Lennar Corp (LEN) Q3 2024 Earnings Call Transcript Highlights: Strong Home Deliveries and Cost ...

GuruFocus Research
5 min read

In This Article:

  • Revenue: Not explicitly mentioned.

  • Gross Margin: 22.5%.

  • Net Margin: 15.8%.

  • Earnings per Share (EPS): $3.90, excluding one-time items.

  • Home Deliveries: Increased by 16% year-over-year to just over 21,500.

  • New Orders: Increased by 5% year-over-year to almost 20,600.

  • Starts: Increased by 8% year-over-year to almost 20,250.

  • Community Count: Increased to 1,283 communities, expected to be above 1,400 by year-end 2024.

  • Sales Incentives: Rose to just over 10%.

  • SG&A: Reduced to 6.7% versus an expected 7.3%.

  • Construction Costs: Decreased by over 6% year-over-year.

  • Cycle Time: Decreased by 10 days sequentially to 140 calendar days on average for single-family homes.

  • Homesites Acquired: About 82% of $2 billion, or approximately 17,000 homesites, were finished homesites.

  • Cash on Book: $4 billion.

  • Debt-to-Total Capital Ratio: 7.6%.

  • Share Repurchases: 3.4 million shares for $519 million.

  • Dividends: $136 million paid.

  • Stockholders' Equity: Increased to over $27 billion.

  • Book Value per Share: Just over $1.01.

  • Q4 New Orders Guidance: 19,000 to 19,300 homes.

  • Q4 Deliveries Guidance: 22,500 to 23,000 homes.

  • Q4 Average Sales Price Guidance: Approximately $425,000.

  • Q4 Gross Margin Guidance: Flat with Q3.

  • Q4 SG&A Guidance: 6.7% to 6.8%.

  • Q4 EPS Guidance: $4.10 to $4.25 per share.

Release Date: September 20, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Lennar Corp (NYSE:LEN) reported strong demand for new homes, driven by lower interest rates and incentives.

  • The company successfully reduced construction costs by over 6% year-over-year, demonstrating effective cost management.

  • Lennar Corp (NYSE:LEN) achieved a significant decrease in cycle time, down to 140 calendar days on average for single-family homes, a 23% year-over-year improvement.

  • The company maintained a strong balance sheet with $4 billion in cash and no borrowings on its $2.2 billion revolving credit facility.

  • Lennar Corp (NYSE:LEN) repurchased 3.4 million shares for $519 million and paid $136 million in dividends, reflecting a commitment to returning capital to shareholders.

Negative Points

  • Gross margins came in lower than expected at 22.5%, impacted by higher sales incentives and community count lag.

  • The company faced challenges with community count, leading to some communities selling out faster than expected and others experiencing entitlement and development delays.

  • Higher interest rates and inflation have hindered the ability of average families to accumulate a down payment or qualify for a mortgage.

  • Lennar Corp (NYSE:LEN) had to use its margin as a point of adjustment to maintain consistent production, impacting profitability.

  • The company is still in the process of completing its asset-light transformation, which has required significant time and effort.

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