Lennar Corp 10-Q for FY2022 Q1

Lennar Corp (LEN)

10-Q 2022-04-01 For: 2022-02-28

Added on April 06, 2026

About this 10-Q

Lennar Corp filed this 10-Q on April 1, 2022, covering the quarter ended February 28, 2022 (FY2022 Q1).

Headline figures

Quarter ended February 28, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $6.2B; up 16.5% from $5.33B a year earlier
Net income: $503.58M; down 49.7% from net income of $1B a year earlier
Diluted EPS: $1.69; down 47.2% from $3.20 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,
	2022 (1)		2021 (1)
	(Unaudited)
ASSETS
Homebuilding:
Cash and cash equivalents	$	1,366,597	2,735,213
Restricted cash	27,025		21,927
Receivables, net	456,185		490,278
Inventories:
Finished homes and construction in progress	11,587,394		10,446,139
Land and land under development	7,758,804		7,108,142
Consolidated inventory not owned	1,246,504		1,161,023
Total inventories	20,592,702		18,715,304
Investments in unconsolidated entities	1,066,256		972,084
Goodwill	3,442,359		3,442,359
Other assets	1,141,362		1,090,654
	28,092,486		27,467,819
Financial Services	2,183,333		2,964,367
Multifamily	1,250,570		1,311,747
Lennar Other	1,108,863		1,463,845
Total assets	$	32,635,252	33,207,778


	February 28,		November 30,
	2022 (2)		2021 (2)
	(Unaudited)
LIABILITIES AND EQUITY
Homebuilding:
Accounts payable	$	1,321,148	1,321,247
Liabilities related to consolidated inventory not owned	1,038,561		976,602
Senior notes and other debts payable, net	4,639,222		4,652,338
Other liabilities	3,022,840		2,920,055
	10,021,771		9,870,242
Financial Services	1,334,145		1,906,343
Multifamily	311,775		288,930
Lennar Other	120,129		145,981
Total liabilities	11,787,820		12,211,496
Stockholders’ equity:
Preferred stock	—		—
Class A common stock of $0.10 par value; Authorized: February 28, 2022 and November 30, 2021 - 400,000,000 shares; Issued: February 28, 2022 - 302,427,896 shares and November 30, 2021 - 300,500,075 shares	30,243		30,050
Class B common stock of $0.10 par value; Authorized: February 28, 2022 and November 30, 2021 - 90,000,000 shares; Issued: February 28, 2022 - 39,443,168 shares and November 30, 2021 - 39,443,168 shares	3,944		3,944
Additional paid-in capital	8,855,151		8,807,891
Retained earnings	15,078,788		14,685,329
Treasury stock, at cost; February 28, 2022 - 43,806,845 shares of Class A common stock and 2,574,016 shares of Class B common stock; November 30, 2021 - 38,586,961 shares of Class A common stock and 1,922,016 shares of Class B common stock	(3,290,748)		(2,709,448)
Accumulated other comprehensive income (loss)	1,686		(1,341)
Total stockholders’ equity	20,679,064		20,816,425
Noncontrolling interests	168,368		179,857
Total equity	20,847,432		20,996,282
Total liabilities and equity	$	32,635,252	33,207,778


	Three Months Ended
	February 28,
	2022		2021
Revenues:
Homebuilding	$	5,752,205	4,943,056
Financial Services	176,701		244,069
Multifamily	267,359		131,443
Lennar Other	7,251		6,900
Total revenues	6,203,516		5,325,468
Costs and expenses:
Homebuilding	4,641,898		4,118,286
Financial Services	85,910		97,862
Multifamily	263,737		131,049
Lennar Other	5,407		4,252
Corporate general and administrative	113,661		110,531
Charitable foundation contribution	12,538		12,314
Total costs and expenses	5,123,151		4,474,294
Homebuilding equity in loss from unconsolidated entities	(286)		(4,565)
Homebuilding other income (expense), net	(171)		12,975

