Lennar Reports First Quarter 2024 Results
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 increased 21% 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%
- 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 revolving credit facility - 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 per share to$2.00 per share
"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
"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 77% from 68% year over year. These results drove our return on inventory to 30.5%, a sequential improvement of 110 basis points."
RESULTS OF OPERATIONS
THREE MONTHS ENDED
THREE MONTHS ENDED
Homebuilding
Revenues from home sales increased 13% in the first quarter of 2024 to
Gross margins on home sales were $1.5 billion, or 21.8%, in the first quarter of 2024, compared to
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
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 22.5% |
S,G&A as a % of Home Sales |
About 7.2% |
Financial Services Operating Earnings |
|
About Lennar
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
A conference call to discuss the Company's first quarter earnings will be held at
LENNAR CORPORATION AND SUBSIDIARIES Selected Revenues and Operating Information (In thousands, except per share amounts) (unaudited) |
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|
|||
|
Three Months Ended |
||
|
|
|
|
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) |
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|
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Three Months Ended |
||
|
|
|
|
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 |
||
|
|
|
|
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) |
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|
|
|
|
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 |
|
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 |
|
(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) |
|||||
|
|||||
|
|
|
|
|
|
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:
Investor Relations
(305) 485-4129
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