Lennar Reports Third Quarter 2023 Results
- Deliveries increased 8% and new orders increased 37% with a dollar value of $8.6 billion, indicating strong sales performance.
- Homebuilding operating earnings of $1.5 billion and gross margin on home sales of 24.4% reflect solid financial performance.
- None.
- Net earnings per diluted share of
$3.87 , excluding mark-to-market losses on technology investments$3.91
- Net earnings of
$1.1 billion - Deliveries increased
8% to 18,559 homes - New orders increased
37% to 19,666 homes; new orders dollar value increased30% to$8.6 billion - Backlog of 21,321 homes with a dollar value of
$9.9 billion - Total revenues of
$8.7 billion - Homebuilding operating earnings of
$1.5 billion - Gross margin on home sales of
24.4% - S,G&A expenses as a % of revenues from home sales of
7.0% - Net margin on home sales of
17.4%
- Gross margin on home sales of
- Financial Services operating earnings of
$148 million - Multifamily operating loss of
$9 million - Lennar Other operating loss of
$26 million - Homebuilding cash and cash equivalents of
$3.9 billion - Years supply of owned homesites of 1.5 years and controlled homesites of
73% - No outstanding borrowings under the Company's
revolving credit facility$2.6 billion - Homebuilding debt to total capital of
11.5% - Redeemed
of$425 million 5.875% homebuilding senior notes due November 2024 - Repurchased
aggregate principal amount of senior notes due in fiscal year 2024$50 million - Repurchased 3 million shares of Lennar common stock for
$366 million
Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, said, "Market conditions remained constructive for new homebuilders during our third quarter, as the Fed continued to use tighter money supply and higher interest rates as tools to battle inflation, while enabling continued economic growth. At the same time, short housing supply, absorbed by strong primary and pent-up demand, continued to define a strong sales environment. Homebuilders continued to use incentives, including buy-downs, to offset rising interest rates and tighter capital, which limit affordability. Our solid third quarter performance reflects strong strategic focus, and even as the month of August saw another uptick in interest rates, we were able to continue to drive sales pace."
Mr. Miller continued, "Against this backdrop, our third quarter earnings were
"While our operating performance remained strong, we continued to strengthen and fortify our balance sheet and our future. During the quarter, we repaid
Jon Jaffe, Co-Chief Executive Officer and President of Lennar, said, "During the quarter, we continued the execution of our land light strategy. This was evidenced by our years supply of owned homesites improving to 1.5 years from 2.2 years and our controlled homesite percentage increasing to
Operationally, our cycle time during the quarter was down 32 days sequentially as the improving supply chain and labor market positively impacted our production times. Concurrently, the Lennar Machine continued to drive sales pace in concert with production. Accordingly, quarterly starts and sales pace were 4.9 homes and 5.2 homes per community, respectively, and we ended the third quarter with approximately 1,400 completed, unsold homes, about one home per community."
Mr. Miller concluded, "As the Fed continues to focus on its goal of reducing inflation, we have remained vigilant and focused on our operating strategies. As we look ahead to our fourth quarter, we expect to deliver between 21,500 to 22,500 homes with a gross margin between
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 2023 COMPARED TO
THREE MONTHS ENDED AUGUST 31, 2022
Homebuilding
Revenues from home sales decreased
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
RESULTS OF OPERATIONS
NINE MONTHS ENDED AUGUST 31, 2023 COMPARED TO
NINE MONTHS ENDED AUGUST 31, 2022
Homebuilding
Revenues from home sales were
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
For the nine months ended August 31, 2023 and 2022, the Company had tax provisions of
Debt Transactions
In August 2023, the Company redeemed
During the three months ended August 31, 2023, the Company repurchased
Share Repurchases
During the third quarter of 2023, the Company repurchased 3 million shares of its common stock for
Liquidity
At August 31, 2023, the Company had
Guidance
The following are the Company's expected results of its homebuilding and financial services activities for the fourth quarter of 2023:
New Orders | 16,200 - 17,200 |
Deliveries | 21,500 - 22,500 |
Average Sales Price | Consistent with Q3 2023 |
Gross Margin % on Home Sales | |
S,G&A as a % of Home Sales | |
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; decreased demand for our homes, or for Multifamily rental apartments or single family homes; 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 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 third quarter earnings will be held at 11:00 a.m. Eastern Time on Friday, September 15, 2023. 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 203-369-3809 and entering 5723593 as the confirmation number.