Multifamily equity in earnings (loss) from unconsolidated entities and other gain	1,805		(1,268)
Lennar Other unrealized gain (loss) from technology investments	(395,170)		469,745
Lennar Other equity in loss from unconsolidated entities and other expense, net, and other gain	(9,808)		(1,047)
Earnings before income taxes	676,735		1,327,014
Provision for income taxes	(167,420)		(310,105)
Net earnings (including net earnings attributable to noncontrolling interests)	509,315		1,016,909
Less: Net earnings attributable to noncontrolling interests	5,734		15,540
Net earnings attributable to Lennar	$	503,581	1,001,369
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on securities available-for-sale	$	742	(942)
Reclassification adjustments for gain included in earnings, net of tax	2,285		—
Total other comprehensive income (loss), net of tax	$	3,027	(942)
Total comprehensive income attributable to Lennar	$	506,608	1,000,427
Total comprehensive income attributable to noncontrolling interests	$	5,734	15,540
Basic earnings per share	$	1.70	3.20
Diluted earnings per share	$	1.69	3.20


(In thousands)	February 28, 2022
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	1,366,597	168,032	34,439	2,757	1,571,825
Restricted cash	27,025		6,724	—	—	33,749
Receivables, net (1)	456,185		358,866	101,334	—	916,385
Inventories	20,592,702		—	395,507	—	20,988,209
Loans held-for-sale (2)	—		1,199,603	—	—	1,199,603

Investments in equity securities (3)	—		—	—	670,980	670,980
Investments available-for-sale (4)	—		—	—	34,760	34,760
Loans held-for-investment, net	—		33,168	—	—	33,168
Investments held-to-maturity	—		156,587	—	—	156,587
Investments in unconsolidated entities	1,066,256		—	661,252	333,755	2,061,263
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,141,362		70,654	58,038	66,611	1,336,665
	$	28,092,486	2,183,333	1,250,570	1,108,863	32,635,252
Liabilities:
Notes and other debts payable, net	$	4,639,222	1,197,360	16,930	—	5,853,512
Accounts payable and other liabilities	5,382,549		136,785	294,845	120,129	5,934,308
	$	10,021,771	1,334,145	311,775	120,129	11,787,820


(In thousands)	November 30, 2021
Assets:	Homebuilding		Financial Services	Multifamily	Lennar Other	Total
Cash and cash equivalents	$	2,735,213	167,021	16,850	2,660	2,921,744
Restricted cash	21,927		12,012	—	—	33,939
Receivables, net (1)	490,278		708,165	98,405	—	1,296,848
Inventories	18,715,304		—	454,093	—	19,169,397
Loans held-for-sale (2)	—		1,636,351	—	—	1,636,351

Investments in equity securities (3)	—		—	—	1,006,599	1,006,599
Investments available-for-sale (4)	—		—	—	41,654	41,654
Loans held-for-investment, net	—		44,582	—	—	44,582
Investments held-to-maturity	—		157,808	—	—	157,808
Investments in unconsolidated entities	972,084		—	654,029	346,270	1,972,383
Goodwill	3,442,359		189,699	—	—	3,632,058
Other assets	1,090,654		48,729	88,370	66,662	1,294,415
	$	27,467,819	2,964,367	1,311,747	1,463,845	33,207,778
Liabilities:
Notes and other debts payable, net	$	4,652,338	1,726,026	—	—	6,378,364
Accounts payable and other liabilities	5,217,904		180,317	288,930	145,981	5,833,132
	$	9,870,242	1,906,343	288,930	145,981	12,211,496


	Three Months Ended February 28, 2022
(In thousands)	Homebuilding		Financial Services	Multifamily	Lennar Other	Corporate and unallocated	Total
Revenues (1)	$	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

	Three Months Ended February 28, 2021
Revenues	$	4,943,056	244,069	131,443	6,900	—	5,325,468
Operating earnings (loss)	833,180		146,207	(874)	471,346	—	1,449,859
Corporate general and administrative expenses	—		—	—	—	110,531	110,531
Charitable foundation contribution	—		—	—	—	12,314	12,314
Earnings (loss) before income taxes	833,180		146,207	(874)	471,346	(122,845)	1,327,014



(In thousands)	East		Central	Texas	West	Other	Corporate and Unallocated	Total Homebuilding
February 28, 2022	$	6,552,930	3,939,627	3,240,006	11,854,213	1,414,532	1,091,178	28,092,486
November 30, 2021	5,854,057		3,782,847	2,801,192	11,171,741	1,443,163	2,414,819	27,467,819


(In thousands)	Maximum Aggregate Commitment
Residential facilities maturing:
April 2022	$	100,000
July 2022	400,000
October 2022	200,000
December 2022	500,000
Total - Residential facilities	$	1,200,000
LMF Commercial facilities maturing
November 2022	$	100,000
December 2022	400,000
July 2023	50,000

