Lennar (LEN) 8 Jan 202019 Q4 Earnings call transcript

Welcome to Lennar’s Fourth 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.

the the to forward-looking turn the Lumpkin now of reading statements. will call Alexandra over for I

Thank you, financial and include operations, forward-looking good flows, morning. Today’s including cash regarding conference statements Lennar’s and business, strategies condition, of statements, results prospects. call may

only future represent the on inherently statements that to results. and Because estimates conference any assurance have date to matters occurred, are not forward-looking subject intended Lennar’s and give this these not as call uncertainties. statements Forward-looking of are risks to statements yet actual to relate

under Many cause statements. factors activities results materially and release those could Lennar’s and contained those affect any to future most this Risk SEC factors forward-looking note SEC. the XX-K, These Lennar’s to Form obligation filings, Annual on results filed Lennar may in from forward-looking the in or actual with recently press described activities in include the update statements. results that Please including Factors caption no anticipated morning’s differ Report and assumes our

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

everyone, Officer; and our and morning, Jaffee, our Alex. from of President; I’m you’ve Jon This Chief Executive you. with Collins, Rick Good Great. Beckwitt, here in Chief Bessette, Diane heard just our and Officer; morning, Dave Financial Miami thank course, Controller;

on quarter are detail to for our some further additional guidance give I’m full-year going and and as fourth to Jon will well start, our XXXX. as year-end I numbers, deliver always going some overview, and operational do with quarter first a Rick as brief Diane and remarks, our

one and we your to get we’d one questions follow-up, we as Q&A, to participants can when possible. many accommodate like always, that as ask that As our so you limit question just to

performance, excellent So and on for let continue shareholder year-end company, quarter another that begin is to go as focus flow, returns. saying cash and we me the by this total and ahead

to housing finish performance off and together XXXX year robust record sluggish paused strong with the We’re and a market. record to quarterly report rather ended that very pleased started a with

the both leveraging market, reflect and capital. greater as flow and equity housing on results strength on on drive scale focus cash our returns to continued and the size in higher well Our as continued

the economy the front, fourth interest new a homes trends reported strengthen in remained that strong. macro to for last continued stimulated throughout last demand, earnings the market as of the while the market have lower improvement quarter, housing calls. the continued steady have year’s pause, overall continuing On our from two quarterly confirming The has rates we fundamentals

fourth impacted growth, wage together the to at traffic clearly sales continue Greater affordable return of price appreciation economic consumer quarter, more slower especially drove saw housing market. and confidence, We in home affordability. combination have purchases, strengthen growth lower with to low to and affordability, positively rates the a as entry-level interest a and unemployment,

the Even the from from see with global flow out job confidence and the the the market. in in play the we current election cycle of and our in tensions, and which constant reflect economy noise seeing from and that customers hear real-time, stability we’re indicators of ebb the

today, the strong. now housing of through is As and market

from approximately year. On These or per Services, homebuilding from less the million, for derived both $X.XX $XXX solid as a of and record results Lennar posted $X.XX results net businesses quarter, of become the factor. for the earnings as Financial share operating company front, a ancillary we achieved and share billion our over results have $X.XXX primarily or

quarter. produced orders high-end a new and our of for quarter, deliveries in homebuilding, gross the margin XX.X% of the which last was In improvement at guidance

enabled costs savings, X.X% of of margin driven and which rising overhead the over while and in full-year XX.X%, year in a size has to country tepid has most of XX.X% respectively. best jumped with SG&A and low new net XX% last cost offset an orders X.X%, rather XX% the fourth deliveries scale our markets improved to production year’s fourth land enables low quarter the While our leverage of last us over all-time and quarter,

going We’re are confident to that continue these into trends XXXX.

also Our a want Financial as to contribute Services last to beat. did I performance continued this on earnings segment focus our to for I minute quarter.