LENNAR CORPORATION AND SUBSIDIARIES | |||||||
Three Months Ended | Nine Months Ended | ||||||
August 31, | August 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenues: | |||||||
Homebuilding | $ 8,318,615 | 8,479,496 | 22,144,937 | 22,209,683 | |||
Financial Services | 266,206 | 202,078 | 672,166 | 578,945 | |||
Multifamily | 137,394 | 243,056 | 432,661 | 686,436 | |||
Lennar Other | 7,388 | 9,801 | 15,419 | 21,579 | |||
Total revenues | $ 8,729,603 | 8,934,431 | 23,265,183 | 23,496,643 | |||
Homebuilding operating earnings | $ 1,493,820 | 1,963,224 | 3,615,068 | 4,953,485 | |||
Financial Services operating earnings | 148,995 | 63,348 | 340,331 | 258,074 | |||
Multifamily operating earnings (loss) | (8,733) | 48,487 | (38,496) | 54,582 | |||
Lennar Other operating loss | (26,218) | (117,980) | (84,374) | (629,538) | |||
Corporate general and administrative expenses | (114,144) | (115,557) | (365,002) | (334,425) | |||
Charitable foundation contribution | (18,559) | (17,248) | (49,292) | (46,335) | |||
Earnings before income taxes | 1,475,161 | 1,824,274 | 3,418,235 | 4,255,843 | |||
Provision for income taxes | (358,209) | (351,580) | (824,233) | (951,276) | |||
Net earnings (including net earnings attributable to | 1,116,952 | 1,472,694 | 2,594,002 | 3,304,567 | |||
Less: Net earnings attributable to noncontrolling interests | 7,956 | 5,350 | 16,778 | 12,886 | |||
Net earnings attributable to Lennar | $ 1,108,996 | 1,467,344 | 2,577,224 | 3,291,681 | |||
Average shares outstanding: | |||||||
Basic | 282,854 | 288,109 | 284,612 | 290,645 | |||
Diluted | 282,854 | 288,109 | 284,612 | 290,645 | |||
Earnings per share: | |||||||
Basic | $ 3.87 | 5.04 | 8.94 | 11.19 | |||
Diluted | $ 3.87 | 5.03 | 8.94 | 11.18 | |||
Supplemental information: | |||||||
Interest incurred (1) | $ 46,924 | 59,137 | 146,206 | 180,869 | |||
EBIT (2): | |||||||
Net earnings attributable to Lennar | $ 1,108,996 | 1,467,344 | 2,577,224 | 3,291,681 | |||
Provision for income taxes | 358,209 | 351,580 | 824,233 | 951,276 | |||
Interest expense included in: | |||||||
Costs of homes sold | 60,415 | 74,358 | 171,012 | 212,125 | |||
Costs of land sold | 386 | 155 | 1,433 | 358 | |||
Homebuilding other income (expense), net | 3,576 | 4,655 | 10,908 | 15,229 | |||
Total interest expense | 64,377 | 79,168 | 183,353 | 227,712 | |||
EBIT | $ 1,531,582 | 1,898,092 | 3,584,810 | 4,470,669 |
(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 | |||||||
Three Months Ended | Nine Months Ended | ||||||
August 31, | August 31, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Homebuilding revenues: | |||||||
Sales of homes | 8,439,125 | 22,016,279 | 22,124,565 | ||||
Sales of land | 20,430 | 32,397 | 46,462 | 63,888 | |||
Other homebuilding | 12,312 | 7,974 | 82,196 | 21,230 | |||
Total homebuilding revenues | 8,318,615 | 8,479,496 | 22,144,937 | 22,209,683 | |||
Homebuilding costs and expenses: | |||||||
Costs of homes sold | 6,261,578 | 5,973,889 | 16,980,746 | 15,769,536 | |||
Costs of land sold | 18,720 | 34,994 | 52,729 | 71,365 | |||
Selling, general and administrative | 582,765 | 485,854 | 1,543,259 | 1,400,887 | |||
Total homebuilding costs and expenses | 6,863,063 | 6,494,737 | 18,576,734 | 17,241,788 | |||
Homebuilding net margins | 1,455,552 | 1,984,759 | 3,568,203 | 4,967,895 | |||
Homebuilding equity in loss from unconsolidated entities | (4,016) | (14,652) | (13,109) | (10,076) | |||
Homebuilding other income (expense), net | 42,284 | (6,883) | 59,974 | (4,334) | |||
Homebuilding operating earnings | 1,963,224 | 3,615,068 | 4,953,485 | ||||
Financial Services revenues | $ 266,206 | 202,078 | 672,166 | 578,945 | |||
Financial Services costs and expenses | 117,211 | 138,730 | 331,835 | 320,871 | |||
Financial Services operating earnings | $ 148,995 | 63,348 | 340,331 | 258,074 | |||
