Lennar reports Q3 net earnings of US$1.47B, up from US$1.4B year-ago on revenues up 29% to US$8.9B, new orders down 12% to 14,366 homes; material and labor costs increased, supply chain constraints continued to limit deliveries

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MIAMI , September 27, 2022 (press release) –

Third Quarter 2022 Highlights - comparisons to the prior year quarter

  • Net earnings per diluted share increased 11% to $5.03
    • Increased 58% to $5.18, excluding mark-to-market gains (losses) on technology investments and one-time items
  • Net earnings increased 4% to $1.47 billion
    • Increased 48% to $1.51 billion, excluding mark-to-market gains (losses) on technology investments and one-time items
  • Deliveries increased 13% to 17,248 homes
  • New orders decreased 12% to 14,366 homes; new orders dollar value decreased 11% to $6.7 billion
  • Backlog of 25,734 homes - consistent with prior year; backlog dollar value increased 8% to $12.9 billion
  • Total revenues increased 29% to $8.9 billion
  • Homebuilding operating earnings increased to $2.0 billion, compared to operating earnings of $1.3 billion
    • Gross margin on home sales improved 190 basis points ("bps") to 29.2%
    • S,G&A expenses as a % of revenues from home sales improved 120 bps to 5.8%
    • Net margin on home sales improved 320 bps to 23.5%
  • Financial Services operating earnings of $63.0 million (including a $35.5 million one-time charge), compared to operating earnings of $111.9 million
  • Multifamily operating earnings of $45.9 million, compared to operating loss of $9.4 million
  • Lennar Other operating loss of $118.0 million, compared to operating earnings of $492.0 million
  • Homebuilding cash and cash equivalents of $1.3 billion
  • Controlled homesites increased to 63%, compared to 53%
  • No outstanding borrowings under the Company's $2.575 billion revolving credit facility
  • Retired $575 million of homebuilding senior notes due November 2022
  • Homebuilding debt to total capital improved to 15.0%, compared to 21.2%

Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's leading homebuilders, today reported results for its third quarter ended August 31, 2022. Third quarter net earnings attributable to Lennar in 2022 were $1.5 billion, or $5.03 per diluted share, compared to third quarter net earnings attributable to Lennar in 2021 of $1.4 billion, or $4.52 per diluted share. Excluding mark-to-market gains (losses) on technology investments in both years and one-time items in the current year, third quarter net earnings attributable to Lennar in 2022 were $1.5 billion, or $5.18 per diluted share, compared to third quarter net earnings attributable to Lennar in 2021 of $1.0 billion, or $3.27 per diluted share.

Stuart Miller, Executive Chairman of Lennar, said, "At this evolving time in the market, we are pleased to report third quarter earnings of $1.5 billion, or $5.03 per diluted share, compared to $1.4 billion, or $4.52 per diluted share for the third quarter last year. Excluding mark-to-market gains (losses) on our technology investments and one-time items, third quarter earnings were $1.5 billion, or $5.18 per diluted share, compared to $1.0 billion, or $3.27 per diluted share for the third quarter last year, a 48% and 58% increase year over year, respectively."

Mr. Miller continued, "Our home deliveries were 17,248, up 13% over last year, and in line with our guidance estimate given at the beginning of the quarter, and we achieved a homebuilding gross margin of 29.2% and homebuilding S,G&A expenses of 5.8%, leading to a 23.5% net margin, even as materials and labor costs increased. Supply chain constraints, while improving, still continue to limit deliveries."

"While our new orders declined 12% compared to last year's third quarter, we continued to maintain a consistent starts pace and drive sales by adjusting pricing and incentives. Sales have clearly been impacted by rising interest rates, but there remains a significant national shortage of housing, especially workforce housing, and demand remains strong as we navigate the rebalance between price and interest rates."

"Accordingly, during the quarter, we continued to focus on pricing to market and rightsizing our inventory to generate significant cash flow. We are focused on balance sheet strength as we retired early $575 million of homebuilding senior notes due November 2022, ended the quarter with $1.3 billion in cash, had no borrowings on our $2.6 billion revolver and homebuilding debt to capital of 15.0%, the lowest in our history. Our balance sheet has never been in a stronger position than it is today."

Rick Beckwitt, Co-Chief Executive Officer and Co-President of Lennar, said, "Much of our balance sheet and inventory management progress was driven by an intense focus on our land strategy while simultaneously driving sales, deliveries and managing production. During the quarter, we reassessed every deal in our land pipeline and worked with our strong land relationships to improve the underwriting on many deals. Our ending community count for the quarter decreased slightly from the second quarter, but is expected to increase approximately 5% by year end. We also continued to make significant progress on our land light strategy. This was evidenced by our controlled homesite percentage increasing to 63% from 53% and our years owned supply of homesites improving to 2.9 years from 3.3 years year over year."

Jon Jaffe, Co-Chief Executive Officer and Co-President of Lennar, said, "During the quarter, our homebuilding machine continued to be intensely focused on carefully managing production. Our cycle time during the quarter was marginally down sequentially, indicating that the well documented supply chain issues that continue to limit our productivity are beginning to become more manageable and perhaps subside. Our quarterly starts and sales pace were 4.4 homes and 4.0 homes per community, respectively, and we ended the third quarter with approximately 500 completed, unsold homes, demonstrating our focus on inventory management."

Mr. Miller concluded, "As we have seen over the past quarters, interest rates are moving and likely to continue to move, and the housing market will continue to rebalance pricing and interest rates in order to meet demand. Therefore, for our fourth quarter, we will give broad boundaries for deliveries between 20,000 to 21,000 homes and boundaries for gross margins between 26.0% – 27.0%. We continue to fortify our balance sheet with significant liquidity and operate from a position of strength, enabling us to continue to execute on our core strategies and outperform in periods of uncertainty."

Industry Intelligence Editor's Note: This press release omits select charts and/or marketing language for editorial clarity. Click here to view the full report.

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