Our beyond. and important year a many driving to continues company performance our for Financial Services into and be improvement initiatives the next proxy of

$XXX up year, year and Performance the Financial earned XX%. though Services million the Financial For versus year, improved in current division through $XXX – the our million last quarter.

million XX% Our of $XX.X $XX.X compared Financial a last a million to segment or quarterly improvement. profit Services year record generated

the operational core on homebuying that in to and streamlining technology core focus selling drove retail company’s profit first remaining mortgage record year. significant improvement implement team the our initiatives both second quarter in This on enabled business title business the sales this the are after This earlier focus comes operations substantially and the These half year. all of business. the to in the of

company’s – mortgage the rate from to increased we excellent service. engagement our XX% combined customer on and XX% focusing by XX% providing First, from customers capture simplifying

this cost from per originate loan per down in loan per to quarter, by year $X,XXX by in Second, to $X,XXX XXXX. is $X,XXX the loan last reduced loan this a to third per the loan we $X,XXX one-third steady improvement, XX% quarter from and

our the experience These repetitive along driven management’s frictionless to application, closing lower were not loan process. improvements which to friendlier initiatives, focused lead reduce processes but only streamline technology the robotic to technology and to processes flow the include cost with company, with company. front-end and paper for that customer These cost all blend by on reductions automate a

Technology, headcount a we efficiency, same customer better total the with a XX% at about together much management experience, focus, Services reduced time. line. bottom and Financial enabled has by Finally, better have

process technology the are and process in entire division, for is mission initiatives In leadership our Services regard. customer frictionless, made simple, gaining end-to-end our Financial company a our to never to has before. we’re management entire and improve more core get ever team a been and and a closing confidence tap Accordingly, that group showing to entire that have that we satisfaction the seen one will create continue

also building seeing we’re in improvements they drive the the across improvements as bottom improvement entire to sustainable, future. we’re at line. these of and company Services our will generally These of continue types investments are line bottom And these in our in focus and specifically, the segment and fruits Financial improvements, our

affecting next the costs and customer operations, we areas improvements inventory Over and core two tuned. see management. acquisition homebuilding even in the flow technology-based to of Stay years, of some expect same specifically our production

improve all operating line, our Moving bottom shareholder drove on, results on ways simultaneously by are base. reducing total returns the to we our focused asset strong any while and

as results control focus quarter that fourth our enhanced and cash spend well. Our our land reflect on overall and improving has flow picture inventory strong

focus buy driving a of asset on each cash owned lighter we significantly to a relentless timing percentage that a business our land maintained and land, to From our to and smaller the the land strategy. of we our migrating land pivot option We’ve duration land-owned of the inventory, are flow purchases versus towards continue will forward.

continuing our spend segments, and While driving business we’re assets and remains immediately by our also focus most base our non-core land focus on monetizing our inventory. to on impactful asset lower

mark. continuing for year $X and results flow projected flow our head With strong cash billion billion and cash $X.X said, XXXX to to has operating focus towards expectations annual asset this the that are increased base on for

an $XXX repurchased fourth of stock we while to quarter, another we shares cash the average used of at X.X In additional million $XX debt, an repay just share. of excess under million also price a

cash ratio million our improvement a shares and almost paid is XX%, XX we a to cap billion to which senior debt debt, of our last year, approximately of sheet with retired $X.X we repurchasing while while the zero. year. basis For billion total year improved ended balance XXX of We the of over point $X.X stock, with revolver

and As return shareholder cash we to cash continue continue flow we to down balance total look to improving as and while use capital XXXX, our to our pay debt returns. to strong shareholders, we generate to expect improve sheet to will

excellent let where had I We me In and end year-end. conclusion, began. another quarter

and last execution is focus management. demonstrated our results. and Our careful also laser-focused land year’s just management with returns not excellent by on but words, This driving by operational inventory team is

While seems year market Lennar’s the book, the remainder and it. conditions for the XXXX to of by brighter encouraged remain We in even both position us. XXXX is in

scale and market. constraints facilitate labor to the and cost land a size in management continues Our production of and the

in live operational carrying shareholder addition for of single-family along In customers forward and strategies, “sustainable to our Lennar last have initiative rent improvements a the to These way the and the to a year, technology-based drive our will of our we purchase team” successes return. home. total additional enhance continue excellence customers and sub with our innovation growing home the way our and opportunities

the of rest With me that, to the turn over it Rick? let team.

