Lennar Corp 10-Q for FY2023 Q1

Lennar Corp (LEN)

10-Q 2023-04-04 For: 2023-02-28

Added on April 06, 2026

About this 10-Q

Lennar Corp filed this 10-Q on April 4, 2023, covering the quarter ended February 28, 2023 (FY2023 Q1).

Headline figures

Quarter ended February 28, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net income: $596.53M; up 18.5% from net income of $503.58M a year earlier
Diluted EPS: $2.06; up 21.9% from $1.69 a year earlier

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Delaware						95-4337490
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $.10	LEN	New York Stock Exchange
Class B Common Stock, par value $.10	LEN.B	New York Stock Exchange


	February 28,		November 30,
	2023 (1)		2022 (1)

ASSETS
Homebuilding:
Cash and cash equivalents	$	4,057,956	4,616,124
Restricted cash	22,504		23,046
Receivables, net	559,939		673,980
Inventories:
Finished homes and construction in progress	11,945,232		11,718,507
Land and land under development	7,459,185		7,382,273
Consolidated inventory not owned	2,223,469		2,331,231
Total inventories	21,627,886		21,432,011
Investments in unconsolidated entities	1,178,802		1,173,164
Goodwill	3,442,359		3,442,359
Other assets	1,412,654		1,323,478
	32,302,100		32,684,162
Financial Services	2,213,421		3,254,257
Multifamily	1,266,777		1,257,337
Lennar Other	790,856		788,539
Total assets	$	36,573,154	37,984,295


	February 28,		November 30,
	2023 (2)		2022 (2)

LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	1,490,808	1,616,128
Liabilities related to consolidated inventory not owned	1,867,373		1,967,551
Senior notes and other debts payable, net	4,033,335		4,047,294
Other liabilities	2,937,472		3,347,673
	10,328,988		10,978,646
Financial Services	1,317,775		2,353,904
Multifamily	283,380		313,484
Lennar Other	87,724		97,894
Total liabilities	12,017,867		13,743,928
Stockholders’ equity:
Preferred stock	—		—
Class A common stock of $0.10 par value; Authorized: February 28, 2023 and November 30, 2022 - 400,000,000 shares; Issued: February 28, 2023 - 258,339,930 shares and November 30, 2022 - 256,084,147 shares	25,834		25,608
Class B common stock of $0.10 par value; Authorized: February 28, 2023 and November 30, 2022 - 90,000,000 shares; Issued: February 28, 2023 - 36,601,215 shares and November 30, 2022 - 36,601,215 shares	3,660		3,660
Additional paid-in capital	5,503,789		5,417,796
Retained earnings	19,350,060		18,861,417
Treasury stock, at cost; February 28, 2023 - 4,566,767 shares of Class A common stock and 973,655 shares of Class B common stock; November 30, 2022 - 2,455,387 shares of Class A common stock and 419,860 shares of Class B common stock	(468,347)		(210,389)
Accumulated other comprehensive income	3,259		2,408
Total stockholders’ equity	24,418,255		24,100,500
Noncontrolling interests	137,032		139,867
Total equity	24,555,287		24,240,367
Total liabilities and equity	$	36,573,154	37,984,295


	Three Months Ended
	February 28,
	2023		2022
Revenues:
Homebuilding	$	6,156,305	5,752,205
Financial Services	182,981		176,701
Multifamily	143,523		267,359
Lennar Other	7,620		7,251
Total revenues	6,490,429		6,203,516
Costs and expenses:
Homebuilding	5,274,714		4,641,898
Financial Services	104,244		85,910
Multifamily	148,956		263,737
Lennar Other	6,476		5,407
Corporate general and administrative	126,106		113,661
Charitable foundation contribution	13,659		12,538
Total costs and expenses	5,674,155		5,123,151
Homebuilding equity in earnings (loss) from unconsolidated entities	3,186		(286)
Homebuilding other income (expense), net	22,062		(171)

