade, and demand strength driven by strong household formation. Housing market fundamentals remained strong as demand continued to outweigh supply. These conditions remained constructive for our overall operating strategy of focusing on production and sales pace over price while growing market share."
"Earnings were
"Driven by this quarter's strong operating performance, we constructively allocated capital while we continued to strengthen and fortify our balance sheet. During the quarter, we repurchased
Jon Jaffe, Co-Chief Executive Officer and President of Lennar, said, "Operationally, both our starts pace and sales pace were 4.9 homes per community in the first quarter, as we continue to move closer to an even flow operating model. Our cycle time was down to 154 days, or
"During the quarter, we continued the execution of our land light strategy. This was evidenced by our years supply of owned homesites improving to 1.3 years from 1.9 years last year and our controlled homesite percentage increasing to
Mr. Miller concluded, "We continue to remain enthusiastic about our current execution and our future. We have remained focused on our operating strategies, while at the same time being observant of current economic and market trends. This has positioned us particularly well as the economic environment continues to define itself throughout the complicated election year in 2024. As we look ahead to our second quarter, we expect to deliver between 19,000 and 19,500 homes with a gross margin of approximately
RESULTS OF OPERATIONS
THREE MONTHS ENDED FEBRUARY 29, 2024 COMPARED TO
THREE MONTHS ENDED FEBRUARY 28, 2023
Homebuilding
Revenues from home sales increased
Gross margins on home sales were
Selling, general and administrative expenses were
Financial Services
Operating earnings for the Financial Services segment were
Other Ancillary Businesses
Operating loss for the Multifamily segment was
Tax Rate
In the first quarter of 2024 and 2023, the Company had tax provisions of
Share Repurchases
In the first quarter of 2024, the Company repurchased 3.4 million shares of its common stock for
Liquidity
At February 29, 2024, the Company had
Guidance
The following are the Company's expected results of its homebuilding and financial services activities for the second quarter of 2024:
Second Quarter 2024 | |
New Orders | 20,900 - 21,300 |
Deliveries | 19,000 - 19,500 |
Average Sales Price | |
Gross Margin % on Home Sales | About |
S,G&A as a % of Home Sales | About |
Financial Services Operating Earnings |
About Lennar
Lennar Corporation, founded in 1954, is one of the nation's leading builders of quality homes for all generations. Lennar builds affordable, move-up and active adult homes primarily under the Lennar brand name. Lennar's Financial Services segment provides mortgage financing, title and closing services primarily for buyers of Lennar's homes and, through LMF Commercial, originates mortgage loans secured primarily by commercial real estate properties throughout
Note Regarding Forward-Looking Statements: Some of the statements in this press release are "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to the homebuilding market and other markets in which we participate. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those anticipated by the forward-looking statements. We wish to caution readers not to place undue reliance on any forward-looking statements, which are expressly qualified in their entirety by this cautionary statement and speak only as of the date made. Important factors that could cause differences between anticipated and actual results include slowdowns in real estate markets in regions where we have significant Homebuilding or Multifamily development activities or own a substantial number of single-family homes for rent; decreased demand for our homes, either for sale or for rent, or Multifamily rental apartments; the potential impact of inflation; the impact of increased cost of mortgage financing for homebuyers, increased interest rates or increased competition in the mortgage industry; supply shortages and increased costs related to construction materials, including lumber, and labor; cost increases related to real estate taxes and insurance; the effect of increased interest rates with regard to our funds' borrowings on the willingness of the funds to invest in new projects; reductions in the market value of our investments in public companies; natural disasters or catastrophic events for which our insurance may not provide adequate coverage; our inability to successfully execute our strategies, including our land light strategy, and our planned spin-off of certain businesses; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; the forfeiture of deposits related to land purchase options we decide not to exercise; the effects of public health issues such as a major epidemic or pandemic that could have a negative impact on the economy and on our businesses; possible unfavorable results in legal proceedings; conditions in the capital, credit and financial markets; changes in laws, regulations or the regulatory environment affecting our business, and the other risks and uncertainties described in our filings from time to time with the Securities and Exchange Commission, including those included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
A conference call to discuss the Company's first quarter earnings will be held at 11:00 a.m. Eastern Time on Thursday, March 14, 2024. The call will be broadcast live on the Internet and can be accessed through the Company's website at investors.lennar.com. If you are unable to participate in the conference call, the call will be archived at investors.lennar.com for 90 days. A replay of the conference call will also be available later that day by calling 203-369-3032 and entering 5723593 as the confirmation number.