driven price. Stuart. execution Thanks, totaled strategies. quarter decrease X% XX% representing XXXX. XX,XXX X% business by in our This average of $X.X had increase quarter in partially homes, a by an a of solid increase fourth offset a by We our revenues deliveries from a Homebuilding each operating driven billion, strong was for to the segments, in sales

the in market, driven the our guidance, price first-time buyers the inventory Deliveries year-over-year. we exceeded entry-level of average as our with quarter for high-end sales on The carefully increased of very by demand. focus continued was strategic decline our buyer percentage strong as matched available robust

third and number of was basis Our totaled up the XX.X%, gross sequentially the a points the discuss, as improvement cost well our margin which field will our leverage which quarter. This that as Jon us of sequential expense. deliveries, guidance, allowed for savings the to quarter from benefited direct side from XXX top higher

prior an Homebuilding and the scale was the our marks X.X%. leverage. power $XXX earnings totaled operating the Our XX% of and all-time up SG&A low increased from quarter million, in fourth This market quarter highlights year. operating

We’re at demonstrating rate fact leverage. a of once faster are earnings revenues the proud our growing than our again, homebuilding operating that

non-recurring for in gain up totaled from sale year. prior earnings Rialto XX% the excluding XXXX, quarter the of million, and on $XXX Net expenses the the

to XX% New guidance. orders homes, increased of quarter for our the exceeding XX,XXX the high-end

the up which XX% totaled prior a $X.X dollar perspective, was well. new year From from the value fourth quarter, billion in orders as

with in up orders XX%, operating Texas significantly year-over-year. Homebuilding each increased from and region our our segments, West where orders performance New were our new respectively, strong our of and extremely region, in XX%

continues segment to benefit focus Our positioned our the market. on perfectly is entry-level and strategic from strong Texas

wages, and from our competitive low inventory a pace fourth rates, higher fundamentals, During saw XX% much community mortgage to low demand, favorable all sales homebuyer, levels, year-over-year. contributed market benefited quarter, more increase a unemployment, the per confident housing which we in increased

a a and sales XX,XXX the between with housing homes great position ended $X.X combined current our of close billion. XX,XXX to a inventory, backlog, XX,XXX with quarter in homes, XXXX. with puts fiscal We us backlog fourth of value in This dollar

our increasing we and percentage of fiscal and improving cash returns laser-focused were owned in of were With XXXX, in said, increased on our capital supply generating year Stuart homesites mind, homesites flow. our option top As reducing this on priorities.

XX% made set our At the XX% year, goal two-year finished end as homesites and similar we at We progress, ended third the on our two-year progress year, the the via the beginning XX% with on first needs mix, goal this Based and versus throughout controlled is of of front at ended XXXX. our land quarter we have quarter year arrangements. our having new great the by a of options a XX% fiscal of the controlled of XX%. owned to

fourth the to quarter, end $X on reduce at successful, the land our years our XXXX we from at of supply end owned During years Based on-balance end three X.X quarter can sheet of homesites significant position the get reducing of we well. by the owned made also on third this would homesites as the to X.X the billion. fourth of years progress, fiscal we’re we of years quarter. to this our approximately reduce If years by supply believe progress

controlled impact meaningful The drive and executing reaching cash on capital returns higher land and stated goals owned and total flow, shareholder lighter our combined on properly business our returns. will of

returns, and address light Consistent affordable no on and the continuing single-family to can and we’re and with There’s our rental housing, a that new land market. this problem. program single-family of there’s to solve rentals focused develop strategy increased shortage question a workforce develop

they intense managed professionally the rental because in identical from costs can shortage, interest in home-to-home. the where with of are overhead investor single-family features there’s rentals, community communities, managing owner leverage same the the Given new the

of risk in homebuilding be with bulk our is owned operation where Since and Last lease-up then, homes by program to incremental include program, building this our expanded communities. single-family land third in existing in some dilated to larger quarter, we selling rentals will communities separate bulk of Lennar. with our parties, building in selling and no sections single-family rental we’ve

this growing of stages beginning prospects. we’re the business, excited growth at we’re While about its

about in closings rentals will getting represent in Given production a of the new single-family and started, XXXX. only developing lead time X% communities our home

have However, will provide impact meaningful a this accordingly. we and will an program in more much XXXX, update

us an our is our of and as core business, Single-family rental to machine expansion overhead. it leverage existing allows

Additionally, program unique provides this our and to for-sale hedge an interesting business.

