01—Abstract
Summary
Summary of the 10-K filed January 22, 2021. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation (LEN) reported fiscal 2020 results for the year ended November 30, 2020, describing itself as the largest homebuilder in the United States by home sale revenues and net earnings.
Total revenues were $22.49 billiona, with Homebuilding generating $20.98 billion, or approximately 93% of consolidated revenues. Net earnings attributable to Lennar were $2.47 billion, or $7.85 per diluted share, compared with $1.85 billion, or $5.74 per diluted share, in 2019. Homebuilding gross margin on home sales was 22.8%, up from 20.6% in 2019, and selling, general and administrative expenses improved to 8.1% of home sales revenues from 8.3%.
Homebuilding debt to total capital declined to 24.9% from 32.8%, and the company ended the year with $2.7 billionb of Homebuilding cash and no borrowings under its $2.4 billion revolving credit facility. The company guided to 62,000 to 64,000 home deliveries in 2021 with a 23.75% to 24% gross margin, and expects deliveries to grow faster in 2021 than in 2020. It is pursuing a land-light strategy, with 39% of total homesites controlled through options and joint ventures at year-end, up from 33%, and a stated target of 50% owned and 50% optioned land by the end of 2021.
Risk factors highlighted by the filing include COVID-19 uncertainty, rising material and labor costs, tariffs, mortgage rate increases, and a 34%c voting power held by Executive Chairman Stuart Miller through Class B shares. Several ancillary businesses, including Multifamily, the Rialto legacy funds, and technology investments, are described as becoming a smaller part of the company, and the company says it is working on strategies to better position them. Subsequent to year-end, Opendoor began trading on Nasdaq, and the company expects to record a significant unrealized gain in the first quarter of fiscal 2021.
02—Key points
Key Highlights
- Total revenues of $22.49 billion in fiscal 2020, with Homebuilding at $20.98 billion (about 93% of consolidated revenues)
- Net earnings attributable to Lennar of $2.47 billion, or $7.85 per diluted share, versus $5.74 per diluted share in 2019
- Homebuilding gross margin on home sales of 22.8%, up from 20.6% in 2019; SG&A improved to 8.1% of home sales revenues
- Homebuilding debt to total capital fell to 24.9% from 32.8%; $1.5 billion of senior notes retired during 2020
- Homebuilding cash and cash equivalents of $2.7 billion and no borrowings under the $2.4 billion Credit Facility, providing $5.1 billion of available capacity
- 2021 guidance of 62,000 to 64,000 home deliveries with a 23.75% to 24% gross margin
- Land-light progress: 39% of total homesites controlled through options and joint ventures, up from 33%; 3.5 years of owned land supply versus 4.1 years at start of 2020
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2020filed January 22, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $22.49B$22.26B | +1.0% |
| Operating Expenses | $19.37B$19.80B | −2.1% |
| Operating Income | $3.48B$2.78B | +25.5% |
| Net Income | $2.47B$1.85B | +33.3% |
| EPS (Basic) | $7.88$5.76 | +36.8% |
| EPS (Diluted) | $7.85$5.74 | +36.8% |
| Shares Outstanding (Basic) | 309.41M318.42M | −2.8% |
| Shares Outstanding (Diluted) | 309.41M318.42M | −2.8% |
05—Questions
Frequently Asked Questions
How did Lennar perform financially in fiscal 2020?
Lennar reported total revenues of $22.49 billion and net earnings attributable to Lennar of $2.47 billion, or $7.85 per diluted share, compared with $1.85 billion, or $5.74 per diluted share, in fiscal 2019. Homebuilding operating earnings were $2.99 billion, up from $2.50 billion.
What is Lennar's outlook for fiscal 2021?
Lennar expects to deliver between 62,000 and 64,000 homes in 2021 at a gross margin between 23.75% and 24%, compared with 22.8% in 2020. The company expects deliveries to grow faster in 2021 than in 2020 and expects its bottom line to grow faster than its top line.
How strong is Lennar's balance sheet?
Homebuilding debt to total capital was 24.9% at November 30, 2020, the lowest in the company's history according to the filing, and net Homebuilding debt to total capital was 15.3%. The company had $2.7 billion of Homebuilding cash and no borrowings under its $2.4 billion revolving credit facility, and it reduced senior indebtedness by $1.5 billion during the year.
What are the main risks to Lennar's business identified in the filing?
Key risks include the uncertain duration and impact of COVID-19, rising costs for lumber, labor and tariffs on imported building materials that may pressure margins, higher mortgage interest rates reducing buyer demand, and potential land write-downs if home prices decline. The filing also notes Financial Services reliance on secondary mortgage market liquidity and the need to renew $2.4 billion of warehouse lines in fiscal 2021.
Who controls voting at Lennar?
Executive Chairman Stuart Miller, through family and personal holdings of Class B and, to a lesser extent, Class A common stock, has the power to cast approximately 34% of the votes that can be cast by holders of all outstanding Class A and Class B common stock combined. The filing states this gives him substantial influence over director elections and most stockholder matters.
06—Continue