In This Article:
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Average Sales Price: Declined to $408,000, 1% lower than last year.
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Homes Started: 17,651 homes.
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Homes Delivered: 17,834 homes.
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Homes Sold: 18,355 homes.
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Sales Incentives: Increased to approximately 13%.
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Gross Margin: Reduced to 18.7%.
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SG&A: Came in at 8.5%.
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Net Margin: 10.2%.
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Community Count: Increased from 1,447 to 1,584 communities.
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Cash on Book: $2.3 billion.
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Debt-to-Total Capital Ratio: 8.9%.
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Share Repurchase: 5.2 million shares for $703 million.
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Liquidity: Approximately $5.3 billion.
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Homesites Owned: 13,000 homesites.
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Homesites Controlled: 533,000 homesites.
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Inventory Turn: 1.7 times.
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Return on Inventory: Almost 30%.
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Book Value Per Share: About $86.
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Q2 New Orders Guidance: 22,500 to 23,500 homes.
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Q2 Deliveries Guidance: 19,500 to 20,500 homes.
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Q2 Average Sales Price Guidance: $390,000 to $400,000.
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Q2 Gross Margin Guidance: Approximately 18%.
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Q2 SG&A Guidance: 8% to 8.2%.
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Q2 EPS Guidance: Approximately $1.80 to $2 per share.
Release Date: March 21, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Lennar Corp (NYSE:LEN) successfully completed the Moro spin-off and Rausch Coleman acquisition, supporting their transition to an asset-light land-light model.
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The company maintained a strong balance sheet with $2.3 billion in cash and an 8.9% debt-to-total capital ratio.
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Lennar Corp (NYSE:LEN) achieved a sales pace of 4.1 homes per community per month, aligning with their target and demonstrating operational efficiency.
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Construction costs decreased by 2.5% year-over-year, reaching the lowest level since Q3 2021, indicating effective cost management.
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The company repurchased 5.2 million shares for $703 million, demonstrating a commitment to returning capital to shareholders.
Negative Points
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The macroeconomic environment remains challenging with high mortgage interest rates, impacting housing market demand.
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Lennar Corp (NYSE:LEN) experienced a decline in average sales price to $408,000, 1% lower than the previous year.
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Sales incentives rose to approximately 13%, significantly impacting gross margins, which fell to 18.7%.
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The company faces ongoing pressure on margins due to the need for incentives to maintain sales volume.
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Consumer confidence and affordability issues continue to limit actionable demand in the housing market.
Q & A Highlights
Q: What is Lennar's view on the normalized operating margin and the path to achieve it? A: Stuart Miller, Executive Chairman and Co-CEO, explained that Lennar is focused on improving efficiencies across all business elements, especially after the Millrose spin-off. The current high level of incentives is temporary, and the company expects to achieve a significantly higher operating margin once these incentives normalize. Diane Bessette, CFO, added that historically, SG&A was around 7% and corporate G&A around 1.5%, suggesting room for improvement from current levels.