LENNAR CORPORATION AND SUBSIDIARIES Selected Revenues and Operating Information (In thousands, except per share amounts) (unaudited) | |||
Three Months Ended | |||
February 29, 2024 | February 28, 2023 | ||
Revenues: | |||
Homebuilding | $ 6,930,991 | 6,156,305 | |
Financial Services | 249,720 | 182,981 | |
Multifamily | 129,677 | 143,523 | |
Lennar Other | 2,542 | 7,620 | |
Total revenues | $ 7,312,930 | 6,490,429 | |
Homebuilding operating earnings | $ 1,028,796 | 906,839 | |
Financial Services operating earnings | 131,296 | 78,737 | |
Multifamily operating loss | (15,639) | (21,601) | |
Lennar Other operating loss | (39,548) | (39,757) | |
Corporate general and administrative expenses | (157,321) | (126,106) | |
Charitable foundation contribution | (16,798) | (13,659) | |
Earnings before income taxes | 930,786 | 784,453 | |
Provision for income taxes | (210,865) | (185,145) | |
Net earnings (including net earnings attributable to noncontrolling interests) | 719,921 | 599,308 | |
Less: Net earnings attributable to noncontrolling interests | 587 | 2,774 | |
Net earnings attributable to Lennar | $ 719,334 | 596,534 | |
Average shares outstanding: | |||
Basic | 276,946 | 286,074 | |
Diluted | 276,946 | 286,074 | |
Earnings per share: | |||
Basic | $ 2.57 | 2.06 | |
Diluted | $ 2.57 | 2.06 | |
Supplemental information: | |||
Interest incurred (1) | $ 36,511 | 49,577 | |
EBIT (2): | |||
Net earnings attributable to Lennar | $ 719,334 | 596,534 | |
Provision for income taxes | 210,865 | 185,145 | |
Interest expense included in: | |||
Costs of homes sold | 39,214 | 49,452 | |
Homebuilding other income (expense), net | 4,915 | 3,593 | |
Total interest expense | 44,129 | 53,045 | |
EBIT | $ 974,328 | 834,724 | |
(1) | Amount represents interest incurred related to homebuilding debt. |
(2) | EBIT is a non-GAAP financial measure defined as earnings before interest and taxes. This financial measure has been presented because the Company finds it important and useful in evaluating its performance and believes that it helps readers of the Company's financial statements compare its operations with those of its competitors. Although management finds EBIT to be an important measure in conducting and evaluating the Company's operations, this measure has limitations as an analytical tool as it is not reflective of the actual profitability generated by the Company during the period. Management compensates for the limitations of using EBIT by using this non-GAAP measure only to supplement the Company's GAAP results. Due to the limitations discussed, EBIT should not be viewed in isolation, as it is not a substitute for GAAP measures. |
LENNAR CORPORATION AND SUBSIDIARIES Segment Information (In thousands) (unaudited) | |||
Three Months Ended | |||
February 29, 2024 | February 28, 2023 | ||
Homebuilding revenues: | |||
Sales of homes | $ 6,901,781 | 6,093,827 | |
Sales of land | 20,752 | 9,718 | |
Other homebuilding | 8,458 | 52,760 | |
Total homebuilding revenues | 6,930,991 | 6,156,305 | |
Homebuilding costs and expenses: | |||
Costs of homes sold | 5,395,532 | 4,802,843 | |
Costs of land sold | 14,017 | 22,077 | |
Selling, general and administrative | 567,987 | 449,794 | |
Total homebuilding costs and expenses | 5,977,536 | 5,274,714 | |
Homebuilding net margins | 953,455 | 881,591 | |
Homebuilding equity in earnings from unconsolidated entities | 13,302 | 3,186 | |
Homebuilding other income, net | 62,039 | 22,062 | |
Homebuilding operating earnings | $ 1,028,796 | 906,839 | |
Financial Services revenues | $ 249,720 | 182,981 | |
Financial Services costs and expenses | 118,424 | 104,244 | |
Financial Services operating earnings | $ 131,296 | 78,737 | |
Multifamily revenues | $ 129,677 | 143,523 | |