Total - LMF Commercial facilities	$	550,000
Total	$	1,750,000


	Three Months Ended
	February 28,
(Dollars in thousands)	2022		2021
Originations (1)	$	264,845	219,500


Sold	178,082		282,965
Securitizations	1		2


	February 28, 2022
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, 2022
(In thousands)	LMV I		LMV II
Lennar's carrying value of investments	$	244,454	316,728
Equity commitments	2,204,016		1,257,700
Equity commitments called	2,150,135		1,204,235
Lennar's equity commitments	504,016		381,000
Lennar's equity commitments called	499,216		363,749
Lennar's remaining commitments	4,800		17,251
Distributions to Lennar during the three months ended February 28, 2022	8,732		3,735


			Three Months Ended February 28, 2022
(In thousands)	Total Equity		Class A Common Stock	Class B Common Stock	Additional Paid - in Capital	Treasury Stock	Accumulated Other Comprehensive Income (loss)	Retained Earnings	Noncontrolling Interests
Balance at November 30, 2021	$	20,996,282	30,050	3,944	8,807,891	(2,709,448)	(1,341)	14,685,329	179,857
Net earnings (including net earnings attributable to noncontrolling interests)	509,315		—	—	—	—	—	503,581	5,734
Employee stock and directors plans	(54,886)		193	—	(140)	(54,939)	—	—	—
Purchases of treasury stock	(526,361)		—	—	—	(526,361)	—	—	—




Amortization of restricted stock	81,457		—	—	81,457	—	—	—	—
Cash dividends	(110,122)		—	—	—	—	—	(110,122)	—

Receipts related to noncontrolling interests	6,984		—	—	—	—	—	—	6,984
Payments related to noncontrolling interests	(59,388)		—	—	—	—	—	—	(59,388)
Non-cash purchase or activity of noncontrolling interests, net	1,124		—	—	(34,057)	—	—	—	35,181



Total other comprehensive income, net of tax	3,027		—	—	—	—	3,027	—	—
Balance at February 28, 2022	$	20,847,432	30,243	3,944	8,855,151	(3,290,748)	1,686	15,078,788	168,368


	Three Months Ended
	February 28,
(In thousands, except per share amounts)	2022		2021
Numerator:
Net earnings attributable to Lennar	$	503,581	1,001,369
Less: distributed earnings allocated to nonvested shares	780		630
Less: undistributed earnings allocated to nonvested shares	4,548		11,624
Numerator for basic earnings per share	498,253		989,115
Less: net amount attributable to Rialto's Carried Interest Incentive Plan (1)	1,798		553



Numerator for diluted earnings per share	$	496,455	988,562
Denominator:
Denominator for basic earnings per share - weighted average common shares outstanding	293,930		309,020



Denominator for diluted earnings per share - weighted average common shares outstanding	293,930		309,020
Basic earnings per share	$	1.70	3.20
Diluted earnings per share	$	1.69	3.20


	Three Months Ended
	February 28,
	2022		2021
Cash flows from operating activities:
Net earnings (including net earnings attributable to noncontrolling interests)	$	509,315	1,016,909
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities:
Depreciation and amortization	20,089		22,325
Amortization of discount/premium on debt, net	(490)		(2,361)
Equity in loss from unconsolidated entities	9,752		7,897
Distributions of earnings from unconsolidated entities	4,822		4,234
Share-based compensation expense	81,457		48,818

Deferred income tax (benefit) expense	(54,032)		114,917

Loans held-for-sale unrealized loss	27,387		35,021
Lennar Other unrealized (gain) loss from technology investments	395,170		(469,745)
Gain on sale of other assets and operating properties and equipment	—		(1,167)



Gain on sale of interest in unconsolidated entity and other Multifamily gain	—		(19,184)



Valuation adjustments and write-offs of option deposits and pre-acquisition costs	11,509		635
Changes in assets and liabilities:

Decrease in receivables	380,502		45,649
Increase in inventories, excluding valuation adjustments and write-offs of option deposits and pre-acquisition costs	(1,913,634)		(862,120)
Increase in other assets	(49,968)		(100,486)
Decrease in loans held-for-sale	409,435		360,582
Increase in accounts payable and other liabilities	96,455		183,584
Net cash (used in) provided by operating activities	(72,231)		385,508
Cash flows from investing activities:

