Lennar's Q1 2022 Operating Performance Reflects Continued Strength in the Housing Market

• Net earnings per diluted share were $1.69 ($2.70, excluding mark-to-market losses on technology investments)
• Net earnings were $503.6 million ($800.2 million, excluding mark-to-market losses on technology investments)
• Revenues increased 16% to $6.2 billion
• Deliveries increased 2% to 12,538 homes
• New orders increased 1% to 15,747 homes; new orders dollar value increased 19% to $7.8 billion
• Backlog increased 24% to 27,335 homes; backlog dollar value increased 43% to $13.6 billion
• Homebuilding operating earnings increased to $1.1 billion, compared to operating earnings of $0.8 billion
• Gross margin on home sales improved 190 basis points ("bps") to 26.9%
• S,G&A expenses as a % of revenues from home sales improved 90 bps to 7.5%
• Net margin on home sales improved 280 bps to 19.4%
• Financial Services operating earnings of $90.8 million, compared to operating earnings of $146.2 million
• Multifamily operating earnings of $5.4 million, compared to operating loss of $0.9 million
• Lennar Other operating loss of $403.1 million, compared to operating earnings of $471.3 million
• Homebuilding cash and cash equivalents of $1.4 billion
• Controlled homesites increased to 58%, compared to 45%
• No borrowings under the Company's $2.5 billion revolving credit facility
• Homebuilding debt to total capital improved to 18.3%, compared to 24.0%
• Repurchased 5.3 million shares of Lennar common stock for $526.3 million
• Received Board approval for a new $2 billion stock repurchase authorization

MIAMI, March 16, 2022 /PRNewswire/ -- Lennar Corporation (NYSE: LEN and LEN.B), one of the nation's leading homebuilders, today reported results for its first quarter ended February 28, 2022. First quarter net earnings attributable to Lennar in 2022 were $503.6 million, or $1.69 per diluted share, compared to first quarter net earnings attributable to Lennar in 2021 of $1.0 billion, or $3.20 per diluted share. Excluding mark-to-market gains and losses in both years, first quarter net earnings attributable to Lennar in 2022 were $800.2 million or $2.70 per diluted share, compared to first quarter net earnings attributable to Lennar in 2021 of $642.7 million, or $2.04 per diluted share.

Stuart Miller, Executive Chairman of Lennar, said, "Our core operating performance in the first quarter reflects the continued strength in the housing market across the country. Our sales pace remained strong and consistent throughout the quarter, while strong traffic to our welcome home centers and website suggests that demand remains strong for the foreseeable future. While our new orders grew a controlled 1% compared to last year's first quarter, we achieved a homebuilding gross margin of 26.9% and homebuilding SG&A of 7.5%, leading to a 19.4% net margin. Both gross margin and net margin remained strong, even as materials costs and wages have increased, and home prices have continued to rise while remaining affordable even as interest rates have ticked up. Deliveries, though constrained by the supply chain disruption, were in line with the guidance given at the beginning of the quarter.

"Clearly the volatility imbedded in our LEN^X investments have skewed our bottom line performance as we report first quarter earnings of $503.6 million, or $1.69 per diluted share, compared to $1.0 billion or $3.20 per diluted share for the first quarter last year. Excluding the significant upward impact last year and downward impact this quarter from these investments, first quarter 2022 earnings were $800.2 million, or $2.70 per diluted share, compared to $642.7 million or $2.04 per diluted share for the first quarter last year.

"While our LEN^X investment strategy creates some volatility in our results, it nevertheless remains core to the future of our operating platform. Our LEN^X investments continue to provide significant operational efficiencies for both our homebuilding and financial services platforms, which flow through to our strong operating margins while vastly improving our homebuyers' experience." 

Rick Beckwitt, Co-Chief Executive Officer and Co-President of Lennar, said, "During the first quarter, our community count increased 4% year over year as we continued to make excellent progress on our land light strategy. This was evidenced by our controlled homesite percentage increasing to 58% from 45% for those same periods. We ended the quarter with $1.4 billion in cash, no borrowings on our $2.5 billion revolver and homebuilding debt to capital of 18.3%. We repurchased 5.3 million shares of our common stock for $526 million. These buybacks, combined with our significant earnings, contributed to a return on equity of 19.5%, a 180 basis point improvement over last year's first quarter."

Jon Jaffe, Co-Chief Executive Officer and Co-President of Lennar, said, "During the quarter, our homebuilding machine continued to be intensely focused on production, even while our cycle time expanded about two weeks from the fourth quarter driven by the well documented, supply chain issues. The impact of supply chain issues and increased cycle times were partially offset by accelerated construction starts. We continue to strategize with our national supply vendors and local trades to minimize these ever changing challenges and are confident that we will successfully navigate through these unique dynamics. Our quarterly starts and sales pace remained strong and consistent at 4.7 homes and 4.3 homes per community, respectively, in the first quarter."

Mr. Miller concluded, "The housing industry continues to exhibit strong demand, outweighing supply, and we are confident that we will continue to generate solid growth and enhance our current market position. As we look ahead to our second quarter and consider the industry supply chain issues already noted, we expect to deliver between 16,000 to 16,300 homes while we expect homebuilding gross margins to be between 28.0% – 28.25%. For the full year, we are increasing our guidance on both deliveries and gross margin. We expect to deliver about 68,000 homes (up from our prior guidance of 67,000) while we expect homebuilding gross margins to be between 27.25% – 28.0% (up from 27.0% – 27.5%). Overall, we are operating from a position of strength with an excellent balance sheet enabling us to continue to execute on our core strategies."

