- Lennar Corporation’s (NYSE: LEN) share price fell more than 2.5% during intraday trading today. That’s why it happened.
Lennar Corporation’s (NYSE: LEN) share price fell more than 2.5% during intraday trading today. Investors are reacting negatively to the company’s fourth quarter results.
Here are the highlights of the fourth quarter:
– Diluted net earnings per share increased 39% to $ 3.91 (up 55% to $ 4.36, excluding mark-to-market losses on strategic technology investments)
– Net income increased 35% to $ 1.2 billion (up 50% to $ 1.3 billion, excluding mark-to-market losses on strategic technology investments)
– Revenue increased 24% to $ 8.4 billion
– Deliveries increased by 11% to 17,819 housing units
– New orders increased by 2% to 15,539 housing units; New orders dollar value increased 16% to $ 7.3 billion
– The order book increased by 26% to 23,771 housing units; the dollar value of the backlog increased 45% to $ 11.4 billion
– Residential construction operating profit of $ 1.8 billion, compared to operating profit of $ 1.1 billion
– Financial Services operating income of $ 111.4 million, compared to operating income of $ 151.2 million
– Multifamily operating income of $ 9.3 million, compared to operating income of $ 26.7 million
– Lennar Other operating losses of $ 176.2 million, compared to an operating loss of $ 1.2 million
– The number of years of residential site supply decreased to 3.0 years
– Controlled housing sites increased to 59%
– Cash and cash equivalents for housing construction of $ 2.7 billion
– Restated $ 850 million of senior home construction notes due in fiscal 2022
– Repurchase of 10 million common shares of Lennar for $ 977.4 million
– Residential construction debt to total capital of 18.3%, the lowest in the history of the Company
Highlights of fiscal year 2021 – comparisons with the previous year
– Net profit, revenue, shipments, new orders and net margin for 2021 were the highest in the history of the Company
– Withdrawal of $ 1.15 billion of senior housing construction notes due in fiscal 2022
– Repurchase of 14 million common shares of Lennar for $ 1.37 billion
– Return on equity improved 790 basis points to 22.6%
Here are the Company’s expected results for its residential construction and financial services activities for the first quarter and fiscal year 2022:
First quarter 2022
New orders: 14,800 – 15,100
Deliveries: Around 12,500
Average sale price: approximately $ 460,000
% gross margin on home sales: around 26.75%
S, G&A as% of home sales: 7.8% – 7.9%
Financial Services Operating Profit: $ 85 million to $ 90 million
Fiscal year 2022:
Deliveries: Around 67,000
Average sale price: approximately $ 460,000
% gross margin on home sales: 27% to 27.5%
S, G&A as% of home sales: 6.8% to 6.9%
Financial services operating profit: $ 440 million to $ 450 million
What investors respond to:
Investors appear to be reacting negatively to the fact that the company guided 12,500 deliveries for the first quarter, which is only a 1.5% increase year-over-year. And supply chain concerns weigh on investors today as well.
âAs supply chain challenges continued to dominate both homebuilding and the broader economic narrative in the fourth quarter, we are pleased to report a record fourth quarter profit of $ 1.2 billion. quarter, or $ 3.91 per diluted share, compared to $ 882.8 million or $ 2.82 per diluted share. share for the quarter of last year. Excluding mark-to-market losses on our strategic public technology investments, fourth quarter 2021 earnings were $ 1.3 billion, or $ 4.36 per diluted share. For the year as a whole, we delivered just under 60,000 units generating EPS of $ 14.27 per diluted share ($ 13.00 per diluted share before market valuation gains), an increase by 82% over the previous year (66% before market valuation gains).
âOur record fourth quarter results reflect both the continued strength of the housing market across the country and the continued shortage of housing supply due to limited land, labor and housing constraints. supply chain, and 10 years of production deficit. While our new orders were up 2% compared to the seasonal fourth quarter of last year, we achieved a home construction gross margin of 28.0% and home construction general and administrative expenses of 6. 0%, leading to a net margin of 22.0%. files. “
âThe housing industry continues to show strong demand, exceeding supply, and we are confident that we will continue to generate solid growth and improve our current market position. As a result, as we look to 2022, we expect to deliver around 67,000 homes with a gross margin of 27.0% to 27.5% for the year, with plus or minus 12,500 homes with a gross margin of ‘about 26.75% in the first quarter. Overall, we are operating from a strong position with an excellent track record enabling us to continue to execute our core strategies. “
– Stuart Miller, Executive Chairman of Lennar
âDuring the fourth quarter, the number of our communities grew by 7% year over year as we continued to make excellent progress on our terrestrial lighting strategy. This has been demonstrated by our years-owned housing offering which improves from our previously stated target of 3.0 years at the end of the fourth quarter, compared to 3.5 years last year, and by our percentage of controlled housing sites going from 39% to 59% for these same periods. “
“We ended the quarter with $ 2.7 billion in cash, no borrowing on our $ 2.5 billion revolver, and homebuilding debt-to-equity debt of 18.3%, an all-time low of the society. Our land relief model generated additional cash flow in the fourth quarter, which we used to repurchase 10 million common shares for just under $ 1 billion and reduce the $ 850 million debt. These transactions, combined with our strong earnings, contributed to a return on equity of over 22%.
– Rick Beckwitt, Co-CEO and Co-Chairman of Lennar
âDuring the quarter, our home construction machine continued to be laser production focused, although our cycle time was approximately two weeks longer than in the third quarter due to the rapid development supply chain issues. The impact of supply chain issues and increased cycle times were partially offset by the acceleration of construction starts throughout the year.
âIn this turbulent environment, we are confident that we are implementing the right game plan with our position as a builder of choice and our streamlined Everything is IncludedÂ® business model to successfully navigate current supply chain dynamics. Our strong and deep-rooted relationships with our business partners have helped mitigate the impact of labor and supply shortages. Our quarterly pace of housing starts and sales remained strong and constant at 4.5 homes and 4.3 homes per community, respectively, in the fourth quarter. “
– Jon Jaffe, Co-CEO and Co-Chairman of Lennar
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