Lennar(LEN) - 2025 Q3 - Quarterly Results

Third Quarter 2025 Earnings Overview Lennar Corporation's Q3 2025 performance reflects market pressures and strategic adjustments, with key financial metrics, management insights, and Q4 guidance indicating a focus on operational efficiency and market adaptation 1.1 Key Financial and Operational Highlights Lennar Corporation achieved diluted EPS of $2.29, 12% new orders growth to 23,004 homes, and total revenue of $8.8 billion in Q3 2025, maintaining deliveries and a healthy balance sheet amidst market pressures | Metric | Q3 2025 | Change (YoY) | | :----------------------------------- | :--------------- | :---------- | | Diluted EPS | $2.29 | -46.2% | | Net Earnings | $591 million | -50.8% | | New Orders | 23,004 homes | +12% | | Deliveries | 21,584 homes | Flat | | Total Revenue | $8.8 billion | -6.4% | | Home Sales Gross Margin | 17.5% | -5.0 ppts | | SG&A as % of Home Sales Revenue | 8.2% | +1.5 ppts | | Home Sales Net Margin | 9.2% | - | | Financial Services Operating Earnings | $178 million | +23.6% | | Homebuilding Cash & Equivalents | $1.4 billion | - | | Homebuilding Debt to Total Capital | 13.5% | +6.0 ppts | | Share Repurchases | 4.1 million shares ($507 million) | - | - New orders increased by 12% year-over-year to 23,004 homes, with a backlog of 16,953 homes valued at $6.6 billion[3] - The company repurchased 4.1 million shares of common stock for $507 million[3] 1.2 Management's Commentary and Strategic Outlook Management noted Q3 results reflect ongoing housing market pressures and stable operations, using incentives to maintain sales momentum while improving inventory turnover and construction cycles - Market pressures led to an average sales price reduction to $383,000, a gross margin decline to 17.5%, and SG&A expenses at 8.2% of revenue[5] - The company maintained a start pace of 4.4 homes per community per month and a sales pace of 4.7 homes per community per month through targeted incentives, including mortgage rate buydowns[5] - Inventory turnover improved to 1.9 times, and the construction cycle shortened to a record low of 126 days, reflecting a production-first strategy and successful negotiations with trade partners[5] - Management is optimistic for Q4, projecting new orders of 20,000-21,000 homes, deliveries of 22,000-23,000 homes, and a gross margin of approximately 17.5%[5] 1.3 Fourth Quarter 2025 Guidance The company forecasts Q4 2025 new orders between 20,000-21,000 homes, deliveries of 22,000-23,000 homes, and an average sales price of $380,000-$390,000, with homebuilding gross margin around 17.5% 2025 Fourth Quarter Guidance | Metric | Expected Results | | :-------------------------- | :--------------- | | New Orders | 20,000 - 21,000 homes | | Deliveries | 22,000 - 23,000 homes | | Average Sales Price | $380,000 - $390,000 | | Home Sales Gross Margin | Approx. 17.5% (Consistent with Q3) | | SG&A as % of Home Sales | 7.8% - 8.0% | | Financial Services Operating Earnings | $130 million - $135 million | Detailed Financial Results (Three Months Ended August 31, 2025 vs 2024) This section provides a detailed breakdown of Lennar's Q3 2025 consolidated and segment-specific financial performance, highlighting revenue, earnings, and operational shifts compared to the prior year 2.1 Consolidated Financial Performance The company's Q3 2025 net earnings and diluted EPS significantly declined year-over-year, primarily due to reduced home sales revenue and lower gross margins, with total revenue decreasing by 6.4% Consolidated Financial Results (Q3 2025 vs Q3 2024) | Metric | Q3 2025 ($) | Q3 2024 ($) | YoY Change | | :------------------------------------------------- | :--------------- | :--------------- | :------- | | Total Revenue | $8.81 billion | $9.42 billion | -6.4% | | Net Earnings Attributable to Lennar | $591 million | $1.16 billion | -49.2% | | Diluted EPS | $2.29 | $4.26 | -46.2% | | Net Earnings Attributable to Lennar (Excluding Mark-to-Market Gains on Tech Investments) | $516 million | $1.1 billion | -53.0% | | Diluted EPS (Excluding Mark-to-Market Gains on Tech Investments) | $2.00 | $3.90 | -48.7% | 2.2 Segment-Specific Performance This section details the