Lennar (LEN) Q1 2025 Earnings Call Transcript

Lennar (LEN -4.11%)
Q1 2025 Earnings Call
Mar 21, 2025, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

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 M. Collins — Chief Accounting Officer and Controller

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.

Questions & Answers:

Operator

Now, I’d like to introduce your host, Mr. Stuart Miller, executive chairman and co-CEO. Sir, you may begin.

Stuart A. Miller — Executive Chair and Co-Chief Executive Officer

Very good. Good morning, everybody, and thanks 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; and Fred Rothman, our chief operating officer. As usual, today, I’m going to give a brief macro and strategic overview of the company.

After my introductory remarks, Jon’s going to give an operational overview, updating construction cost cycles on some of our other operating positions. As usual, Diane is going to give a detailed financial highlight, along with some limited guidance for the second quarter of 2025. And then, of course, we’ll have our question-and-answer period. And as usual, I’d like to ask you to please limit to one question and one follow-up so we can accommodate as many as possible.

So, let me begin. As we noted in our press release last night, we’re very pleased to review our 2025 first quarter results against the backdrop of a challenging economic environment for the housing market. We adhere to our strategy and focus on driving consistent volume and growth by matching sales and production pace and using our margin as a circuit breaker. We completed our Millrose spinoff, distributing shares to our shareholders and supporting our transition to an asset-ight land-light model.

And we completed our Rausch Coleman acquisition using our asset-light model as we expand into new markets. While margin and earnings have been adjusting to movements in the overall housing market, we are confident that our focus on volume and even flow will position us very well for resilience, durability, and growth in the future. Let me briefly discuss the overall housing market. Consistent with last quarter’s earnings call, the macro economy remains challenging as mortgage interest rates have remained higher for longer, which has left the overall housing market weaker for longer.

Across the housing landscape, actionable demand has slowed materially. On a bad-news-is-good-news basis, all of this has led to the long-awaited environment where the costs of both homes, new and existing, and apartments start to come down. As we noted in our press release, our average sales price this quarter, net of incentives, declined to $408,000, 1% lower than last year. Evidence suggests that the time is now, and the sticky and large housing component of inflation might soon contribute to curtail the last mile to the 2% target.