Net additions of operating properties and equipment	(5,780)		(8,561)
Proceeds from the sale of operating properties and equipment, other assets	—		32,002


	Three Months Ended
	February 28,
(In thousands)	2022		2021
Loan origination liabilities, beginning of period	$	11,670	7,569
Provision for losses	966		966


Payments/settlements	(165)		(102)
Loan origination liabilities, end of period	$	12,471	8,433


	Three Months Ended
	February 28,
	2022		2021
Opendoor (OPEN) mark to market	$	(143,361)	469,745
Hippo (HIPO) mark to market	(124,457)		—
Sunnova (NOVA) mark to market	(75,041)		—
SmartRent (SMRT) mark to market	(44,363)		—


Blend Labs (BLND) mark to market	(7,442)		—

Sonder (SOND) mark to market	(506)		—
	$	(395,170)	469,745


	Three Months Ended
	February 28,
(In thousands)	2022		2021

General contractor services, net of deferrals	$	117,263	115,399
General contractor costs	113,233		110,453
Management fee income	13,127		14,871


	Fair Value Hierarchy	Fair Value at
(In thousands)		February 28, 2022		November 30, 2021
Financial Services Assets:
Residential loans held-for-sale	Level 2	$	1,113,808	1,636,283
LMF Commercial loans held-for-sale	Level 3	85,795		68



Mortgage servicing rights	Level 3	2,793		2,492
Lennar Other:
Investments in equity securities	Level 1	$	502,755	906,539
Investments available-for-sale	Level 3	34,760		41,654



Unobservable inputs	As of February 28, 2022	As of November 30, 2021

Mortgage prepayment rate	11%	13%
Discount rate	13%	13%
Delinquency rate	5%	4%


			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, 2022	1,199	5	—	$	—	$	—
February 28, 2021	1,158	10	—	—		—


(In thousands)	Lease Payments
2022	$	26,898
2023	30,481
2024	24,833
2025	20,269
2026	15,423
2027 and thereafter	63,257
Total future minimum lease payments (1)	$	181,161
Less: Interest (2)	19,953
Present value of lease liabilities (2)	$	161,208


	Three Months Ended February 28, 2022
	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	$	1,662,991	1,176,553	29.3	%	351,554	(5,674)	797	(1,358)	6,676	351,995
Central	1,105,929		870,611	21.3	%	150,375	1,619	234	129	(279)	152,078
Texas	805,630		573,842	28.8	%	169,941	2,398	242	—	(1,269)	171,312
West	2,142,204		1,557,737	27.3	%	444,524	(839)	881	136	(3,254)	441,448
Other (2)	5,003		6,121	(22.3)	%	(7,979)	(2,093)	4,327	807	(2,045)	(6,983)
Totals	$	5,721,757	4,184,864	26.9	%	1,108,415	(4,589)	6,481	(286)	(171)	1,109,850


	Three Months Ended
	Homes		Dollar Value (In thousands)			Average Sales Price
	February 28,		February 28,			February 28,
	2022	2021	2022		2021	2022		2021
East	4,082	3,920	$	1,672,372	1,351,301	$	410,000	345,000
Central	2,521	2,419	1,105,929		926,438	439,000		383,000
Texas	2,537	2,349	805,630		636,411	318,000		271,000
West	3,392	3,622	2,142,204		1,976,808	632,000		546,000
Other	6	4	5,003		3,647	834,000		912,000
Total	12,538	12,314	$	5,731,138	4,894,605	$	457,000	398,000


	Three Months Ended
	Active Communities		Homes		Dollar Value (In thousands)			Average Sales Price
	February 28,		February 28,		February 28,			February 28,
	2022	2021	2022	2021	2022		2021	2022		2021
East	347	340	4,910	4,814	$	2,133,056	1,700,112	$	434,000	353,000
Central	298	274	3,112	3,326	1,402,138		1,333,626	451,000		401,000
Texas	216	218	2,766	2,775	921,785		812,169	333,000		293,000
West	340	327	4,954	4,652	3,335,932		2,692,395	673,000		579,000
Other	3	3	5	3	4,628		2,974	926,000		991,000
Total	1,204	1,162	15,747	15,570	$	7,797,539	6,541,276	$	495,000	420,000


