Lennar Q3 Earnings & Revenues Beat, Stock Down on Tepid Q4 View

Core Viewpoint - Lennar Corporation (LEN) reported third-quarter fiscal 2024 results with earnings and revenues exceeding Zacks Consensus Estimates, although earnings showed a slight decline year-over-year, leading to a drop in stock price due to investor concerns over lower earnings and gross margin, along with cautious fourth-quarter guidance [1][2]. Quarterly Numbers - Adjusted earnings per share (EPS) were $3.90, surpassing the Zacks Consensus Estimate of$ 3.62 by 7.7%, but down 0.3% from $3.91 a year ago [2]. - Revenues reached$ 9.42 billion, exceeding the Zacks Consensus Estimate of $9.29 billion by 1.4% and increasing 7.9% from$ 8.73 billion year-over-year [2]. Segment Details - Homebuilding segment revenues totaled $9.05 billion, an 8.7% increase from the prior-year quarter, with home sales contributing$ 9.02 billion, up 8.8% [3]. - Home deliveries improved 16% year-over-year to 21,516 units, exceeding projections, while the average sales price (ASP) of homes delivered was $422,000, down 5.8% from the previous year [3]. - New orders rose 5% year-over-year to 20,587 homes, but the potential value of net orders fell 0.9% to$ 8.56 billion [4]. - Backlog declined 20.5% year-over-year to 16,944 homes, with potential housing revenues from backlog decreasing 21.4% to $7.75 billion [4]. - Gross margin on home sales was 22.5%, down 190 basis points from the previous year, attributed to decreased revenues per square foot and increased land costs [4]. - Financial Services segment revenues increased to$ 273.3 million from $266.2 million year-over-year, with operating earnings rising to$ 144.4 million [4][5]. Financials - At the end of the fiscal third quarter, Lennar had cash and cash equivalents of $4.04 billion, down from$ 6.27 billion at the end of fiscal 2023, with no outstanding borrowings under its $2.2 billion revolving credit facility [6]. - Total homebuilding debt was$ 2.26 billion, down from $2.82 billion at the fiscal 2023-end, with homebuilding debt to capital at 7.6% [6]. - The company repurchased 3.4 million shares for$ 519 million during the fiscal third quarter [6]. Guidance - For fourth-quarter fiscal 2024, Lennar expects deliveries between 22,500-23,000 homes, a decrease from 23,795 homes delivered in the prior year, with an expected ASP of nearly $425,000 [7]. - Gross margin on home sales is anticipated to remain flat year-over-year, with SG&A expenses projected to be in the range of 6.7-6.8% [7]. - New orders are expected to be between 19,000-19,300 units, up from 17,366 homes reported a year ago [7]. - Financial Services operating earnings are expected to be around$ 140 million, down from $168 million a year ago [7].