LEN - Lennar Corporation (LEN) Q1 2024 Earnings Call Transcript

2024-03-14 13:48:08 ET

Lennar Corporation (LEN)

Q1 2024 Earnings Conference Call

March 14, 2024 11:00 AM ET

Company Participants

David Collins – Vice President and Controller

Stuart Miller – Executive Chairman and Co-Chief Executive Officer

Jon Jaffe – Co-Chief Executive Officer and President

Diane Bessette – Chief Financial Officer

Bruce Gross – Chief Executive Officer-Lennar Financial Services

Conference Call Participants

Alan Ratner – Zelman & Associates

Stephen Kim – Evercore

Mike Rehaut – JPMorgan

Kenneth Zener – Seaport Research Partners

John Lovallo – UBS

Presentation

Operator

Welcome to Lennar's First Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time.

I will now turn the call over to David Collins for the reading of the forward-looking statement.

David Collins

Thank you, and good morning, everyone. Today's conference call may include forward-looking statements, including statements regarding Lennar's business, financial condition, results of operations, cash flows, strategies and prospects. Forward-looking statements represent only Lennar's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause Lennar's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in our earnings release and our SEC filings, including those under the caption Risk Factors contained in Lennar's annual report on Form 10-K most recently filed with the SEC. Please note that Lennar assumes no obligation to update any forward-looking statements.

Operator

I would like to introduce your host, Mr. Stuart Miller, Executive Chairman and Co-CEO. Sir, you may begin.

Stuart Miller

Very good. Good morning, everybody, and thank you for joining us today. I'm in Miami today, together with Jon Jaffe, our Co-CEO and President; Diane Bessette, our Chief Financial Officer; David Collins, who you just heard from, our Controller and Vice President; Bruce Gross, our CEO of Lennar Financial Services and a few others are here with us as well. And as usual, I'm going to give a macro and strategic overview of the company. After my introductory remarks, Jon is going to give an operational overview, updating construction cost, cycle time and some of our land strategy and position. As usual, Diane is going to give a detailed financial highlight along with some limited guidance for the second quarter and full year 2024. And then, of course, we'll have our Q&A session. As usual I'd like to ask that you please limit yourself to one question and one follow up, so that we can accommodate as many as possible.

So let's go ahead and begin. We're very pleased to report another very solid and consistent quarter of operating results for Lennar. We've continued to execute our operating plan effectively into the first quarter driving excellent operating results, and we have simply never been better positioned from balance sheet to execution to operating strategy to address market conditions as they unfold for the remainder of 2024 and beyond. In the first quarter, we started 18,338 homes, we sold 18,176 homes, and we delivered 16,798 homes. While we expect deliveries for the year to be approximately 10% higher than last year at 80,000 homes. Next quarter, we expect to start approximately 21,000 homes, sell approximately 21,000 homes and deliver between 19,000 to 19,500 homes. Admittedly, we aren't quite there yet, but we are getting closer and closer to an even flow manufacturing model that we believe will continue to enhance our cash flow, our bottom line as well as our predictability.

Last year, we grew at a 10% pace in a very difficult year, and we believe we'll grow at a 10% pace again this year in a complicated economic conditions. And it is being done by a carefully designed program to maintain volume, maximize efficiencies and cost reductions around production, maintaining even flow of production and sales and rebuild our asset base and balance sheet in order to drive cash flow, effective capital allocation and higher returns. That is total shareholder returns, returns on assets and returns on equity. I know I didn't mention margin yet. That's because, as I've said before, margin is the springing mechanism that enables all of this to happen. This quarter, our margin was 21.8%, somewhat higher than expected. And next quarter, we expect our margin to be approximately 22.5%, depending on market conditions. And for the full year, we expect margin to be approximately the same as last year's full year margin of 23.3%, but that, of course, will depend on market conditions as well, we will see....

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