Multifamily revenues | $ 137,394 | 243,056 | 432,661 | 686,436 | |||
Multifamily costs and expenses | 139,759 | 215,433 | 443,069 | 654,322 | |||
Multifamily equity in earnings (loss) from unconsolidated entities and | (6,368) | 20,864 | (28,088) | 22,468 | |||
Multifamily operating earnings (loss) | $ (8,733) | 48,487 | (38,496) | 54,582 | |||
Lennar Other revenues | $ 7,388 | 9,801 | 15,419 | 21,579 | |||
Lennar Other costs and expenses | 6,155 | 10,007 | 19,426 | 23,650 | |||
Lennar Other equity in loss from unconsolidated entities, other | (11,738) | (31,935) | (66,197) | (68,493) | |||
Lennar Other unrealized losses from technology investments (1) | (15,713) | (85,839) | (14,170) | (558,974) | |||
Lennar Other operating loss | $ (26,218) | (117,980) | (84,374) | (629,538) |
(1) The following is a detail of Lennar Other unrealized losses from mark-to-market adjustments on technology investments: |
Three Months Ended | Nine Months Ended | |||||||
August 31, | August 31, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Blend Labs (BLND) | $ 386 | (518) | (360) | (21,510) | ||||
Hippo (HIPO) | (17,166) | (32,933) | (14,933) | (195,336) | ||||
Opendoor (OPEN) | 23,638 | (54,391) | 38,459 | (218,751) | ||||
SmartRent (SMRT) | (1,707) | (23,118) | 8,219 | (71,431) | ||||
Sonder (SOND) | (91) | (168) | (549) | (2,300) | ||||
Sunnova (NOVA) | (20,773) | 25,289 | (45,006) | (49,646) | ||||
$ (15,713) | (85,839) | (14,170) | (558,974) |
LENNAR CORPORATION AND SUBSIDIARIES | |||||||||||
Lennar's reportable homebuilding segments and all other homebuilding operations not required | |||||||||||
East: | |||||||||||
For the Three Months Ended August 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||
Deliveries: | Homes | Dollar Value | Average Sales Price | ||||||||
East | 5,605 | 5,647 | $ 2,430,072 | 2,538,479 | $ 434,000 | 450,000 | |||||
Central | 3,807 | 3,501 | 1,598,527 | 1,566,610 | 420,000 | 447,000 | |||||
4,102 | 3,447 | 1,174,859 | 1,138,901 | 286,000 | 330,000 | ||||||
West | 5,036 | 4,649 | 3,108,783 | 3,208,713 | 617,000 | 690,000 | |||||
Other | 9 | 4 | 6,258 | 3,655 | 695,000 | 914,000 | |||||
Total | 18,559 | 17,248 | $ 8,318,499 | 8,456,358 | $ 448,000 | 491,000 |
Of the total homes delivered listed above, 66 homes with a dollar value of |
At August 31, | For the Three Months Ended August 31, | ||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||||
New Orders: | Active Communities | Homes | Dollar Value | Average Sales Price | |||||||||||
East | 362 | 328 | 5,779 | 5,675 | $ 2,398,206 | 2,514,776 | $ 415,000 | 443,000 | |||||||
Central | 277 | 296 | 4,003 | 3,033 | 1,669,911 | 1,348,226 | 417,000 | 445,000 | |||||||
235 | 217 | 4,730 | 2,577 | 1,302,268 | 776,156 | 275,000 | 301,000 | ||||||||
West | 375 | 345 | 5,140 | 3,077 | 3,261,380 | 2,015,897 | 635,000 | 655,000 | |||||||
Other | 4 | 3 | 14 | 4 | 7,877 | 2,668 | 563,000 | 667,000 | |||||||
Total | 1,253 | 1,189 | 19,666 | 14,366 | $ 8,639,642 | 6,657,723 | $ 439,000 | 463,000 |
Of the total homes listed above, 82 homes with a dollar value of |
For the Nine Months Ended August 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||
Deliveries: | Homes | Dollar Value | Average Sales Price | ||||||||
East | 15,272 | 14,927 | $ 6,669,141 | 6,436,576 | $ 437,000 | 431,000 | |||||
Central | 9,327 | 8,966 | 4,022,372 | 3,956,302 | 431,000 | 441,000 | |||||
11,431 | 9,272 | 3,329,349 | 3,038,064 | 291,000 | 328,000 | ||||||
West | 13,243 | 13,151 | 8,075,810 | 8,718,178 | 610,000 | 663,000 | |||||
Other | 19 | 19 | 14,824 | 17,816 | 780,000 | 938,000 | |||||
Total | 49,292 | 46,335 | $ 22,111,496 | 22,166,936 | $ 448,000 | 479,000 |
Of the total homes delivered listed above, 201 homes with a dollar value of |
For the Nine Months Ended August 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||
