01—Abstract
Summary
Summary of the 10-K filed January 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation (LEN) reported fiscal 2023 (year ended November 30, 2023) results as one of the largest homebuilders in the United States by deliveries, revenues and net earnings.
Homebuilding generated $33 billiona in revenues, or approximately 95% of consolidated revenues. Net earnings attributable to Lennar were $3.9 billion, or $13.73 per diluted and basic share, compared with $4.6 billion, or $15.72 per diluted share, in 2022. Home deliveries rose to 73,087 from 66,399, but the average sales price fell to $446,000 from $480,000, and gross margins on home sales declined to 23.3% from 27.5% as the company used incentives to keep homes affordable amid higher interest rates.
Sales incentives rose to 8.8% of home sales revenues from 3.5%. The balance sheet strengthened considerably. Homebuilding cash and cash equivalents reached $6.3 billionb, the $2.6 billion revolving Credit Facility had no outstanding borrowings, and homebuilding debt fell to $2.82 billion from $4.05 billion, leaving net homebuilding cash of $3.5 billion over debt.
The company repurchased $1.1 billionc of senior notes and $1.1 billion of its stock, and it increased its annual dividend to $2.00 per share from $1.50 in January 2024. Backlog declined to $6.6 billion from $8.7 billion. Management stated it expects to deliver 80,000 homes in 2024 and is pursuing a land-light strategy, with 76% of homesites controlled through options rather than owned.
Key risks highlighted include the effect of interest rates on buyer demand, cancellation rates of 16% in 2023, the planned spin-off of multifamily and single-family rental businesses into Quarterra Group, Inc. (which has been deferred), and the concentrated voting power of Executive Chairman Stuart Miller, who holds approximately 36% of votes. Lennar Other recorded unrealized losses of $50.2 milliond on publicly traded technology investments in 2023, compared with $655.1 million in 2022.
02—Key points
Key Highlights
- Net earnings attributable to Lennar were $3.9 billion, or $13.73 per diluted share, versus $4.6 billion, or $15.72 per diluted share, in 2022.
- Home deliveries increased to 73,087 from 66,399, while the average sales price decreased to $446,000 from $480,000.
- Gross margins on home sales were $7.6 billion, or 23.3%, compared with $8.8 billion, or 27.5%, in 2022.
- Homebuilding debt declined to $2.82 billion from $4.05 billion; homebuilding cash was $6.3 billion and the $2.6 billion Credit Facility had no borrowings.
- Backlog dollar value was $6.6 billion at November 30, 2023, compared with $8.7 billion a year earlier.
- Quarterly dividend was increased to $0.50 per share, an annual rate of $2.00, and the stock repurchase authorization was increased by an additional $5 billion after year end.
- Lennar expects to deliver 80,000 homes in 2024, and 76% of its homesites were controlled through options or other contracts at year end.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed January 26, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $34.23B$33.67B | +1.7% |
| SG&A Expenses | $2.23B— | — |
| Operating Expenses | $28.87B— | — |
| Net Income | $3.94B$4.61B | −14.6% |
| EPS (Basic) | $13.73$15.74 | −12.8% |
| EPS (Diluted) | $13.73$15.72 | −12.7% |
| Shares Outstanding (Basic) | 283.32M289.82M | −2.2% |
| Shares Outstanding (Diluted) | 283.32M289.82M | −2.2% |
05—Questions
Frequently Asked Questions
How did profitability change in fiscal 2023?
Net earnings attributable to Lennar were $3.9 billion, or $13.73 per diluted share, compared with $4.6 billion, or $15.72 per diluted share, in 2022. The decline reflected a lower average sales price and gross margins on home sales of 23.3%, down from 27.5%, as the company used price reductions and incentives to maintain sales pace. Sales incentives were 8.8% of home sales revenues, up from 3.5%.
How strong is Lennar's balance sheet?
At November 30, 2023, Homebuilding cash and cash equivalents were $6.3 billion, and homebuilding debt was $2.82 billion, giving net homebuilding debt to total capital of (15.0)%. The company had no outstanding borrowings under its $2.6 billion revolving Credit Facility. It also redeemed or repurchased $1.1 billion of homebuilding senior notes during the year.
What are the main risks to Lennar's outlook?
The filing cites higher mortgage interest rates reducing buyers' ability to finance homes, potential inflation pressure on margins, rising cancellation rates (16% in 2023), write-downs of land if prices decline, and the uncertain timing of the planned spin-off of Quarterra Group, Inc., which has been deferred due to market conditions. Stuart Miller holds approximately 36% of voting power, giving him substantial influence over stockholder votes.
What does Lennar expect for 2024?
Management expects to deliver 80,000 homes in 2024, which would be a 10% increase over 2023, and expects to deliver between 16,500 and 17,000 homes in the first quarter with a margin of 21.00% to 21.25%. The company expects its community count to increase by mid-to-high single digits during 2024.
How have Lennar's technology investments affected earnings?
Lennar Other recorded unrealized losses from technology investments of $50.2 million in 2023, compared with $655.1 million in 2022. The 2023 Lennar Other operating loss also included a $65.0 million write-off of a non-public technology investment. These investments are carried at market value and will continue to change with the share prices of the publicly traded holdings each quarter.
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