Balance Sheets
(In thousands)	February 28, 2022		November 30, 2021


Multifamily investments in unconsolidated entities	$	661,252	654,029
Lennar's net investment in Multifamily	897,683		976,676


(Dollars in thousands)	Covenant Level			Level Achieved as of February 28, 2022
Minimum net worth test	$	10,795,613		14,108,931
Maximum leverage ratio	65.0		%	20.0	%
Liquidity test	1.00			5.09


	Principal Maturities of Unconsolidated JVs by Period
(In thousands)	Total JV Debt		2022	2023	2024	Thereafter	Other



Debt without recourse to Lennar	$	1,243,980	94,040	89,756	405,030	655,154	—
Land seller and other debt	4,606		—	—	—	—	4,606
Maximum recourse debt exposure to Lennar	2,564		—	—	—	2,564	—
Debt issuance costs	(14,249)		—	—	—	—	(14,249)
Total	$	1,236,901	94,040	89,756	405,030	657,718	(9,643)


	Controlled Homesites							Years of
February 28, 2022	Optioned	JVs	Total		Owned Homesites		Total Homesites	Supply Owned (1)
East	97,731	—	97,731		59,254		156,985
Central	34,465	—	34,465		41,388		75,853
Texas	78,031	—	78,031		46,193		124,224
West	62,889	—	62,889		53,356		116,245
Other	—	5,758	5,758		2,037		7,795
Total homesites	273,116	5,758	278,874		202,228		481,102	3.4
% of total homesites			58	%	42	%


	Nine Months Ending November 30,			Years Ending November 30,														Fair Value at February 28,
(Dollars in millions)	2022			2023		2024		2025		2026		2027		Thereafter		Total		2022
LIABILITIES:
Homebuilding:
Senior Notes and other debts payable:
Fixed rate	$	674.8		126.8		1,531.6		593.1		404.5		1,254.5		43.7		4,629.0		4,889.7
Average interest rate	4.5		%	4.2	%	5.0	%	4.8	%	5.2	%	4.8	%	6.2	%	4.9	%	—


Financial Services:
Notes and other debts payable:
Fixed rate	$	—		—		—		—		—		—		146.3		146.3		147.1
Average interest rate	—			—		—		—		—		—		3.4	%	3.4	%	—
Variable rate	$	1,046.8		—		4.2		—		—		—		—		1,051.0		1,051.0
Average interest rate	2.1		%	—		2.4	%	—		—		—		—		2.1	%	—


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, 2021	551,364	$	108.31	551,364	20,857,596
January 1 to January 31, 2022	4,352,900	$	100.65	4,352,900	16,504,696
February 1 to February 28, 2022	962,047	$	86.65	363,736	16,140,960


10.1***			Lennar Corporation 2016 Incentive Compensation Plan, as Amended and Restated effective January 12, 2022 - Incorporated by reference to Exhibit 10.2 of the Company’s Annual Report on Form 10-K for the fiscal year ended November 30, 2021.
10.2***			2022 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, 2022.
10.3***			Form of 2022 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 10.2 of the Company’s Current Report on Form 8-K, dated February 28, 2022.
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, 2022, filed on April 1, 2022, 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.
101.INS*			iXBRL Instance Document.
101.SCH*			iXBRL Taxonomy Extension Schema Document.
101.CAL*			iXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*			iXBRL Taxonomy Extension Definition.
101.LAB*			iXBRL Taxonomy Extension Label Linkbase Document.
101.PRE*			iXBRL Taxonomy Presentation Linkbase Document.
104**			The cover page from Lennar Corporation's Quarterly Report on Form 10-Q for the quarter ended February 28, 2022 was formatted in iXBRL.


		Lennar Corporation
		(Registrant)

Date:	April 1, 2022	/s/ Diane Bessette
		Diane Bessette
		Vice President, Chief Financial Officer and Treasurer

Date:	April 1, 2022	/s/ David Collins
		David Collins
		Vice President and Controller


Date:	April 1, 2022	/s/ Rick Beckwitt
		Name:	Rick Beckwitt
		Title:	Co-Chief Executive Officer and Co-President


Date:	April 1, 2022	/s/ Jonathan M. Jaffe
		Name:	Jonathan M. Jaffe
		Title:	Co-Chief Executive Officer and Co-President