Before our trade like many to would Jon, work thank to your Through more partners excellent XXXX. And since strategy year. things for we associates our importantly, to XXXX. in an accomplished I I on over turn execute it positioned and collaboration, our we’re and hard excellently great

I’d to like to Jon turn it over now.

Thanks, Rick.

year, scale back size the receiving across platform. the benefits we As on fiscal from we can the clearly and in we look see are significant quarter our our

delivered in the fourth For most history. homes both the quarter year, Lennar’s the for and we

also result costs process, simplification of size efficiencies. but our only of and maximize processes continue our benefits to focus the that We not see to this construction our direct scale, are in of and on particularly SG&A the in

to had forward. costs first last will sequentially, noted quarter, that costs. contribute gross our construction visibility and going our are Turning I down direct margins positively going we to direct

our has our average direct cost Throughout basis improvement came margin trended costs. our points this construction as a ratio was our each points quarter, quarter, from In of quarter. sequential price downward fourth XX.X%. XX cost In the percentage our XXX XXXX, fourth to direct basis of sales price of

projecting We a even XXXX though homes. this in continue expect sales to throughout mix to XXXX, prices of entry-level trend we’re higher due lower

in while square our increase marks third footage the lowest square an up than quarter’s rate and foot, down Looking X%. was costs year-over-year from by average were This at less increase is our per X%, XX year-over-year costs direct cost of improvement X% quarters. year-over-year, the direct

more deliver we price lower. will as homes to selling be and both forward, footage our and Going continue entry-level average square

both sales the our costs lower While platform. to average demonstrate a direct percentage value of per price construction as flat, to and the scale the our and ability of efficiency this square relatively is occurring, of keep cost our foot size,

Across is the while the to model, disciplined which labor we included to allows trade our impacts Lennar XXXX, combined flow with our maximizing country, Throughout even focus with of and predictability our platform builder our efficiencies. choice manufacturers. of everything the minimize supply chain partners, were suppliers production shortage, gives

to now Turning overhead.

were fourth noted, full-year quarter all-time company our As and respectively, and both SG&A X.X% of lows. X.X%,

combined our SG&A us technology, size and and continue scale, give simplicity on focus Our with to leverage.

and In simplify homebuilding the processes, As efficient. increasingly leverage. giving volume our year-over-year we spend our quarter, us XX%, increased more while our improve our associates systems SG&A G&A fourth personnel our by become significant in was down X%,

and sales to sales and spend. our use leverage achieved reduce We marketing through the marketing of technology

sales had or As on our information mentioned we leads, quarter, quarter, team. to fourth we last requesting In had customers Internet many focused XX,XXX we over meaning, higher-quality we are Internet that leads home a Internet the about specific community.

needs about of the high-quality, Our times customer messaging communicate to the to set of and with with The more result then call our customers’ their learn specific needs range the consultants well sales our visit online and phone then by customers, our and visiting one homes communities. is with communities. very or text informed team Internet via match

engineering is In summary, included land durations; matching experience our for playbooks: along while two, a step providing and operating costs, of land flow of the with by division; lower happier page systems strategic light, start and chain, four, productive and more production, simplification, three, we’re associates, partnerships with direct platform the five, and plan choice division our to pricing costs. technology, following everything optioning the this builder maximizing lower better better shorter one, a information our dynamic buying using every pace, game model; throughout executing even process; construction with customer unified workshops with production asset value supply sales developing efficiency