Multifamily equity in earnings (loss) from unconsolidated entities and other gain	(16,168)		1,805
Lennar Other equity in loss from unconsolidated entities, other expense, net, and other gain	(16,947)		(9,808)
Lennar Other unrealized loss from technology investments	(23,954)		(395,170)
Earnings before income taxes	784,453		676,735
Provision for income taxes	(185,145)		(167,420)
Net earnings (including net earnings attributable to noncontrolling interests)	599,308		509,315
Less: Net earnings attributable to noncontrolling interests	2,774		5,734
Net earnings attributable to Lennar	$	596,534	503,581
Other comprehensive income, net of tax:
Net unrealized gain on securities available-for-sale	$	851	742
Reclassification adjustments for gain included in earnings, net of tax	—		2,285
Total other comprehensive income, net of tax	$	851	3,027
Total comprehensive income attributable to Lennar	$	597,385	506,608
Total comprehensive income attributable to noncontrolling interests	$	2,774	5,734
Basic earnings per share	$	2.06	1.70
Diluted earnings per share	$	2.06	1.69


(In thousands)	February 28, 2023
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	4,057,956	163,000	15,075	6,825	4,242,856
Restricted cash	22,504		8,797	—	—	31,301
Receivables, net (1)	559,939		329,331	110,696	—	999,966
Inventories	21,627,886		—	439,947	—	22,067,833
Loans held-for-sale (2)	—		1,233,466	—	—	1,233,466

Investments in equity securities (3)	—		—	—	367,369	367,369
Investments available-for-sale (4)	—		—	—	36,332	36,332
Loans held-for-investment, net	—		45,327	—	—	45,327
Investments held-to-maturity	—		141,854	—	—	141,854
Investments in unconsolidated entities	1,178,802		—	635,499	315,632	2,129,933
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,412,654		101,947	65,560	64,698	1,644,859
	$	32,302,100	2,213,421	1,266,777	790,856	36,573,154
Liabilities:
Notes and other debts payable, net	$	4,033,335	1,171,638	16,828	—	5,221,801
Accounts payable and other liabilities	6,295,653		146,137	266,552	87,724	6,796,066
	$	10,328,988	1,317,775	283,380	87,724	12,017,867


(In thousands)	November 30, 2022
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	4,616,124	139,378	17,827	5,391	4,778,720
Restricted cash	23,046		14,004	—	—	37,050
Receivables, net (1)	673,980		826,163	114,134	—	1,614,277
Inventories	21,432,011		—	430,442	—	21,862,453
Loans held-for-sale (2)	—		1,776,311	—	—	1,776,311

Investments in equity securities (3)	—		—	—	391,026	391,026
Investments available-for-sale (4)	—		—	—	35,482	35,482
Loans held-for-investment, net	—		45,636	—	—	45,636
Investments held-to-maturity	—		143,251	—	—	143,251
Investments in unconsolidated entities	1,173,164		—	648,126	316,523	2,137,813
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,323,478		119,815	46,808	40,117	1,530,218
	$	32,684,162	3,254,257	1,257,337	788,539	37,984,295
Liabilities:
Notes and other debts payable, net	$	4,047,294	2,135,093	16,749	—	6,199,136
Accounts payable and other liabilities	6,931,352		218,811	296,735	97,894	7,544,792
	$	10,978,646	2,353,904	313,484	97,894	13,743,928


	Three Months Ended February 28, 2023
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and Unallocated	Total
Revenues	$	6,156,305	182,981	143,523	7,620	—	6,490,429
Operating earnings (loss)	906,839		78,737	(21,601)	(39,757)	—	924,218
Corporate general and administrative expenses	—		—	—	—	126,106	126,106
Charitable foundation contribution	—		—	—	—	13,659	13,659
Earnings (loss) before income taxes	906,839		78,737	(21,601)	(39,757)	(139,765)	784,453