performance of Lennar's homebuilding, financial services, and ancillary businesses, revealing varied results across segments 2.2.1 Homebuilding Segment Homebuilding revenue decreased 9% to $8.2 billion in Q3 2025 due to a 9% drop in average sales price, with gross margin falling to 17.5% despite stable deliveries Homebuilding Key Metrics (Q3 2025 vs Q3 2024) | Metric | Q3 2025 | Q3 2024 | YoY Change | | :----------------------- | :--------------- | :--------------- | :------- | | Home Sales Revenue | $8.2 billion | $9.0 billion | -9% | | New Home Deliveries | 21,584 homes | 21,516 homes | +0.3% | | Average Sales Price of Homes Delivered | $383,000 | $422,000 | -9% | | Home Sales Gross Margin | 17.5% | 22.5% | -5.0 ppts | | SG&A Expenses | $676 million | $601 million | +12.5% | | SG&A as % of Home Sales Revenue | 8.2% | 6.7% | +1.5 ppts | - Gross margin decline was primarily due to lower revenue per square foot and higher land costs, partially offset by reduced construction costs[10] 2.2.2 Financial Services Segment Financial Services operating earnings increased to $177 million in Q3 2025, driven by higher profit per locked loan in the mortgage business Financial Services Operating Earnings (Q3 2025 vs Q3 2024) | Metric | Q3 2025 | Q3 2024 | YoY Change | | :--------------- | :--------------- | :--------------- | :------- | | Operating Earnings | $177 million | $144 million | +22.9% | - The increase in operating earnings was primarily due to higher profit per locked loan in the mortgage business, reflecting improved margins[12] 2.2.3 Ancillary Businesses (Multifamily & Lennar Other) Multifamily recorded a $16 million operating loss in Q3 2025, while Lennar Other operating earnings rose to $62 million, primarily due to mark-to-market gains on technology investments Ancillary Businesses Operating Earnings/Loss (Q3 2025 vs Q3 2024) | Business Segment | Q3 2025 | Q3 2024 | YoY Change | | :--------------- | :--------------- | :--------------- | :------- | | Multifamily Operating Earnings (Loss) | $(16) million | $79 million | Shift from Profit to Loss | | Lennar Other Operating Earnings | $62 million | $20 million | +210% | - Multifamily operating earnings in the prior year were positively impacted by a $179 million net gain from asset sales, partially offset by a $90 million write-down of non-core assets[13] - Lennar Other operating earnings were primarily related to mark-to-market gains on technology investments, totaling $99.2 million in Q3 2025 and $39.1 million in Q3 2024[13][23] 2.3 Tax Rate The effective income tax rate increased to 24.4% in Q3 2025 from 23.0% in the prior year, mainly due to reduced tax credits, with no significant impact expected from new legislation Income Tax Information (Q3 2025 vs Q3 2024) | Metric | Q3 2025 | Q3 2024 | | :----------- | :--------------- | :--------------- | | Provision for Income Taxes | $191 million | $348 million | | Effective Income Tax Rate | 24.4% | 23.0% | - The effective tax rate increased primarily due to reduced tax credits[14] 2.4 Share Repurchases The company repurchased 4.1 million shares of common stock for $507 million at an average price of $122.97 per share during Q3 2025 - The company repurchased 4.1 million shares of common stock for $507 million at an average price of $122.97 per share during the third quarter[15] Homebuilding Operational Metrics Key homebuilding operational metrics for Q3 2025 show stable deliveries and increased new orders, alongside a decrease in average sales prices and backlog value, reflecting dynamic market conditions 3.1 Deliveries In Q3 2025, the company delivered 21,584 homes, largely flat year-over-year, but the average sales price decreased 9% to $383,000, with notable declines in Western and Eastern regions Home Deliveries and Average Sales Price (Q3 2025 vs Q3 2024) | Region | 2025 Deliveries (homes) | 2024 Deliveries (homes) | YoY Change | 2025 Avg. Sales Price | 2024 Avg. Sales Price | YoY Change | | :------------ | :------------- | :------------- | :------- | :------------------- | :------------------- | :------- | | East | 4,770 | 5,270 | -9.5% | $366,000 | $400,000 | -8.5% | | Central | 5,469 | 5,510 | -0.7% | $379,000 | $400,000 | -5.3% | | Southeast | 6,413 | 5,067 | +26.6% | $235,000 | $253,000 | -7.1% | | West | 4,926 | 5,663 | -13.0% | $599,000 | $613,000 | -2.2% | | Other | 6 | 6 | 0.0% | $604,000 | $538,000 | +12.3% | | Total | 21,584 | 21,516 | +0.3% | $383,000 | $422,000 | -9.2% | Home Deliveries and Average Sales Price (Nine Months Ended August 31, 2025 vs 2024) | Region | 2025 Deliveries (homes) | 2024 Deliveries (homes) | YoY Change | 2025 Avg. Sales Price | 2024 Avg. Sales Price | YoY Change | | :------------ | :------------- | :------------- | :------- | :------------------- | :------------------- | :------- | | East | 13,757 | 15,177 | -9.4% | $375,000 | $407,000 | -7.8% | | Central | 14,102 | 13,604 | +3.7% | $383,000 | $398,000 | -3.8% | | Southeast | 17,317 | 13,999 | +23.7% | $241,000 | $253,000 | -4.7% | | West | 14,351 | 15,193 | -5.6% | $603,000 | $609,000 | -1.0% | | Other | 22 | 31 | -29.0% | $652,000 | $529,000 | +23.2% | | Total | 59,549 | 58,004 | +2.7% | $393,000 | $421,000 | -6.6% | 3.2 New Orders New orders increased 12% year-over-year to 23,004 homes in Q3 2025, driven by strong growth in the Central and Eastern regions, despite an 11.8% decrease in average sales price to $367,000 New Orders and Average Sales Price (Q3 2025 vs Q3 2024) | Region | 2025 Active Communities | 2024 Active Communities | 2025 New Orders (homes) | 2024 New Orders (homes) | YoY Change | 2025 Avg. Sales Price | 2024 Avg. Sales Price | YoY Change | | :------------ | :------------- | :------------- | :------------- | :------------- | :------- | :------------------- | :------------------- | :------- | | East | 348 | 293 | 5,665 | 4,641 | +22.1% | $359,000 | $408,000 | -12.1% | | Central | 464 | 365 | 5,555 | 5,405 | +2.8% | $361,000 | $390,000 | -7.4% | | Southeast | 411 | 245 | 7,055 | 5,217 | +35.2% | $224,000 | $251,000 | -10.8% | | West | 440 | 378 | 4,725 | 5,317 | -11.2% | $596,000 | $612,000 | -2.6% | | Other | 1 | 2 | 4 | 7 | -42.9% | $611,000 | $349,000 | +75.1% | | Total | 1,664 | 1,283 | 23,004 | 20,587 | +11.7% | $367,000 | $416,000 | -11.8% | New Orders and Average Sales Price (Nine Months Ended August 31, 2025 vs 2024) | Region | 2025 New Orders (homes) | 2024 New Orders (homes) | YoY Change | 2025 Avg. Sales Price | 2024 Avg. Sales Price | YoY Change | | :------------ | :------------- | :------------- | :------- | :------------------- | :------------------- | :------- | | East | 15,141 | 13,782 | +9.9% | $363,000 | $414,000 | -12.3% | | Central | 15,562 | 15,396 | +1.1% | $377,000 | $396,000 | -4.8% | | Southeast | 18,602 | 14,861 | +25.2% | $235,000 | $253,000 | -7.1% | | West | 14,634 | 15,979 | -8.4% | $595,000 | $621,000 | -4.2% | | Other | 21 | 38 | -44.7% | $666,000 | $465,000 | +43.2% | | Total | 63,960 | 60,056 | +6.5% | $382,000 | $425,000 | -10.1% | 3.3 Backlog As of August 31, 2025, backlog stood at 16,953 homes, flat year-over-year, but total dollar value decreased 14.2% to $6.6 billion, with average sales price also down 14.2% to $392,000 Backlog and Average Sales Price (As of August 31, 2025) | Region | 2025 Backlog (homes) | 2024 Backlog (homes) | YoY Change | 2025 Backlog Value ($) | 2024 Backlog Value ($) | YoY Change | 2025 Avg. Sales Price | 2024 Avg. Sales Price | YoY Change | | :------------ | :------------- | :------------- | :------- | :------------------- | :------------------- | :------- | :------------------- | :------------------- | :------- | | East | 4,720 | 5,115 | -7.6% | $1.82 billion | $2.22 billion | -18.0% | $386,000 | $434,000 | -11.1% | | Central | 4,862 | 5,025 | -3.2% | $1.87 billion | $2.08 billion | -10.0% | $384,000 | $413,000 | -7.0% | | Southeast | 4,072 | 2,757 | +47.7% | $892 million | $694 million | +28.6% | $219,000 | $252,000 | -13.1% | | West | 3,299 | 4,037 | -18.2% | $2.07 billion | $2.75 billion | -25.0% | $626,000 | $682,000 | -8.2% | | Other | — | 10 | -100.0% | — | $2,805 | -100.0% | — | $280,000 | -100.0% | | Total | 16,953 | 16,944 | +0.1% | $6.65 billion | $7.75 billion | -14.2% | $392,000 | $457,000 | -14.2% | - As of August 31, 2025, backlog included 909 acquired homes, with 181 in Central, 717 in Southeast, and 11 in Western homebuilding operations[31] Financial Position and Capital Structure Lennar's