01—Abstract
Summary
Summary of the 10-K filed January 23, 2025. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation reported fiscal 2024 (year ended November 30, 2024) results with homebuilding operations generating $34 billiona in revenues, or approximately 96% of consolidated revenues.
The company delivered 80,210 homes in fiscal 2024, up from 73,087 in fiscal 2023, while the average sales price fell to $423,000b from $446,000. Net earnings attributable to Lennar were $3.9 billion, or $14.31 per diluted share, compared with $3.9 billion, or $13.73 per diluted share, in 2023. Gross margin on home sales was 22.3%, compared with 23.3% a year earlier, as incentives rose; sales incentives averaged 10.3% of home sales revenues versus 8.8% in 2023.
Management said mortgage rates climbed approximately 100 basis points in the fourth quarter instead of falling, which stalled sales and forced higher incentives. For fiscal 2025 the company anticipates 17,000 to 17,500 closings in the first quarter with gross margins of 19% to 19.25%, and 86,000 to 88,000 deliveries for the year. The central strategic development is the planned spin-off of Millrose Properties Inc., into which Lennar expects to contribute land with an expected total aggregate value between $5.0 billionc and $6.0 billion plus approximately $1.0 billion of cash.
Lennar's Board declared a stock dividend under which roughly 80% of Millrose's outstanding shares will be distributed to stockholders of record as of January 21, 2025, with a distribution date of February 7, 2025. Lennar also agreed to acquire Rausch Coleman Homes, expected to close in the first quarter of 2025. Balance sheet metrics remained strong: homebuilding debt to total capital was 7.5% at November 30, 2024, and the company repurchased $2.3 billiond of common stock during the year.
Key risks include pressure from elevated interest rates on affordability and cancellations, which were 14% in 2024 versus 16% in 2023, and execution risk on the Millrose transaction, which remains subject to conditions and an uncertain timeline. Backlog value declined to $5.4 billion from $6.6 billion.
02—Key points
Key Highlights
- Homebuilding revenues of $34 billion, approximately 96% of consolidated revenues, in fiscal 2024
- New home deliveries rose to 80,210 from 73,087, while the average sales price fell to $423,000 from $446,000
- Gross margin on home sales was 22.3%, compared with 23.3% in fiscal 2023; sales incentives reached 10.3% of home sales revenues
- Net earnings attributable to Lennar were $3.9 billion, or $14.31 per diluted share, versus $13.73 in 2023
- Planned Millrose Spin-Off: land with expected value of $5.0 to $6.0 billion plus about $1.0 billion of cash, with distribution date of February 7, 2025
- Backlog value at November 30, 2024 was $5.4 billion, down from $6.6 billion; fiscal 2025 guidance calls for 86,000 to 88,000 deliveries
- No borrowings under the $2.9 billion Credit Facility; homebuilding debt to total capital of 7.5%; $2.3 billion of stock repurchases in 2024
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed January 23, 2025Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $35.44B$34.23B | +3.5% |
| SG&A Expenses | $2.48B$2.23B | +11.2% |
| Operating Expenses | $30.67B$28.87B | +6.3% |
| Net Income | $3.93B$3.94B | −0.2% |
| EPS (Basic) | $14.31$13.73 | +4.2% |
| EPS (Diluted) | $14.31$13.73 | +4.2% |
| Shares Outstanding (Basic) | 272.02M283.32M | −4.0% |
| Shares Outstanding (Diluted) | 272.02M283.32M | −4.0% |
05—Questions
Frequently Asked Questions
What is the Millrose Spin-Off and why is Lennar doing it?
Lennar is spinning off Millrose Properties Inc., a wholly owned subsidiary, into an independent NYSE-listed company. Lennar will contribute undeveloped, partially developed and some fully developed land, expected to be worth $5.0 to $6.0 billion, plus about $1.0 billion of cash. The stated goal is to complete the migration to an asset-light operating model by removing a significant portion of land assets from Lennar's balance sheet. Lennar will hold options to purchase homesites from Millrose on pre-set takedown schedules.
Why did gross margins decline in fiscal 2024?
Gross margin on home sales fell to 22.3% from 23.3%. The filing attributes the decline primarily to revenue per square foot decreasing while land costs increased, partially offset by lower material costs. Average sales incentives rose to 10.3% of home sales revenues from 8.8%, as the company priced to market through incentives and product mix.
What did management say about the outlook for fiscal 2025?
Management said that mortgage rates rose about 100 basis points in the fourth quarter instead of falling, stalling sales and requiring more incentives and rate buy-downs. It moderated expectations for margins and sales in the first quarter of fiscal 2025 and anticipates 17,000 to 17,500 closings in that quarter with gross margins of 19% to 19.25%. For 2025 it expects 86,000 to 88,000 deliveries, including the Rausch Coleman acquisition.
How strong is Lennar's balance sheet and liquidity?
At November 30, 2024, Lennar had $4.7 billion of Homebuilding cash and cash equivalents and no outstanding borrowings under its $2.9 billion Credit Facility. Homebuilding debt to total capital was 7.5%, down from 9.6%, and net homebuilding debt to total capital was (9.4)%. The company was in compliance with its debt covenants. It returned capital through $2.3 billion of stock repurchases and $549 million of dividend payments in 2024.
What are the main risks to the Millrose transaction?
The filing states the spin-off remains subject to conditions, including execution of certain agreements and other customary conditions, some of which will not occur until shortly before the distribution date. Delays or failure could reduce expected benefits. Lennar also relies on Millrose to perform its obligations and to honor homesite option exercises, and lenders could foreclose on land Millrose pledges as collateral or it could enter bankruptcy.
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