01—Abstract
Summary
Summary of the 10-Q filed July 1, 2025. Cited figures are marked; the original filing is the authoritative source.
Lennar Corporation's Form 10-Q for the quarter ended May 31, 2025 shows a sharp year-over-year decline in profitability.
Net earnings attributable to Lennar were $477.4 milliona, or $1.81 per diluted share, for the second quarter of 2025, versus $954.3 million, or $3.45 per share, a year earlier. Homebuilding revenues were $7.84 billion for the quarter, and gross margin on home sales was 17.8%, compared with 22.6% in the prior-year quarter. Management attributes the margin decline to higher land costs and lower revenue per square foot, partly offset by lower construction costs, and says it chose to maintain volume over margin.
For the third quarter of 2025, the company expects to deliver 22,000 to 23,000 homes at an average sales price of $380,000 to $385,000b and a margin of approximately 18%, and it expects full-year 2025 deliveries at the low end of its 86,000 to 88,000 range. The balance sheet changed materially during the period. The February 2025 spin-off of Millrose Properties, Inc. reduced total stockholders' equity from $27.87 billion at November 30, 2024 to $22.58 billion at May 31, 2025, and retained earnings fell by $4.84 billion.
Homebuilding cash fell to $1.17 billionc from $4.66 billion, while Homebuilding debt rose to $2.79 billion from $2.26 billion after the issuance of $700 million of 5.20% senior notes due 2030, $400 million of net borrowings under the revolving credit facility, and the redemption of $500 million of 4.75% notes due 2025. Homebuilding debt to total capital rose to 11.0% from 7.5%. Operating cash flow was negative $1.38 billion for the six months, driven by a $1.62 billion increase in inventories and a $782 million increase in deposits and pre-acquisition costs.
The company repurchased $1.30 billiond of common stock and paid $265 million in dividends during the six months. Other notable items include the Rausch Coleman Homes acquisition on February 10, 2025 ($312.6 million of assets acquired), the company's retained 20% stake in Millrose (carried at $1.2 billion), and Lennar Other losses of $91.9 million from technology investments for the six months. The company declared a quarterly dividend of $0.50 per share on June 19, 2025 and had $2.2 billion remaining under its stock repurchase authorization at May 31, 2025.
02—Key points
Key Highlights
- Q2 2025 net earnings attributable to Lennar were $477.4 million ($1.81 per diluted share), down from $954.3 million ($3.45 per share) in Q2 2024.
- Gross margin on home sales was 17.8% in Q2 2025 versus 22.6% in Q2 2024; average sales price of homes delivered fell to $389,000 from $426,000.
- Q3 2025 guidance: 22,000 to 23,000 home deliveries at an average sales price of $380,000 to $385,000 and a margin of approximately 18%; full-year deliveries expected at the low end of 86,000 to 88,000.
- Spin-off of Millrose Properties, Inc. on February 7, 2025 contributed $5.6 billion in land assets and $1.0 billion in cash, reducing total stockholders' equity to $22.58 billion from $27.87 billion.
- Cash and cash equivalents fell to $1.17 billion in Homebuilding from $4.66 billion at November 30, 2024; operating cash flow was negative $1.38 billion for the six months.
- Homebuilding debt rose to $2.79 billion, with homebuilding debt to total capital at 11.0% versus 7.5% at November 30, 2024, after a $700 million senior notes issuance and $400 million of revolver borrowings.
- The company repurchased $1.30 billion of common stock in the six months and retains $2.2 billion of remaining repurchase authorization; it declared a $0.50 quarterly dividend on June 19, 2025.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed July 1, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $8.38B$8.77B | −4.4% |
| SG&A Expenses | $688.85M— | — |
| Operating Expenses | $7.75B$7.55B | +2.7% |
| Net Income | $477.45M$954.31M | −50.0% |
| EPS (Basic) | $1.81$3.45 | −47.5% |
| EPS (Diluted) | $1.81$3.45 | −47.5% |
| Shares Outstanding (Basic) | 260.29M273.70M | −4.9% |
| Shares Outstanding (Diluted) | 260.29M273.70M | −4.9% |
05—Questions
Frequently Asked Questions
Why did Lennar's earnings fall so sharply in the second quarter of 2025?
Net earnings attributable to Lennar were $477.4 million, or $1.81 per diluted share, versus $954.3 million, or $3.45 per share, a year earlier. The filing attributes the decline mainly to lower gross margins on home sales (17.8% versus 22.6%), driven by higher land costs and lower revenue per square foot, partly offset by lower construction costs. Average sales price of homes delivered fell 9% to $389,000, and selling, general and administrative expenses rose to 8.8% of home sales revenue from 7.5%. Lennar Other also recorded $29.4 million of technology investment losses in the quarter.
How did the Millrose spin-off affect Lennar's financial position?
On February 7, 2025, Lennar distributed approximately 80% of Millrose's stock to shareholders and contributed $5.6 billion in land assets and $1.0 billion in cash to Millrose. Total stockholders' equity fell to $22.58 billion at May 31, 2025 from $27.87 billion at November 30, 2024, and retained earnings declined by $4.84 billion. Lennar retains about 20% of Millrose, carried at $1.2 billion, which it expects to dispose of later in the year. The company also entered into a Master Option Agreement to option land back from Millrose, with $720.8 million of related deposits outstanding at May 31, 2025.
How is Lennar's liquidity and leverage changing?
Homebuilding cash and cash equivalents were $1.17 billion at May 31, 2025, down from $4.66 billion at November 30, 2024. Homebuilding debt increased to $2.79 billion from $2.26 billion, following the issuance of $700 million of 5.20% senior notes due 2030 and $400 million of revolving credit borrowings, partly offset by repayment of $500 million of 4.75% notes due 2025. Homebuilding debt to total capital was 11.0% versus 7.5% at November 30, 2024. Management stated it believes its operations and borrowing resources will meet current and long-term capital requirements, and it reported compliance with debt covenants at May 31, 2025.
What is management's outlook for the third quarter and full year 2025?
Management expects to sell and deliver between 22,000 and 23,000 homes in the third quarter of 2025, at an average sales price between $380,000 and $385,000, with margin of approximately 18%, depending on market conditions. For the full year, the company expects to deliver at the low end of its previously stated range of 86,000 to 88,000 homes. Management noted continued pricing pressure on homes sold and stated it is focused on sales and closings while maintaining cash flow even at reduced profitability.
What drove the negative operating cash flow for the six months?
Net cash used in operating activities was $1.38 billion for the six months ended May 31, 2025, compared with $610 million provided in the prior-year period. The main drivers were a $1.62 billion increase in inventories from land purchases, land development and construction costs, a $782 million increase in deposits and pre-acquisition costs on real estate as the company increased its share of controlled homesites (primarily through Millrose option contracts), and a $600 million decrease in accounts payable and other liabilities. These were partly offset by net earnings and a $361 million decrease in loans held-for-sale.
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