01—Abstract
Summary
Summary of the 10-Q filed October 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation's Form 10-Q for the quarter ended August 31, 2024 (filed October 2, 2024) shows third-quarter net earnings attributable to Lennar of $1.16 billiona, or $4.26 per diluted share, compared with $1.11 billion, or $3.87 per share, a year earlier.
Revenues rose to $9.42 billionb from $8.73 billion. Homebuilding revenue of $9.05 billion reflected 21,516 home deliveries at an average sales price of $422,000, versus 18,559 deliveries at $448,000 in the prior-year quarter. Gross margin on home sales was 22.5%, down from 24.4%, as management pushed volume through higher absorption and increased incentives.
For the nine months, net earnings attributable to Lennar were $2.84 billionc, or $10.26 per share. Balance sheet and capital allocation were central themes. Homebuilding cash and cash equivalents fell to $4.04 billion from $6.27 billion at November 30, 2023, as the company repurchased $1.73 billion of common stock, paid $414 million in dividends, and invested $985 million (increase) in deposits and pre-acquisition costs on real estate.
Homebuilding senior notes and other debt declined to $2.26 billiond from $2.82 billion after the early redemption of $454 million of 4.50% notes due 2024. Total stockholders' equity rose to $27.41 billion. Net cash provided by operating activities was $1.43 billion for the nine months, compared with $2.59 billion a year earlier.
The filing states that remaining repurchase authorization was $3.9 billion. Management describes an ongoing shift to a land-light model and a planned spin-off of Millrose Properties Inc., expected to hold land and cash with an expected book value of $6.0 billion to $8.0 billion.
The company expects 22,500 to 23,000 closings in the fourth quarter and approximately 80,500 to 81,000 homes for fiscal 2024. A one-time $179.0 million net gain on the sale of LMV Fund I rental projects was offset by a one-time $90.0 million write-down of non-core Multifamily assets.
02—Key points
Key Highlights
- Third-quarter net earnings attributable to Lennar were $1.16 billion, or $4.26 per diluted share, versus $3.87 per share a year earlier; nine-month EPS was $10.26 versus $8.94.
- Total revenues were $9.42 billion for the quarter, up from $8.73 billion, driven by 21,516 home deliveries versus 18,559 a year earlier.
- Average sales price of homes delivered fell to $422,000 from $448,000, attributed to pricing to market through increased incentives and product mix.
- Gross margin on home sales declined to 22.5% from 24.4% in the third quarter, and SG&A rose to 7.4% of home sales revenue for the nine months from 7.0%.
- Homebuilding cash fell to $4.04 billion from $6.27 billion at November 30, 2023, while homebuilding debt was reduced to $2.26 billion from $2.82 billion.
- Share repurchases totaled $1.73 billion for the nine months, with $3.9 billion of authorization remaining; quarterly dividend was $0.50 per share.
- Planned spin-off of Millrose Properties Inc. is expected to contribute land and cash with a book value of $6.0 billion to $8.0 billion and reduce inventory and equity.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 2, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $9.42B$8.73B | +7.9% |
| Operating Expenses | $8.13B$7.26B | +12.0% |
| Net Income | $1.16B$1.11B | +4.8% |
| EPS (Basic) | $4.26$3.87 | +10.1% |
| EPS (Diluted) | $4.26$3.87 | +10.1% |
| Shares Outstanding (Basic) | 270.16M282.85M | −4.5% |
| Shares Outstanding (Diluted) | 270.16M282.85M | −4.5% |
05—Questions
Frequently Asked Questions
How did Lennar's earnings and margins change in the third quarter of fiscal 2024?
Net earnings attributable to Lennar rose to $1.16 billion, or $4.26 per diluted share, from $1.11 billion, or $3.87 per share. Gross margin on home sales decreased to 22.5% from 24.4%, as revenue per square foot declined and land costs rose, partly offset by lower material costs.
What is the Millrose spin-off and why is it significant?
Lennar expects to spin off Millrose Properties Inc., a REIT that would acquire and develop land and deliver homesites to Lennar on a just-in-time basis. Lennar would contribute undeveloped and some developed land plus cash with an expected book value of $6.0 billion to $8.0 billion, reducing both inventory and equity on its balance sheet as part of its land-light strategy.
How strong is Lennar's balance sheet and liquidity?
At August 31, 2024, Lennar had $4.04 billion of homebuilding cash and no outstanding borrowings under its $2.2 billion revolving credit facility. Homebuilding debt to total capital was 7.6%, and net homebuilding debt to total capital was negative 6.9%, reflecting net homebuilding cash. Stockholders' equity was $27.41 billion.
What drove the decline in operating cash flow and how is Lennar returning capital?
Net cash provided by operating activities was $1.43 billion for the nine months, down from $2.59 billion, mainly due to a $985 million increase in deposits and pre-acquisition costs on real estate and a $708 million increase in inventories. Lennar repurchased $1.73 billion of common stock and paid $414 million in dividends in the period.
What is Lennar's outlook for the fourth quarter and full fiscal 2024?
Management expects 22,500 to 23,000 closings in the fourth quarter with a gross margin flat with the third quarter, and approximately 80,500 to 81,000 homes delivered for fiscal 2024, which it describes as more than a 10% increase over 2023. It expects community count to exceed 1,400 by year-end 2024 and repurchases of more than $2 billion of stock for fiscal 2024.
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