	Three Months Ended February 28, 2022
Revenues	$	5,752,205	176,701	267,359	7,251	—	6,203,516
Operating earnings (loss)	1,109,850		90,791	5,427	(403,134)	—	802,934
Corporate general and administrative expenses	—		—	—	—	113,661	113,661
Charitable foundation contribution	—		—	—	—	12,538	12,538
Earnings (loss) before income taxes	1,109,850		90,791	5,427	(403,134)	(126,199)	676,735



(In thousands)	East		Central	Texas	West	Other	Corporate and Unallocated	Total Homebuilding
February 28, 2023	$	6,800,191	4,074,510	3,592,725	12,076,029	1,371,403	4,387,242	32,302,100
November 30, 2022	6,877,581		4,010,610	3,742,663	12,182,709	1,382,864	4,487,735	32,684,162


(In thousands)	Maximum Aggregate Commitment
Residential facilities maturing:
May 2023	$	200,000
August 2023	600,000
December 2023	500,000

Total - Residential facilities	$	1,300,000
LMF Commercial facilities maturing
July 2023	$	50,000
November 2023	100,000
December 2023	400,000

Total - LMF Commercial facilities	$	550,000
Total	$	1,850,000


	Three Months Ended
	February 28,
(Dollars in thousands)	2023		2022
Originations (1)	$	79,480	264,845


Sold	77,200		178,082
Securitizations	1		1


	February 28, 2023
Discount rates at purchase	6%	—	84%
Coupon rates	2.0%	—	5.3%
Distribution dates	October 2027	—	December 2028
Stated maturity dates	October 2050	—	December 2051


	February 28, 2023
(In thousands)	LMV I		LMV II
Lennar's carrying value of investments	$	211,275	290,766
Equity commitments	2,204,016		1,257,700
Equity commitments called	2,154,328		1,141,649
Lennar's equity commitments	504,016		381,000
Lennar's equity commitments called	500,381		366,804
Lennar's remaining commitments (1)	3,635		14,196
Distributions to Lennar during the three months ended February 28, 2023	—		—


			Three Months Ended February 28, 2023
(In thousands)	Total Equity		Class A Common Stock	Class B Common Stock	Additional Paid - in Capital	Treasury Stock	Accumulated Other Comprehensive Income	Retained Earnings	Noncontrolling Interests
Balance at November 30, 2022	$	24,240,367	25,608	3,660	5,417,796	(210,389)	2,408	18,861,417	139,867
Net earnings (including net earnings attributable to noncontrolling interests)	599,308		—	—	—	—	—	596,534	2,774
Employee stock and directors plans	(66,990)		226	—	(189)	(67,027)	—	—	—

Purchases of treasury stock	(190,931)		—	—	—	(190,931)	—	—	—




Amortization of restricted stock	86,558		—	—	86,558	—	—	—	—
Cash dividends	(107,891)		—	—	—	—	—	(107,891)	—

Receipts related to noncontrolling interests	2,497		—	—	—	—	—	—	2,497
Payments related to noncontrolling interests	(21,256)		—	—	—	—	—	—	(21,256)
Non-cash purchase or activity of noncontrolling interests, net	12,774		—	—	(376)	—	—	—	13,150



Total other comprehensive income, net of tax	851		—	—	—	—	851	—	—
Balance at February 28, 2023	$	24,555,287	25,834	3,660	5,503,789	(468,347)	3,259	19,350,060	137,032


	Three Months Ended
	February 28,
(In thousands, except per share amounts)	2023		2022
Numerator:
Net earnings attributable to Lennar	$	596,534	503,581
Less: distributed earnings allocated to nonvested shares	724		780
Less: undistributed earnings allocated to nonvested shares	5,895		4,548
Numerator for basic earnings per share	589,915		498,253
Less: net amount attributable to Rialto's Carried Interest Incentive Plan (1)	1,038		1,798



Numerator for diluted earnings per share	$	588,877	496,455
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding	286,074		293,930