Multifamily costs and expenses | 132,667 | 148,956 | |
Multifamily equity in loss from unconsolidated entities and other income (expense), net | (12,649) | (16,168) | |
Multifamily operating loss | $ (15,639) | (21,601) | |
Lennar Other revenues | $ 2,542 | 7,620 | |
Lennar Other costs and expenses | 9,088 | 6,476 | |
Lennar Other equity in loss from unconsolidated entities, other income (expense), net, | (27,865) | (16,947) | |
Lennar Other unrealized losses from technology investments (1) | (5,137) | (23,954) | |
Lennar Other operating loss | $ (39,548) | (39,757) | |
(1) The following is a detail of Lennar Other unrealized losses from mark-to-market adjustments on technology investments: |
Three Months Ended | |||
February 29, 2024 | February 28, 2023 | ||
Blend Labs (BLND) | $ 2,936 | 586 | |
Hippo (HIPO) | 16,449 | 6,632 | |
Opendoor (OPEN) | 1,315 | (7,691) | |
SmartRent (SMRT) | (1,963) | 1,305 | |
Sonder (SOND) | 51 | (320) | |
Sunnova (NOVA) | (23,925) | (24,466) | |
$ (5,137) | (23,954) | ||
LENNAR CORPORATION AND SUBSIDIARIES |
Lennar's reportable homebuilding segments and all other homebuilding operations not required to be reported separately have divisions located in:
East: Alabama,
Central: Georgia,
West: Arizona,
Other: Urban divisions
First Quarter | |||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||
Deliveries: | Homes | Dollar Value | Average Sales Price | ||||||||
East | 4,724 | 3,855 | $ 1,950,631 | 1,711,945 | $ 413,000 | 444,000 | |||||
Central | 3,560 | 2,740 | 1,395,644 | 1,201,395 | 392,000 | 438,000 | |||||
4,263 | 3,421 | 1,070,159 | 1,016,973 | 251,000 | 297,000 | ||||||
West | 4,238 | 3,642 | 2,521,491 | 2,194,022 | 595,000 | 602,000 | |||||
Other | 13 | 1 | 6,817 | 1,165 | 524,000 | 1,165,000 | |||||
Total | 16,798 | 13,659 | $ 6,944,742 | 6,125,500 | $ 413,000 | 448,000 | |||||
Of the total homes delivered listed above, 77 homes with a dollar value of
First Quarter | |||||||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||
New Orders: | Active Communities | Homes | Dollar Value | Average Sales Price | |||||||||||
East | 304 | 317 | 4,526 | 3,841 | $ 1,898,078 | 1,674,177 | $ 419,000 | 436,000 | |||||||
Central | 320 | 322 | 4,274 | 2,741 | 1,718,536 | 1,147,817 | 402,000 | 419,000 | |||||||
233 | 219 | 4,431 | 3,142 | 1,119,999 | 879,456 | 253,000 | 280,000 | ||||||||
West | 368 | 356 | 4,927 | 4,465 | 2,996,239 | 2,708,326 | 608,000 | 607,000 | |||||||
Other | 2 | 3 | 18 | 5 | 9,530 | 3,686 | 529,000 | 737,000 | |||||||
Total | 1,227 | 1,217 | 18,176 | 14,194 | $ 7,742,382 | 6,413,462 | $ 426,000 | 452,000 | |||||||
Of the total homes listed above, 46 homes with a dollar value of
First Quarter | |||||||||||
2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||
Backlog: | Homes | Dollar Value | Average Sales Price | ||||||||
East | 6,382 | 8,147 | $ 2,656,497 | 3,544,939 | $ 416,000 | 435,000 | |||||
Central | 3,877 | 4,570 | 1,698,509 | 2,039,469 | 438,000 | 446,000 | |||||
2,063 | 2,418 | 525,781 | 699,567 | 255,000 | 289,000 | ||||||
West | 3,940 | 4,263 | 2,547,090 | 2,740,782 | 646,000 | 643,000 | |||||
Other | 8 | 5 | 4,241 | 3,685 | 530,000 | 737,000 | |||||
Total | 16,270 | 19,403 | $ 7,432,118 | 9,028,442 | $ 457,000 | 465,000 | |||||
Of the total homes in backlog listed above, 116 homes with a backlog dollar value of
LENNAR CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (In thousands, except per share amounts) (unaudited) | |||
February 29, 2024 | November 30, 2023 | ||
ASSETS | |||
Homebuilding: | |||
Cash and cash equivalents | $ 4,950,128 | 6,273,724 | |
Restricted cash | 12,635 | 13,481 | |
Receivables, net | 897,371 | 887,992 | |
Inventories: | |||
Finished homes and construction in progress | 11,092,033 | 10,455,666 | |
