01—Abstract
Summary
Summary of the 10-Q filed June 28, 2024. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation's Form 10-Q for the quarter ended May 31, 2024 (filed June 28, 2024) reports second-quarter 2024 net earnings attributable to Lennar of $954.3 milliona, or $3.45 per diluted share, versus $871.7 million, or $3.01 per share, a year earlier.
Total revenues were $8.77 billionb for the quarter, up from $8.05 billion, driven by Homebuilding revenues of $8.38 billion. Homebuilding deliveries rose to 19,690 homes from 17,074, while the average sales price of homes delivered fell to $426,000 from $449,000, which the filing attributes primarily to pricing to market through increased use of incentives and product mix. Gross margin on home sales was 22.6% for the quarter, compared with 22.5% a year earlier.
Second-quarter net earnings include $21.5 millionc of mark-to-market losses on technology investments and a $46.5 million one-time gain on the sale of a technology investment. The balance sheet remained strong. Homebuilding cash and cash equivalents were $3.60 billion at May 31, 2024, and Homebuilding debt to total capital was 7.7%, down from 9.6% at November 30, 2023.
Senior notes and other Homebuilding debt fell to $2.24 billiond from $2.82 billion after the April 2024 redemption of $454 million of 4.50% senior notes and $100 million of repurchases of 4.75% notes due 2027. The company had no borrowings under its $2.2 billion revolving Credit Facility. Stockholders' equity rose to $26.88 billion.
During the six months, the company repurchased $1.2 billion of common stock and paid $278 million in dividends. Operating cash flow was $610 million for the six months, compared with $1.6 billion a year earlier, mainly because of higher inventory and deposit and pre-acquisition spending. Management outlined a plan to move toward an asset-light model.
It is proposing to contribute $6 billion to $8 billion of land to a new entity to be spun off to stockholders, a transaction the filing describes as early-stage with no specific timeline or guarantee of completion. For the third quarter, management expects 20,500 to 21,000 home sales at an approximately 23% gross margin, and for the full year about 80,000 home deliveries with a little over 23% gross margin and more than $2 billion of stock repurchases.
02—Key points
Key Highlights
- Second-quarter 2024 net earnings attributable to Lennar were $954.3 million, or $3.45 per diluted share, up from $871.7 million, or $3.01 per share, in the second quarter of 2023.
- Homebuilding revenues from home sales were $8.4 billion in the quarter, up from $7.6 billion, on 19,690 deliveries versus 17,074, while the average sales price fell to $426,000 from $449,000.
- Gross margin on home sales was 22.6% in the second quarter of 2024, compared with 22.5% in the second quarter of 2023.
- Homebuilding debt to total capital declined to 7.7% from 9.6% at November 30, 2023; Homebuilding cash and cash equivalents were $3.6 billion and the $2.2 billion revolving Credit Facility was undrawn.
- The company redeemed $454 million of 4.50% senior notes due April 2024 and repurchased $100 million of 4.75% senior notes due 2027, reducing senior notes and other debt to $2.24 billion.
- Six-month operating cash flow was $610 million, down from $1.6 billion, reflecting increases in inventories of $631 million and deposits and pre-acquisition costs of $755 million.
- Management is proposing a spin-off of a new public company holding $6 billion to $8 billion of land, which the filing describes as early-stage with no guaranteed completion.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed June 28, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $8.77B$8.05B | +9.0% |
| Operating Expenses | $7.55B$6.85B | +10.1% |
| Net Income | $954.31M$871.69M | +9.5% |
| EPS (Basic) | $3.45$3.01 | +14.6% |
| EPS (Diluted) | $3.45$3.01 | +14.6% |
| Shares Outstanding (Basic) | 273.70M284.91M | −3.9% |
| Shares Outstanding (Diluted) | 273.70M284.91M | −3.9% |
05—Questions
Frequently Asked Questions
How did Lennar's profitability change in the second quarter of 2024?
Net earnings attributable to Lennar were $954.3 million, or $3.45 per diluted share, compared with $871.7 million, or $3.01 per share, in the prior-year quarter. Excluding $21.5 million of mark-to-market losses on technology investments and the $46.5 million one-time gain on a technology investment sale, net earnings were $935.3 million, or $3.38 per diluted share.
What drove the increase in revenue and what pressure appeared in pricing?
Home sales revenue rose 9% to $8.4 billion, mainly because home deliveries increased 15%. The average sales price of homes delivered fell 5% to $426,000, which the filing attributes primarily to pricing to market through increased use of incentives and product mix. Selling, general and administrative expenses rose to 7.5% of home sales revenue from 6.7%.
How strong is Lennar's balance sheet and debt position?
Homebuilding debt to total capital was 7.7% at May 31, 2024, versus 9.6% at November 30, 2023. Homebuilding cash and cash equivalents were $3.60 billion, and there were no borrowings under the $2.2 billion Credit Facility. The company states it was in compliance with its debt covenants.
What is the proposed land spin-off and what does the company expect next?
Lennar is planning a taxable spin-off of a new public company to which it would contribute land assets with a value of approximately $6 billion to $8 billion, and it has confidentially submitted a draft registration statement to the SEC. The filing notes there is no specific timeline and no guarantee the transaction will be completed. For the third quarter, management expects 20,500 to 21,000 home sales at about a 23% gross margin, and for 2024 it expects about 80,000 deliveries and more than $2 billion of stock repurchases.
How much capital did Lennar return to shareholders in the first half of fiscal 2024?
During the six months ended May 31, 2024, Lennar repurchased $1.2 billion of common stock, including $1.1 billion under its repurchase program, and paid $278 million in dividends. The Board declared a quarterly cash dividend of $0.50 per share on June 20, 2024, payable July 19, 2024.
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