Denominator for diluted earnings per share - weighted average common shares outstanding	286,074		293,930
Basic earnings per share	$	2.06	1.70
Diluted earnings per share	$	2.06	1.69


	Three Months Ended
	February 28,
	2023		2022
Cash flows from operating activities:
Net earnings (including net earnings attributable to noncontrolling interests)	$	599,308	509,315
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	20,305		20,089
Amortization of discount/premium on debt, net	(838)		(490)
Equity in loss from unconsolidated entities	31,187		9,752
Distributions of earnings from unconsolidated entities	4,623		4,822
Share-based compensation expense	86,558		81,457

Deferred income tax benefit	(81,940)		(54,032)

Loans held-for-sale unrealized loss	31,462		27,387
Lennar Other unrealized losses from technology investments	23,954		395,170








Valuation adjustments and write-offs of option deposits, pre-acquisition costs and other assets	25,846		11,509
Changes in assets and liabilities:

Decrease in receivables	602,757		380,502
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs	(177,705)		(1,913,634)
Increase in other assets	(8,139)		(49,968)
Decrease in loans held-for-sale	511,807		409,435
(Decrease) increase in accounts payable and other liabilities	(690,980)		96,455
Net cash provided by (used in) operating activities	978,205		(72,231)
Cash flows from investing activities:

Net additions of operating properties and equipment	(5,423)		(5,780)


	Three Months Ended
	February 28,
(In thousands)	2023		2022
Blend Labs (BLND)	$	586	(7,442)
Hippo (HIPO)	6,632		(124,457)
Opendoor (OPEN)	(7,691)		(143,361)
SmartRent (SMRT)	1,305		(44,363)
Sonder (SOND)	(320)		(506)
Sunnova (NOVA)	(24,466)		(75,041)
Lennar Other unrealized losses from technology investments	$	(23,954)	(395,170)


	Three Months Ended
	February 28,
(In thousands)	2023		2022

General contractor services, net of deferrals	$	125,402	117,263
General contractor costs	120,733		113,233
Land sales to joint ventures	—		131,553
Management fee income, net of deferrals	18,121		13,127


	Three Months Ended
	February 28,
	2023				2022
(Dollars in thousands, except price per share)	Class A		Class B		Class A		Class B
Shares repurchased	1,446,205		553,795		4,616,000		652,000
Total purchase price	$	143,068	$	46,105	$	472,924	$	53,331
Average price per share	$	98.93	$	83.25	$	102.45	$	81.80


(In thousands)	February 28, 2023
Commitment - maturing in April 2024	$	350,000
Commitment - maturing in May 2027	2,225,000
Total commitment	$	2,575,000
Accordion feature	425,000
Total maximum borrowings capacity	$	3,000,000


	Fair Value Hierarchy	Fair Value at
(In thousands)		February 28, 2023		November 30, 2022
Financial Services Assets:
Residential loans held-for-sale	Level 2	$	1,207,631	1,750,712
LMF Commercial loans held-for-sale	Level 3	25,835		25,599



Mortgage servicing rights	Level 3	3,450		3,463
Forward options	Level 1	$	6,167	9,473
Lennar Other:
Investments in equity securities	Level 1	$	189,324	212,981
Investments available-for-sale	Level 3	36,332		35,482



Unobservable inputs	As of February 28, 2023	As of November 30, 2022

Mortgage prepayment rate	8%	8%
Discount rate	13%	13%
Delinquency rate	8%	7%


			Communities with valuation adjustments
At or for the Three Months Ended	# of active communities	# of communities with potential indicator of impairment	# of communities	Fair Value (in thousands)		Valuation Adjustments (in thousands)

February 28, 2023	1,210	27	—	$	—	$	—
February 28, 2022	1,199	5	—	—		—


(In thousands)	Lease Payments
2023	$	25,877
2024	28,766
2025	24,298
2026	18,948
2027	16,130
2027 and thereafter	56,957
Total future minimum lease payments (1)	$	170,976
Less: Interest (2)	18,819
Present value of lease liabilities (2)	$	152,157