Now, turn Diane. I’ll it over to

and Jon, good everyone. Thank you, to morning

me So with with few fourth please quarter start reemphasizing from our let points starting homebuilding. a

range and from returns. the exceeded a of strong a we Rick as mentioned, X%, the on and from prior continued XX% So year market benefited upper by housing guidance our deliveries as focus increased

guidance Our prior higher-end gross XX.X% was fourth the purchase XX.X%, excluding accounting. the CalAtlantic at margin our which year’s quarter of and gross margin was was

is our SG&A and prior was quarter the Our the X.X%, quarter X.X% year. achieved we which guidance. fourth in was have percent below compared This lowest SG&A to ever

prior and X%. XX% increased by guidance orders our the of New range from year exceeded the upper

Absorption slower-paced returns. enhance the communities for fourth as was X.X X.X quarter versus price of we focused a increased the closeout in benefited year, from the accelerating and on to demand

prior earnings X,XXX. of million, $X $X was homebuilding for had community And we sales Our finally, to combined joint ventures, a other the in million ending compared count year. and categories, of loss land

And then turning to Financial Services.

earnings mentioned, increase components. reduce Mortgage a homebuilding an in in million the $XX and here’s detail by increased earnings compared deliveries earnings as Stuart Stuart a higher of to rate million, the the and Mortgage headcount, prior primarily which operating as to As result us million driven $XX improved year, to to initiatives, due technology year. enabled from origination were loan prior million capture in and costs, operating $XX $XX mentioned. in capital reduction volume of higher the

operating was of increase $XX the in Title business. million reductions on earnings capital to cost in were million, year. compared interest, volume $XX to the prior right-size The an to focus our and increase due non-controlling net

loss earnings decrease volume, Mortgage dollar in in Rialto Finance were driven $X $X a a million compared margins. the of securitization operating million, offset securitization increase by an year. was partially prior in to by This

multifamily. turning then And to

year. prior There to in net million prior earnings had to transactions segment building this of year. no compared operating sales in as million quarter, compared Multifamily the $X of three Our the non-controlling $XX were interest,

compared Rialto Rialto Earnings This the in Finance prior $XX finally, Mortgage technology Other. were quarter, million outside our and losses strategic of year. the investments. of is million of $XX this And to the legacy assets category

largely were quarter, related This earnings by to our losses investments, Rialto expenses. prior primarily year due were driven fund earnings non-recurring to while

sheet. year our billion well-positioned with the billion an extremely of we of fiscal the homebuilding ended then with XXXX, sheet. year We And cash In ended sheet. cash turning $X.X flow the and to balance generated approximately balance balance $X.X on

progress We increased land of to continue position. to and our years control our with strategy land owned reduce make

of end were which controlled. were At the homesites owned our XXX,XXX, controlled XXX,XXX and of the owned XXX,XXX and totaled year,

of from of end X.X years at our mentioned, Rick decreased the As land owned X.X supply the to QX at of end QX.

Our controlled QX. our at the end thereby At the of on providing no of QX end facility, end outstanding homesites to we the borrowings XX% of billion increased of XX% the from at year, revolving had $X.X available capacity. credit

During the since quarter, brings our billion billion we for This CalAtlantic. to of November. were that the in senior senior million year notes note repayments and acquisition retired $XXX $X.X due $X.X the

the totaling XX.X, of shares to debt our approximately the we X.X At our of year a end X.X from This During $XX shares, for $XXX repurchase million. the cap for year, total total improvement XXXX. a point end the basis of quarter, XXX the brings total million. to million million was

I’d will XXXX I fiscal So now provide more and guidance quarter. first provide then guidance. for high-level to for turning to like some detailed the guidance

for our So of sales on This sales XX,XXX reflects year average the for higher focus between approximately with product. an deliver of to expect the we XXXX, entry-level price XX,XXX average homes, of a full-year percentage price and XXX,XXX.

with XX.X% of XXXX XX%. margin be fiscal remain the expected XXXX to in will fiscal consistent it to Our and range is gross

we’ve the senior our deliveries Although reduced entry-level reducing year will expense leveraging from our spend, continued down and to expenses for benefit field focus margins slightly interest on be our more we note continued believe pay margins over as lower, construction maturities. tend to

continue the the of to communities, of entry-level And X% SG&A end communities X.X%. volume, XXXX add higher of fiscal returns, as to while community grow the Our range to we X.X% year. we higher accelerating X% our to enhance closeout paced to also be expect count slower absorption in the should by

our $XXX the recent credits. in million, should rate million to Congress of earnings of Services and range primarily to due we Financial energy-efficient extension tax expect be $XXX be XX.XX%, to approximately by the home

for QX give Now, detailed with more only, you homebuilding. me guidance starting let

the in XX,XXX of expect QX be We the XX,XXX XX,XXX, to in homes. our and deliveries QX orders range new of to be to to X,XXX range

