01—Abstract
Summary
Summary of the 10-Q filed March 29, 2024. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation's Form 10-Q for the quarter ended February 29, 2024 reports net earnings attributable to Lennar of $719.3 milliona, or $2.57 per diluted share, compared with $596.5 million, or $2.06 per diluted share, in the first quarter of 2023.
Total revenues were $7.31 billionb versus $6.49 billion a year earlier. Homebuilding revenues from home sales rose to $6.9 billion, driven by a 23% increase in home deliveries to 16,798 homes, partly offset by an 8% decrease in the average sales price to $413,000. Gross margin on home sales was 21.8%, up from 21.2%, though selling, general and administrative expenses rose to 8.2% of home sales revenue from 7.4%.
The balance sheet remained strong, with homebuilding cash and cash equivalents of $4.95 billionc, homebuilding debt of $2.83 billion, and no outstanding borrowings under the $2.6 billion revolving Credit Facility. Homebuilding debt to total capital was 9.6%, and net homebuilding debt to total capital was (8.6)%. Operating cash flow was $367.9 million, down from $978 million, reflecting higher deposits and pre-acquisition costs on real estate and higher inventory investment.
During the quarter the company repurchased $595.1 milliond of stock and paid $139.4 million in dividends. In January 2024 the board raised the dividend to $0.50 per share quarterly and added $5 billion to the repurchase authorization.
Management stated it is considering a taxable spinoff of excess land to create a permanent land capital vehicle, and that the company expects 80,000 home deliveries in fiscal 2024 with a margin of a little over 23%. Management also flagged concerns about the durability of private equity land banking arrangements that its land-light strategy relies on.
02—Key points
Key Highlights
- Net earnings attributable to Lennar were $719.3 million, or $2.57 per diluted share, versus $596.5 million, or $2.06 per diluted share, in the prior-year quarter.
- Home deliveries rose to 16,798 from 13,659, while the average sales price fell to $413,000 from $448,000 due to increased use of incentives and product mix.
- Gross margin on home sales was 21.8%, up from 21.2%, while SG&A as a percentage of home sales revenue increased to 8.2% from 7.4%.
- Homebuilding cash and cash equivalents were $4.95 billion, with homebuilding debt of $2.83 billion and no borrowings under the $2.6 billion Credit Facility.
- Share repurchases totaled $595.1 million in the quarter, and the quarterly dividend was raised to $0.50 per share, with an added $5 billion repurchase authorization approved in January 2024.
- Operating cash flow was $367.9 million, down from $978 million, as deposits and pre-acquisition costs on real estate rose by $410.9 million.
- Management is considering a taxable spinoff of excess land and expects 80,000 home deliveries in fiscal 2024 at a margin of a little over 23%.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed March 29, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $7.31B$6.49B | +12.7% |
| Operating Expenses | $6.41B$5.67B | +13.0% |
| Net Income | $719.33M$596.53M | +20.6% |
| EPS (Basic) | $2.57$2.06 | +24.8% |
| EPS (Diluted) | $2.57$2.06 | +24.8% |
| Shares Outstanding (Basic) | 276.95M286.07M | −3.2% |
| Shares Outstanding (Diluted) | 276.95M286.07M | −3.2% |
05—Questions
Frequently Asked Questions
How did Lennar's first-quarter 2024 earnings compare with the prior year?
Net earnings attributable to Lennar were $719.3 million, or $2.57 per diluted share, compared with $596.5 million, or $2.06 per diluted share, in the first quarter of 2023. Total revenues were $7.31 billion versus $6.49 billion.
What drove the change in homebuilding revenue?
Revenues from home sales increased 13% to $6.9 billion, primarily due to a 23% increase in home deliveries, partially offset by an 8% decrease in the average sales price of homes delivered. The price decline was attributed to pricing to market through increased incentives and product mix.
How strong is Lennar's balance sheet and liquidity?
At February 29, 2024, homebuilding cash and cash equivalents were $4.95 billion and homebuilding debt was $2.83 billion, giving a homebuilding debt to total capital ratio of 9.6%. There were no outstanding borrowings under the $2.6 billion revolving Credit Facility, and the company stated it was in compliance with its debt covenants.
How is Lennar returning capital to shareholders?
The company repurchased $595.1 million of Class A and Class B common stock during the quarter and paid $139.4 million in dividends. In January 2024 the quarterly dividend was set at $0.50 per share, and the board authorized an additional $5 billion in repurchases. Management expects to repurchase in excess of $2 billion of stock in fiscal 2024.
What strategic changes is management considering?
Management is considering a taxable spinoff of its excess land to create a permanent capital vehicle that would develop homesites and give Lennar options to acquire them. The filing says this would distribute capital to stockholders, reduce inventory on the books and provide dependable capital for future land acquisitions. Management also expressed concern about the durability of private equity land banking arrangements.
06—Continue