	Three Months Ended February 28, 2023
	Gross Margins					Operating Earnings (Loss)
($ in thousands)	Sales of Homes Revenue		Costs of Sales of Homes	Gross Margin %		Net Margins on Sales of Homes (1)	Gross Margins (Loss) on Sales of Land	Other Revenue	Equity in Earnings (Loss) from Unconsolidated Entities	Other Income (Expense), net	Operating Earnings (Loss)
East	$	1,858,048	1,331,478	28.3	%	373,632	(2,384)	20,163	3,248	29,537	424,196
Central	1,023,619		827,712	19.1	%	109,020	1,862	18,941	688	11	130,522
Texas	1,016,973		817,645	19.6	%	126,576	(2,051)	3,709	—	(2,915)	125,319
West	2,194,022		1,823,087	16.9	%	238,477	(9,786)	5,904	(152)	(3,943)	230,500
Other (2)	1,165		2,921	(150.7)	%	(6,515)	—	4,043	(598)	(628)	(3,698)
Totals	$	6,093,827	4,802,843	21.2	%	841,190	(12,359)	52,760	3,186	22,062	906,839


	Three Months Ended
	Homes		Dollar Value (In thousands)			Average Sales Price
	February 28,		February 28,			February 28,
	2023	2022	2023		2022	2023		2022
East	4,295	4,082	$	1,889,721	1,672,372	$	440,000	410,000
Central	2,300	2,521	1,023,619		1,105,929	445,000		439,000
Texas	3,421	2,537	1,016,973		805,630	297,000		318,000
West	3,642	3,392	2,194,022		2,142,204	602,000		632,000
Other	1	6	1,165		5,003	1,165,000		834,000
Total	13,659	12,538	$	6,125,500	5,731,138	$	448,000	457,000


		Three Months Ended
	Average Sales Incentives Per Home Delivered			Sales Incentives as a % of Revenue
	February 28,			February 28,
		2023		2022	2023		2022
East		$	32,400	6,700	6.9	%	1.6	%
Central		38,400		7,100	8.0	%	1.6	%
Texas		67,400		13,700	18.5	%	4.1	%
West		63,900		8,100	9.6	%	1.3	%
Other		85,000		83,400	6.8	%	9.1	%
Total		$	50,700	8,600	10.2	%	1.9	%


	Three Months Ended
	Active Communities		Homes		Dollar Value (In thousands)			Average Sales Price
	February 28,		February 28,		February 28,			February 28,
	2023	2022	2023	2022	2023		2022	2023		2022
East	346	347	4,277	4,910	$	1,851,896	2,133,056	$	433,000	434,000
Central	293	298	2,305	3,112	970,098		1,402,138	421,000		451,000
Texas	219	216	3,142	2,766	879,456		921,785	280,000		333,000
West	356	340	4,465	4,954	2,708,326		3,335,932	607,000		673,000
Other	3	3	5	5	3,686		4,628	737,000		926,000
Total	1,217	1,204	14,194	15,747	$	6,413,462	7,797,539	$	452,000	495,000


Balance Sheets
(In thousands)	February 28, 2023		November 30, 2022


Multifamily investments in unconsolidated entities	$	635,499	648,126
Lennar's net investment in Multifamily	975,420		935,961


(Dollars in thousands)	Covenant Level		Level Achieved as of February 28, 2023
Minimum net worth test	$	12,314,416	18,093,690
Maximum leverage ratio	65.0%		1.8%
Liquidity test	1.00		36.28


	Principal Maturities of Unconsolidated JVs by Period
(In thousands)	Total JV Debt		2023	2024	2025	Thereafter	Other



Bank debt without recourse to Lennar	$	1,390,220	156,069	393,883	726,236	114,032	—
Land seller and other debt without recourse to Lennar	10,442		—	—	—	10,442	—
Maximum recourse debt exposure to Lennar	10,529		—	—	—	10,529	—
Debt issuance costs	(18,496)		—	—	—	—	(18,496)
Total	$	1,392,695	156,069	393,883	726,236	135,003	(18,496)