Land and land under development | 4,734,116 | 4,904,541 | |
Inventory owned | 15,826,149 | 15,360,207 | |
Consolidated inventory not owned | 3,547,921 | 2,992,528 | |
Inventory owned and consolidated inventory not owned | 19,374,070 | 18,352,735 | |
Deposits and pre-acquisition costs on real estate | 2,408,877 | 2,002,154 | |
Investments in unconsolidated entities | 1,206,564 | 1,143,909 | |
Goodwill | 3,442,359 | 3,442,359 | |
Other assets | 1,473,563 | 1,512,038 | |
33,765,567 | 33,628,392 | ||
Financial Services | 3,056,442 | 3,566,546 | |
Multifamily | 1,379,279 | 1,381,513 | |
Lennar Other | 749,911 | 657,852 | |
Total assets | $ 38,951,199 | 39,234,303 | |
LIABILITIES AND EQUITY | |||
Homebuilding: | |||
Accounts payable | $ 1,565,464 | 1,631,401 | |
Liabilities related to consolidated inventory not owned | 3,043,888 | 2,540,894 | |
Senior notes and other debts payable, net | 2,830,332 | 2,816,482 | |
Other liabilities | 2,689,263 | 2,739,217 | |
10,128,947 | 9,727,994 | ||
Financial Services | 1,721,333 | 2,447,039 | |
Multifamily | 249,625 | 278,177 | |
Lennar Other | 73,364 | 79,127 | |
Total liabilities | 12,173,269 | 12,532,337 | |
Stockholders' equity: | |||
Preferred stock | — | — | |
Class A common stock of | 25,983 | 25,848 | |
Class B common stock of | 3,660 | 3,660 | |
Additional paid-in capital | 5,651,836 | 5,570,009 | |
Retained earnings | 22,949,315 | 22,369,368 | |
Treasury stock | (1,988,200) | (1,393,100) | |
Accumulated other comprehensive income | 5,241 | 4,879 | |
Total stockholders' equity | 26,647,835 | 26,580,664 | |
Noncontrolling interests | 130,095 | 121,302 | |
Total equity | 26,777,930 | 26,701,966 | |
Total liabilities and equity | $ 38,951,199 | 39,234,303 | |
LENNAR CORPORATION AND SUBSIDIARIES Supplemental Data (Dollars in thousands) (unaudited) | |||||
February 29, 2024 | November 30, 2023 | February 28, 2023 | |||
Homebuilding debt | $ 2,830,332 | 2,816,482 | 4,033,335 | ||
Stockholders' equity | 26,647,835 | 26,580,664 | 24,418,255 | ||
Total capital | $ 29,478,167 | 29,397,146 | 28,451,590 | ||
Homebuilding debt to total capital | 9.6 % | 9.6 % | 14.2 % | ||
Homebuilding debt | $ 2,830,332 | 2,816,482 | 4,033,335 | ||
Less: Homebuilding cash and cash equivalents | 4,950,128 | 6,273,724 | 4,057,956 | ||
Net homebuilding debt | $ (2,119,796) | (3,457,242) | (24,621) | ||
Net homebuilding debt to total capital (1) | (8.6) % | (15.0) % | (0.1) % | ||
(1) | Net homebuilding debt to total capital is a non-GAAP financial measure defined as net homebuilding debt (homebuilding debt less homebuilding cash and cash equivalents) divided by total capital (net homebuilding debt plus stockholders' equity). The Company believes the ratio of net homebuilding debt to total capital is a relevant and a useful financial measure to investors in understanding the leverage employed in homebuilding operations. However, because net homebuilding debt to total capital is not calculated in accordance with GAAP, this financial measure should not be considered in isolation or as an alternative to financial measures prescribed by GAAP. Rather, this non-GAAP financial measure should be used to supplement the Company's GAAP results. |
Contact:
Ian Frazer
Investor Relations
Lennar Corporation
(305) 485-4129
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SOURCE Lennar Corporation
FAQ
What was Lennar's net earnings per diluted share in the first quarter of 2024?
How much did new orders increase by in the first quarter of 2024?
What was the percentage increase in deliveries in the first quarter of 2024?
What was the homebuilding operating earnings in the first quarter of 2024?
How much did Lennar repurchase in common stock during the first quarter of 2024?