financial position as of August 31, 2025, shows a reduction in total assets and cash, an increase in homebuilding debt, and a shift to positive net homebuilding debt, impacting capital ratios 4.1 Condensed Consolidated Balance Sheets Total assets decreased by 15.6% to $34.88 billion as of August 31, 2025, reflecting significant reductions in homebuilding cash and land inventory, aligning with a 'land-light' strategy Condensed Consolidated Balance Sheet Key Data (As of August 31, 2025 vs November 30, 2024) | Metric | August 31, 2025 ($) | November 30, 2024 ($) | Change | | :--------------------------------- | :--------------- | :--------------- | :------- | | Total Assets | $34.88 billion | $41.31 billion | -15.6% | | Total Liabilities | $12.13 billion | $13.29 billion | -8.8% | | Total Equity | $22.75 billion | $28.02 billion | -18.8% | | Homebuilding Cash & Equivalents | $1.41 billion | $4.66 billion | -69.8% | | Land & Land Development Inventory | $1.07 billion | $4.75 billion | -77.5% | | Real Estate Deposits & Pre-Acquisition Costs | $6.01 billion | $3.63 billion | +65.8% | | Investments in Unconsolidated Entities | $2.65 billion | $1.34 billion | +97.0% | 4.2 Homebuilding Debt and Capital Ratios Homebuilding debt increased to $3.52 billion, while cash significantly decreased, resulting in a positive net homebuilding debt of $2.12 billion and an increased debt-to-capital ratio of 13.5% Homebuilding Debt and Capital Ratios (As of August 31, 2025 vs November 30, 2024) | Metric | August 31, 2025 ($) | November 30, 2024 ($) | Change | | :--------------------------------- | :--------------- | :--------------- | :------- | | Homebuilding Debt | $3.52 billion | $2.26 billion | +56.0% | | Homebuilding Cash & Equivalents | $1.41 billion | $4.66 billion | -69.8% | | Net Homebuilding Debt | $2.12 billion | $(2.40) billion | Shift from Negative to Positive | | Homebuilding Debt to Total Capital Ratio | 13.5% | 7.5% | +6.0 ppts | | Net Homebuilding Debt to Total Capital Ratio | 8.6% | (9.4)% | Shift from Negative to Positive | Company Information This section provides an overview of Lennar Corporation, important disclaimers regarding forward-looking statements, and details for the upcoming Q3 earnings conference call 5.1 About Lennar Corporation Lennar Corporation, founded in 1954, is a leading U.S. homebuilder offering diverse housing options, financial services, multifamily developments, and strategic technology investments - Lennar Corporation is a leading U.S. homebuilder, providing affordable, move-up, and active adult communities under the Lennar brand[17] - The Financial Services segment offers mortgage, title, and closing services, along with commercial real estate mortgages through LMF Commercial[17] - The Multifamily segment focuses on developing high-quality multifamily rental properties[17] - The LEN segment drives the company's technology, innovation, and strategic investments[17] 5.2 Note Regarding Forward-Looking Statements This press release contains forward-looking statements about the housing market and company performance, subject to risks and uncertainties that may cause actual results to differ materially - Forward-looking statements pertain to the housing market, company's expected performance, and guidance, not strictly based on historical or current facts[17] - Actual results may differ materially due to various risks and uncertainties, including a slowdown in the real estate market, decreased demand, inflation, increased mortgage costs, supply chain shortages, changes in government policies, and natural disasters[17] - The company undertakes no obligation to update or revise any forward-looking statements[17] 5.3 Conference Call Information Lennar will host a conference call on Friday, September 19, 2025, at 11:00 AM ET to discuss Q3 earnings, accessible via webcast and archived replay - The third-quarter earnings conference call will be held on Friday, September 19, 2025, at 11:00 AM ET[18] - The conference will be webcast live on the company's website, investors.lennar.com, with an archived replay available for 90 days[18] - A telephone replay can be accessed by dialing 203-369-0176 and entering confirmation code 5723593[18]