Lennar's Q1 Earnings & Revenues Miss, New Home Orders Up Y/Y

Core Insights - Lennar Corporation (LEN) reported disappointing results for Q1 fiscal 2026, with adjusted earnings and total revenues falling short of expectations and declining year over year [1][4]. Group 1: Financial Performance - Adjusted earnings per share (EPS) were 88 cents, missing the Zacks Consensus Estimate of 96 cents by 8.3%, and down from $2.14 in the same quarter last year [4]. - Total revenues amounted to $6.62 billion, which was 3.1% below the consensus estimate of $6.83 billion and represented a 13.2% decline from $7.63 billion year over year [4]. - Homebuilding segment revenues were $6.3 billion, down 13.5% from the prior-year quarter, with home sales contributing $6.27 billion, a decrease of 13.4% [5]. Group 2: Market Conditions - The performance was negatively affected by a weak housing market, characterized by affordability challenges and declining consumer confidence [2]. - The average sales price (ASP) of homes delivered was $374,000, down 8.3% from the previous year, reflecting ongoing market weakness [6]. Group 3: Operational Metrics - Home deliveries decreased by 5.4% to 16,863 units, missing projections of 17,480 units [6]. - New orders increased by 0.9% year over year to 18,515 homes, but the potential value of net orders fell by 3.9% to $7.14 billion [6]. - Backlog at the end of the quarter rose by 18.6% to 15,588 homes, with potential housing revenues from backlog increasing by 4.8% to $6.04 billion [7]. Group 4: Margins and Costs - The gross margin on home sales was 15.2%, down 350 basis points year over year, primarily due to decreased revenues per square foot and increased land costs [8]. - Selling, general and administrative (SG&A) expenses as a percentage of home sales rose by 130 basis points to 9.8% due to lower revenues [8]. Group 5: Financial Services and Other Segments - Financial Services segment revenues fell by 22.2% year over year to $215.6 million, with operating earnings declining to $91.3 million from $143.5 million [9]. - Lennar Multi-Family segment revenues increased by 30.5% to $82.5 million [9]. - The Other segment's revenues surged by 208.8% to $22.9 million, with operating losses narrowing [11]. Group 6: Future Guidance - For Q2 fiscal 2026, Lennar expects home deliveries between 20,000 and 21,000, with an ASP range of $370,000 to $375,000, down from $389,000 a year ago [14]. - Gross margin on home sales is anticipated to be between 15.5% and 16%, down from 17.8% reported a year ago [15]. - New orders are projected to be between 21,000 and 22,000 units, down from 22,601 homes reported a year ago [15].