New Orders: | Homes | Dollar Value | Average Sales Price | ||||||||
East | 15,540 | 16,558 | $ 6,606,656 | 7,401,602 | $ 425,000 | 447,000 | |||||
Central | 9,926 | 9,721 | 4,179,439 | 4,413,718 | 421,000 | 454,000 | |||||
11,604 | 8,718 | 3,261,481 | 2,887,204 | 281,000 | 331,000 | ||||||
West | 14,650 | 12,889 | 9,159,865 | 8,834,508 | 625,000 | 685,000 | |||||
Other | 25 | 19 | 17,106 | 16,499 | 684,000 | 868,000 | |||||
Total | 51,745 | 47,905 | 23,553,531 | $ 449,000 | 492,000 |
Of the total new orders listed above, 252 homes with a dollar value of |
At August 31, | |||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||||||
Backlog: | Homes | Dollar Value | Average Sales Price | ||||||||
East | 8,973 | 9,903 | $ 3,757,839 | 4,538,997 | $ 419,000 | 458,000 | |||||
Central | 4,624 | 5,912 | 2,012,497 | 2,791,899 | 435,000 | 472,000 | |||||
2,870 | 3,712 | 769,216 | 1,302,409 | 268,000 | 351,000 | ||||||
West | 4,847 | 6,203 | 3,310,533 | 4,251,491 | 683,000 | 685,000 | |||||
Other | 7 | 4 | 3,446 | 2,626 | 492,000 | 656,000 | |||||
Total | 21,321 | 25,734 | $ 9,853,531 | 12,887,422 | $ 462,000 | 501,000 |
Of the total homes in backlog listed above, 217 homes with a backlog dollar value of |
LENNAR CORPORATION AND SUBSIDIARIES | |||
August 31, | November 30, | ||
2023 | 2022 | ||
ASSETS | |||
Homebuilding: | |||
Cash and cash equivalents | $ 3,887,809 | 4,616,124 | |
Restricted cash | 16,201 | 23,046 | |
Receivables, net | 843,750 | 673,980 | |
Inventories: | |||
Finished homes and construction in progress | 12,368,338 | 11,718,507 | |
Land and land under development | 6,993,835 | 7,382,273 | |
Consolidated inventory not owned | 2,687,343 | 2,331,231 | |
Total inventories | 22,049,516 | 21,432,011 | |
Investments in unconsolidated entities | 1,157,021 | 1,173,164 | |
Goodwill | 3,442,359 | 3,442,359 | |
Other assets | 1,578,692 | 1,323,478 | |
32,975,348 | 32,684,162 | ||
Financial Services | 2,334,594 | 3,254,257 | |
Multifamily | 1,354,587 | 1,257,337 | |
Lennar Other | 773,596 | 788,539 | |
Total assets | $ 37,438,125 | 37,984,295 | |
LIABILITIES AND EQUITY | |||
Homebuilding: | |||
Accounts payable | $ 1,721,530 | 1,616,128 | |
Liabilities related to consolidated inventory not owned | 2,300,686 | 1,967,551 | |
Senior notes and other debts payable, net | 3,320,119 | 4,047,294 | |
Other liabilities | 2,600,807 | 3,347,673 | |
9,943,142 | 10,978,646 | ||
Financial Services | 1,333,485 | 2,353,904 | |
Multifamily | 290,266 | 313,484 | |
Lennar Other | 82,690 | 97,894 | |
Total liabilities | 11,649,583 | 13,743,928 | |
Stockholders' equity: | |||
Preferred stock | — | — | |
Class A common stock of | 25,844 | 25,608 | |
Class B common stock of | 3,660 | 3,660 | |
Additional paid-in capital | 5,561,793 | 5,417,796 | |
Retained earnings | 21,113,282 | 18,861,417 | |
Treasury stock | (1,052,000) | (210,389) | |
Accumulated other comprehensive income | 4,040 | 2,408 | |
Total stockholders' equity | 25,656,619 | 24,100,500 | |
Noncontrolling interests | 131,923 | 139,867 | |
Total equity | 25,788,542 | 24,240,367 | |
Total liabilities and equity | $ 37,438,125 | 37,984,295 |
LENNAR CORPORATION AND SUBSIDIARIES | |||||
August 31, | November 30, | August 31, | |||
2023 | 2022 | 2022 | |||
Homebuilding debt | $ 3,320,119 | 4,047,294 | 4,057,496 | ||
Stockholders' equity | 25,656,619 | 24,100,500 | 22,977,278 | ||
Total capital | $ 28,976,738 | 28,147,794 | 27,034,774 | ||
Homebuilding debt to total capital | 11.5 % | 14.4 % | 15.0 % | ||
Homebuilding debt | $ 3,320,119 | 4,047,294 | 4,057,496 | ||
Less: Homebuilding cash and cash equivalents | 3,887,809 | 4,616,124 | 1,309,364 | ||
Net homebuilding debt | $ (567,690) | (568,830) | 2,748,132 | ||
Net homebuilding debt to total capital (1) | (2.3) % | (2.4) % | 10.7 % |
(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