RESULTS OF OPERATIONS

THREE MONTHS ENDED FEBRUARY 28, 2022 COMPARED TO
THREE MONTHS ENDED FEBRUARY 28, 2021

Homebuilding

Revenues from home sales increased 17% in the first quarter of 2022 to $5.7 billion from $4.9 billion in the first quarter of 2021. Revenues were higher primarily due to a 2% increase in the number of home deliveries to 12,538 homes from 12,314 homes and a 15% increase in the average sales price to $457,000 from $398,000.

Gross margin on home sales were $1.5 billion, or 26.9%, in the first quarter of 2022, compared to $1.2 billion, or 25.0%, in the first quarter of 2021. During the first quarter of 2022, an increase in revenues per square foot was offset by an increase in costs per square foot primarily due to higher lumber costs. Overall, gross margins improved year over year as land costs remained relatively flat while interest expense decreased as a result of our focus on reducing debt.

Selling, general and administrative expenses were $428.5 million in the first quarter of 2022, compared to $410.2 million in the first quarter of 2021. As a percentage of revenues from home sales, selling, general and administrative expenses improved to 7.5% in the first quarter of 2022, from 8.4% in the first quarter of 2021. This was the lowest percentage for a first quarter in the Company's history primarily due to a decrease in broker commissions and benefits of the Company's technology efforts.

Financial Services

Operating earnings for the Financial Services segment were $90.8 million in the first quarter of 2022, compared to $146.2 million in the first quarter of 2021. The decrease in operating earnings was primarily due to lower mortgage net margins driven by a more competitive mortgage market.

Other Ancillary Businesses

Operating earnings for the Multifamily segment were $5.4 million in the first quarter of 2022, compared to an operating loss of $0.9 million in the first quarter of 2021. Operating loss for the Lennar Other segment was $403.1 million in the first quarter of 2022, compared to operating earnings of $471.3 million in the first quarter of 2021. Lennar Other operating loss in the first quarter of 2022 and Lennar Other operating earnings in the first quarter of 2021 was due to unrealized mark-to-market losses and gains, respectively, on the Company's publicly traded technology investments.

Tax Rate

For the three months ended February 28, 2022 and 2021, the Company had a tax provision of $167.4 million and $310.1 million, respectively, which resulted in an overall effective income tax rate of 25.0% and 23.6%, respectively. In the three months ended February 28, 2022, the overall effective income tax rate was higher primarily due to the expiration of the new energy efficient home tax credit.

Shares Repurchases and New Authorization

During the three months ended February 28, 2022, the Company repurchased 5.3 million shares of its common stock for $526.3 million at an average per share price of $99.90.

On March 16, 2022, the Company's Board of Directors increased the authorization for the Company to repurchase its own shares from time to time by $2 billion. The repurchase authorization has no expiration date.

Liquidity

At February 28, 2022, the Company had $1.4 billion of Homebuilding cash and cash equivalents and no borrowings under its $2.5 billion revolving credit facility, thereby providing $3.9 billion of available capacity.

2022 Guidance

The following are the Company's expected results of its homebuilding and financial services activities for the second quarter and fiscal year 2022:

About Lennar

Lennar Corporation, founded in 1954, is one of the nation's leading builders of quality homes for all generations. Lennar builds affordable, move-up and active adult homes primarily under the Lennar brand name. Lennar's Financial Services segment provides mortgage financing, title and closing services primarily for buyers of Lennar's homes and, through LMF Commercial, originates mortgage loans secured primarily by commercial real estate properties throughout the United States. Lennar's Multifamily segment is a nationwide developer of high-quality multifamily rental properties. LEN^X drives Lennar's technology, innovation and strategic investments. For more information about Lennar, please visit www.lennar.com.

Note Regarding Forward-Looking Statements: Some of the statements in this press release are "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995, including statements relating to the homebuilding market and other markets in which we participate. You can identify forward-looking statements by the fact that these statements do not relate strictly to historical or current matters. Rather, forward-looking statements relate to anticipated or expected events, activities, trends or results. Accordingly, these forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those anticipated by the forward-looking statements. Important factors that could cause such differences include the potential negative impact to our business of the ongoing coronavirus (COVID-19) pandemic; slowdowns in real estate markets in regions where we have significant Homebuilding or Multifamily development activities; supply shortages and increased costs related to construction materials, including lumber, and labor; cost increases related to real estate taxes and insurance; reduced availability or increased cost of mortgage financing for homebuyers, increased interest rates or increased competition in the mortgage industry; reductions in the market value of the Company's investments in public companies; decreased demand for our homes or Multifamily rental apartments; natural disasters or catastrophic events for which our insurance may not provide adequate coverage; our inability to successfully execute our strategies, including our land lighter strategy and our planned spin-off of certain businesses; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; unfavorable losses in legal proceedings; conditions in the capital, credit and financial markets; changes in laws, regulations or the regulatory environment affecting our business, and the risks described in our filings with the Securities and Exchange Commission, including our Form 10-K for the fiscal year ended November 30, 2021. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

A conference call to discuss the Company's first quarter earnings will be held at 11:00 a.m. Eastern Time on Thursday, March 17, 2022. The call will be broadcast live on the Internet and can be accessed through the Company's website at www.lennar.com. If you are unable to participate in the conference call, the call will be archived at www.lennar.com for 90 days. A replay of the conference call will also be available later that day by calling 203-369-0110 and entering 5723593 as the confirmation number.

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SOURCE Lennar Corporation