01—Abstract
Summary
Summary of the 10-K filed January 26, 2023. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation, the second largest homebuilder in the United States by deliveries, revenues and net earnings, reported fiscal 2022 (year ended November 30, 2022) with total revenues of $33.67 billiona and net earnings attributable to Lennar of $4.6 billion, or $15.72 per diluted share, compared to $4.4 billion, or $14.27 per diluted share, in 2021.
Homebuilding generated $32 billionb in revenues, about 95% of consolidated revenues. New home deliveries rose to 66,399 from 59,825, and the average sales price increased to $480,000 from $424,000. Gross margin on home sales was 27.5%, but homebuilding backlog fell to $8.7 billion from $11.4 billion, and the cancellation rate rose to 17% for the year, reaching 21% and 26% in the third and fourth quarters.
Management described a sharp second-half slowdown driven by interest rates, with price reductions and higher incentives in many communities. For fiscal 2023 it expects deliveries of 60,000 to 65,000 homes and first-quarter gross margins of about 21.0%c. It also expects single family and multifamily production to fall by a quarter to a third in 2023.
Lennar ended the year with $4.6 billiond of Homebuilding cash and no borrowings under its $2.6 billion revolving credit facility. Homebuilding debt to total capital declined to 14.4% from 18.3%. Results were partly offset by a $655.1 million unrealized loss on publicly traded technology investments in the Lennar Other segment.
The company plans to spin off its multifamily and single family rental asset management businesses into Quarterra Group, Inc., but it has postponed that spin-off because market conditions are unfavorable. It repurchased $1.0 billion of stock during the year and paid $438 million in dividends, and its quarterly dividend is $0.375 per share.
02—Key points
Key Highlights
- Revenue and earnings: Total revenues were $33.67 billion and net earnings attributable to Lennar were $4.6 billion, or $15.72 per diluted share, versus $14.27 per diluted share in 2021.
- Deliveries and pricing: New home deliveries rose to 66,399 from 59,825, and the average sales price increased to $480,000 from $424,000.
- Demand weakened in the second half: The cancellation rate was 17% for 2022 but reached 21% in the third quarter and 26% in the fourth. Backlog dollar value fell to $8.7 billion from $11.4 billion.
- Outlook for 2023: Lennar expects fiscal 2023 deliveries of 60,000 to 65,000 homes and first-quarter gross margins of about 21.0%, and it expects single family and multifamily production to fall by a quarter to a third nationally.
- Balance sheet strength: Homebuilding debt to total capital fell to 14.4% from 18.3%, and the company had $4.6 billion of Homebuilding cash with no borrowings under its $2.6 billion Credit Facility.
- Investment losses: Lennar Other recorded a $655.1 million unrealized loss on publicly traded technology investments, which produced an operating loss for that segment.
- Capital returns and spin-off: The company repurchased $1.0 billion of stock and paid $438 million in dividends, and it postponed the planned spin-off of its multifamily and rental businesses into Quarterra Group, Inc.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed January 26, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $33.67B$27.13B | +24.1% |
| Net Income | $4.61B$4.43B | +4.2% |
| EPS (Basic) | $15.74$14.28 | +10.2% |
| EPS (Diluted) | $15.72$14.27 | +10.2% |
| Shares Outstanding (Basic) | 289.82M306.61M | −5.5% |
| Shares Outstanding (Diluted) | 289.82M306.61M | −5.5% |
05—Questions
Frequently Asked Questions
How did Lennar perform financially in fiscal 2022?
Lennar reported total revenues of $33.67 billion and net earnings attributable to Lennar of $4.6 billion, or $15.72 per diluted share, compared with $4.4 billion, or $14.27 per diluted share, in 2021. Home sales revenues rose 25% to $31.8 billion, driven by an 11% increase in deliveries and a 13% increase in the average sales price.
What happened to demand in the second half of 2022?
Rising interest rates made homes less affordable, which led Lennar to reduce prices and increase sales incentives in a number of communities. The cancellation rate rose to 21% in the third quarter and 26% in the fourth quarter, and backlog dollar value fell to $8.7 billion from $11.4 billion at the end of 2021.
What does Lennar expect for 2023?
Lennar expects first-quarter 2023 new orders and deliveries of 12,000 to 13,500 homes each, gross margins of about 21.0%, and an average sales price of $440,000 to $450,000. For fiscal 2023 it expects deliveries of 60,000 to 65,000 homes. It also expects national single family and multifamily production to decline by a quarter to a third in 2023.
Is the planned spin-off of Quarterra Group still going forward?
No, not for now. The filing says current market conditions are not favorable, so Lennar is postponing the spin-off of its multifamily and single family rental asset management businesses and will wait for the right timing.
How strong is Lennar's balance sheet?
Homebuilding debt to total capital declined to 14.4% at year-end from 18.3% a year earlier, which the company described as its lowest ever. Lennar had $4.6 billion of Homebuilding cash and cash equivalents and no outstanding borrowings under its $2.6 billion revolving credit facility, which the company said provided $7.2 billion of available capacity.
06—Continue