Lennar(US:LEN) ZACKS·2024-12-19 19:15Core Viewpoint - Lennar Corporation (LEN) reported disappointing fourth-quarter fiscal 2024 results, with adjusted earnings and total revenues missing estimates and declining year over year [1][4]. Financial Performance - Adjusted earnings per share (EPS) for the quarter were $4.03, missing the Zacks Consensus Estimate of $4.16 by 3.1%, and down from $5.17 in the prior year [5]. - Total revenues were $9.95 billion, lagging behind the consensus mark of $10.16 billion by 2.1%, and representing a 9.3% decline from $10.97 billion year over year [5]. - Homebuilding revenues totaled $9.55 billion, down 9.2% from the prior year, with home sales contributing $9.5 billion, a 9% decrease [6]. - Home deliveries fell to 22,206 units from 23,795 units in the prior year, missing projections of 22,987 units [7]. - The average selling price (ASP) of homes delivered was $430,000, down 2.5% from the previous year [7]. Market Conditions - The performance was impacted by a slowdown in home sales due to high mortgage rates and low ASP, leading to a downward trend in new orders [2][3]. - New orders declined 2.7% year over year to 16,895 homes, with the potential value of net orders decreasing to $7.18 billion from $7.28 billion [8]. Strategic Adjustments - To address affordability issues, the company adjusted its ASP, incentives, and margins to stimulate home sales and manage inventory levels, but these efforts were insufficient amid market uncertainties [3]. - Moving forward, LEN plans to adopt a volume-based strategy and implement an asset-light, land-light business model to navigate market challenges [3]. Future Guidance - For the first quarter of fiscal 2025, LEN expects deliveries between 17,000 and 17,500 homes, with an ASP range of $410,000 to $415,000 [16]. - The gross margin on home sales is anticipated to be between 19% and 19.25%, down from 21.8% reported a year ago [17]. - New orders are projected to be between 17,500 and 18,000 units, down from 18,176 homes reported a year ago [18]. Financial Health - At the end of fiscal 2024, Lennar had cash and cash equivalents of $4.66 billion, down from $6.27 billion at the end of fiscal 2023, with no outstanding borrowings under its $2.9 billion revolving credit facility [14]. - Total homebuilding debt was $2.26 billion, reduced from $2.82 billion at the end of fiscal 2023, with a homebuilding debt to capital ratio of 7.5% [14]. Shareholder Actions - The company repurchased 13.6 million shares for $2.1 billion during fiscal 2024 [15].