Lennar Q2 net earnings $1.3 billion
Second quarter net earnings attributable to Lennar in 2022 were $1.3 billion, or $4.49 per diluted share, compared to second quarter net earnings attributable to Lennar in 2021 of $831.4 million, or $2.65 per diluted share.
Excluding mark-to-market losses on technology investments in both years and a gain on the sale of the Company's residential solar business in the prior year, second quarter net earnings attributable to Lennar in 2022 were $1.4 billion, or $4.69 per diluted share, compared to second quarter net earnings attributable to Lennar in 2021 of $923.6 million, or $2.95 per diluted share.
Stuart Miller, Executive Chairman of Lennar, said, "At this complicated moment in the market, we are pleased to report second quarter earnings of $1.3 billion, or $4.49 per diluted share, compared to $831.4 million, or $2.65 per diluted share for the second quarter last year.
"While our new orders grew 4% compared to last year's second quarter, we achieved a homebuilding gross margin of 29.5% and homebuilding S,G&A of 6.1%, leading to a 23.4% net margin, even as materials costs and wages have increased. Our home deliveries were 16,549 and above the high end of our guidance given at the beginning of the quarter."
"While our second quarter results demonstrate strength and excellent performance throughout the quarter, the weight of a rapid doubling of interest rates over six months, together with accelerated price appreciation, began to drive buyers in many markets to pause and reconsider. We began to see these effects after quarter end."
"The Fed's stated determination to curtail inflation through interest rate increases and quantitative tightening have begun to have the desired effect of slowing sales in some markets and stalling price increases across the country.
"While we believe that there remains a significant shortage of dwellings, and especially workforce housing, in the United States, the relationship between price and interest rates is going through a rebalance."
"Accordingly, we are laser focused on traffic, affordability, the quality of our backlog, along with cancellation rates and completed, unsold inventory levels which, to date, are both at low levels.
"Additionally, we are focused on balance sheet strength as we ended the quarter with $1.3 billion in cash, no borrowings on our $2.6 billion revolver and homebuilding debt to capital of 17.7%. Our balance sheet has never been in a stronger position than it is today."
Rick Beckwitt, Co-Chief Executive Officer and Co-President of Lennar, said, "During the second quarter, we continued to make progress on our land light strategy. This was evidenced by our controlled homesite percentage increasing to 62% from 50% year over year. This progress contributed to a return on equity of 21.4%, a 260 basis point improvement over last year's second 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. Our cycle time during the quarter increased only slightly sequentially so it appears that the well documented supply chain issues have started to subside. Our quarterly starts and sales pace remained strong at 6.2 homes and 5.0 homes per community, respectively, in the second quarter."
Mr. Miller concluded, "We recognize that current attempts at guidance are tantamount to 'guessing' and not 'guiding.'
"Therefore, for our third quarter, we will give broad boundaries for deliveries between 17,000 to 18,500 homes and boundaries for gross margins between 28.5% – 29.5%. For the full year, we will leave our delivery expectations at approximately 68,000 homes and, at this time, will not provide updated guidance for other items.
"Recognizing that the Fed's actions are still quite fluid and responsive to inflation data, the housing market will rebalance supply and demand, and interest rates and purchase price as market conditions evolve. Nevertheless, at Lennar, we are operating from a position of strength, enabling us to continue to execute on our core strategies." ■