						Years of
February 28, 2023	Controlled Homesites		Owned Homesites		Total Homesites	Supply Owned (1)
East	85,271		38,542		123,813
Central	38,662		27,475		66,137
Texas	74,548		29,650		104,198
West	59,472		27,402		86,874
Other	5,758		1,891		7,649
Total homesites	263,711		124,960		388,671	1.9
% of total homesites	68	%	32	%


	Nine Months Ending November 30,			Years Ending November 30,														Fair Value at February 28,
(Dollars in millions)	2023			2024		2025		2026		2027		2028		Thereafter		Total		2023
LIABILITIES:
Homebuilding:
Senior Notes and other debts payable:
Fixed rate	$	73.7		1,506.1		679.2		448.2		1,275.7		4.0		38.9		4,025.8		3,958.6
Average interest rate	2.8		%	5.0	%	4.7	%	5.2	%	4.8	%	3.0	%	6.6	%	4.9	%	—


Financial Services:
Notes and other debts payable:
Fixed rate	$	—		—		—		—		—		—		132.0		132.0		132.6
Average interest rate	—			—		—		—		—		—		3.4	%	3.4	%	—
Variable rate	$	1,039.6		—		—		—		—		—		—		1,039.6		1,039.7
Average interest rate	6.4		%	—		—		—		—		—		—		6.4	%	—
Multifamily:
Notes payable:
Fixed rate	$	13.5		—		—		—		—		—		—		13.5		13.5
Average interest rate	0.0		%	—		—		—		—		—		—		0.0	%	—
Variable rate	$	—		3.3		—		—		—		—		—		3.3		3.3
Average interest rate	—			3.6	%	—		—		—		—		—		3.6	%	—


Period:	Total Number of Shares Purchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that may yet be Purchased under the Plans or Programs (2)
December 1 to December 31, 2022	100,170	$	87.05	100,000	25,504,347
January 1 to January 31, 2023	887,999	$	91.53	887,999	24,616,348
February 1 to February 28, 2023	1,656,738	$	98.17	1,012,001	23,604,347


10.1*			2023 Award Agreements under the Company’s 2016 Incentive Compensation Plan, as amended, for Mr. Miller, Mr. Beckwitt, Mr. Jaffe, Ms. Bessette, Mr. McCall and Mr. Sustana – Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated February 28, 2023.
10.2*			Form of 2023 Award Agreement under the Company’s 2016 Equity Incentive Plan for Mr. Miller, Mr. Beckwitt, Mr. Jaffe, Ms. Bessette and Mr. McCall – Incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, dated February 28, 2023.
31.1**			Rule 13a-14(a) certification by Rick Beckwitt.
31.2**			Rule 13a-14(a) certification by Jonathan M. Jaffe.
31.3**			Rule 13a-14(a) certification by Diane Bessette.
32.**			Section 1350 certifications by Rick Beckwitt, Jonathan M. Jaffe, and Diane Bessette.
101.**			The following financial statements from Lennar Corporation's Quarterly Report on Form 10-Q for the quarter ended February 28, 2023, filed on April 4, 2023, were formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Condensed Consolidated Financial Statements.
104***			Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)


		Lennar Corporation
		(Registrant)

Date:	April 4, 2023	/s/ Diane Bessette
		Diane Bessette
		Vice President, Chief Financial Officer and Treasurer

Date:	April 4, 2023	/s/ David Collins
		David Collins
		Vice President and Controller


Date:	April 4, 2023	/s/ Rick Beckwitt
		Name:	Rick Beckwitt
		Title:	Co-Chief Executive Officer and Co-President


Date:	April 4, 2023	/s/ Jonathan M. Jaffe
		Name:	Jonathan M. Jaffe
		Title:	Co-Chief Executive Officer and Co-President