On December 14, 2023, Lennar Corp (LEN, Financial) released its 8-K filing, announcing its financial results for the fourth quarter and fiscal year 2023. The company reported a solid performance, with net earnings per diluted share for the fourth quarter at $4.82, up from $4.55 in the same period last year. Excluding certain adjustments, the EPS would have been $5.17. The net earnings for the quarter were $1.4 billion, and $1.5 billion when excluding adjustments.
Financial Performance Overview
Lennar Corp (LEN, Financial) experienced a notable increase in new orders, which rose by 32% to 17,366 homes, with a corresponding dollar value increase to $7.3 billion. The company's backlog consisted of 14,892 homes valued at $6.6 billion. Deliveries also saw a significant uptick, with a 19% increase to 23,795 homes. Total revenues for the quarter reached $11.0 billion.
The homebuilding operating earnings stood at $1.9 billion, with a gross margin on home sales of 24.2%. Selling, general, and administrative expenses were 6.6% of revenues from home sales, leading to a net margin on home sales of 17.6%. The Financial Services segment contributed operating earnings of $168 million, despite a multifamily operating loss of $12 million and a Lennar Other operating loss of $125 million.
For the fiscal year, Lennar Corp (LEN, Financial) reported net earnings per diluted share of $13.73, or $14.25 excluding adjustments, and net earnings of $3.9 billion, or $4.1 billion excluding adjustments. New orders for the year increased by 13% to 69,111 homes, and deliveries increased by 10% to 73,087 homes. Total revenues for the year were $34.2 billion, with a gross margin on home sales of 23.3% and a net margin of 16.4%.
Balance Sheet and Shareholder Returns
The company's balance sheet remains robust, with homebuilding cash and cash equivalents totaling $6.3 billion. Lennar Corp (LEN, Financial) has no outstanding borrowings under its $2.6 billion revolving credit facility, and the homebuilding debt to total capital ratio improved to 9.6%. During the quarter, the company redeemed $378 million of senior notes and repurchased $110 million aggregate principal amount of senior notes. Additionally, 3 million shares of common stock were repurchased for $337 million.
Throughout the fiscal year, Lennar Corp (LEN, Financial) repurchased 10 million shares of common stock for $1.1 billion and redeemed/repurchased $1.1 billion of senior notes. The homebuilding return on inventory was reported at 29.4%.
Management Commentary
Stuart Miller, Executive Chairman and Co-Chief Executive Officer, commented on the company's strategy amidst changing market conditions, highlighting the focus on production and sales pace over price, which resulted in strong cash flow and a fortified balance sheet. Jon Jaffe, Co-Chief Executive Officer and President, emphasized operational achievements and the implementation of the land light strategy, which improved the years supply of owned homesites and increased the controlled homesite percentage.
Looking ahead, Lennar Corp (LEN, Financial) expects to deliver approximately 80,000 homes in fiscal year 2024, with a gross margin of between 21.0% to 21.25% in the first quarter. The company plans to continue its strong cash flow generation and capital allocation strategy, targeting $2 billion in share repurchases for 2024.
Guidance for Upcoming Quarters
For the first quarter of 2024, Lennar Corp (LEN, Financial) anticipates new orders to be between 17,500 and 18,000, with deliveries ranging from 16,500 to 17,000 homes. The average sales price is expected to be around $420,000, with a gross margin percentage on home sales of 21.0% to 21.25%. Selling, general, and administrative expenses are projected to be 8.0% to 8.2% of home sales, and Financial Services operating earnings are forecasted to be between $85 million and $90 million.
Value investors and potential GuruFocus.com members seeking detailed financial information and analysis can find the complete earnings report and supplemental data in the 8-K filing.
Explore the complete 8-K earnings release (here) from Lennar Corp for further details.