Our be and XXX,XXX QX average sales between XXX,XXX. price should

the gross previously of to and margin in XX.X%, margin will margins be expect this XX.X% We that in QX range quarter be range noting year the to the lowest year, for increase will be our stated. our the to throughout

range and We SG&A our be expect million. QX to we joint the X.X% the loss other of And for in and categories, homebuilding a $XX QX combined of sale expect approximately X.X%. land venture,

We $XX QX million. believe to our $XX range the Financial will for in be earnings Services of

approximately Our will and for assets at And multifamily we earnings break-even. our to Rialto operations $XX investments, other the million. the related QX of expect be to about category strategic million legacy $X

about our tax stated, G&A X% expect total to approximately And We of revenues. QX we our XX.XX%. be as corporate be previously rate expect to

million The weighted average quarter be shares. should the for XXX share count approximately

when all roll for EPS an to so $X.XX quarter. this should $X.XX you of the produce And range together, this guidance

flow we and summary, have we in in increase in generation strong to to So cash believe well-positioned continue are XXXX. profitability

me it to now, questions. And operator the let over turn for

you. Thank

will session. question now question-and-answer Truman comes Fargo. begin first the Patterson Our Instructions] from [Operator Wells with We

line Your open. is

morning, nice taking everybody, good questions. my Thanks for Hi, quarter. and

start upcoming allowing than entry-level. demand Do entry-level, you participants the I greater moving see an on the to to absorption historical robust entry-level paces? generate multi-part all kind really a wanted seeing First, are supply multiple you just communities of that’s or are industry to off question enough imbalance

the XX% that level entry-level in possibly to XXXX. suggested And been maybe on seeing? think that you given you demand the that, call, you’ve get could Do prior there’s all you upside the

your margin And profile of finally, of on might gross be the just you kind versus profile? an drag how update margin segments, could your other it a on much give

just getting everyone longest remained time let remember the important entry-level for to it’s the say, level started. macro for had really the and market of downturn impaired that the time a period me and since difficult has very of Truman, at start part a

recent that has constrained. strong market, more it’s of think towards participants very is that recently is of When a part be that you number note of before – I are accessible. So saturated. most in Demand sometime part it the market. gets it probably to market the that most become migrating And supply the going

Rick, Jon, you’d margin to maybe about and… like talk

Yes.

from think, I last the we that that have overall on mix standpoint has positions – fact communities, lining benefited this target secure to a are products, we strategically years. sizable. working So position, the from We’ve several our been and something for from repositioning very really developer an with that our been methodical excellent partners really up

you’re with in entry-level When because product, your faster. an a pace or dealing single-family you need some absorption is larger much communities communities, these

So, From think, we too well-positioned. standpoint, to up it’s tell. XX%? mix get really we’re to a I do soon

how We’re in going to just years right evolve. probably now, and the the low-XX% we’re see

Diane we standpoint, Jon, result, but on of margins why a said, higher slightly than lower higher, the with From the and associated IRRs those build as they our that. product, that’s much, And else? with anything come is focused velocity. move-up the be first-time communities tend and much a move-up as to margin out

You covered it.

Okay.

Okay, that. thanks for

traction across your – the been just option discuss what more becoming developer it’s market, a Your or in whether of past partners? result we’ve little the you available health Could rotation lots, quarters. towards purely these the lots are industry land option is land whether than couple your has of this expected faster of the the bit

were you throughout that of two part the at you’re developer of to three of kind give thinking could you previously, just XXXX? what partner strategy I an kind question, believe on expand update And relationships? your

I team, we decided what have as significantly our the our and reflects – worked really a and We that management is, Stuart, we really a execute amount expanded Jon, And convert down that think, position. and when sit I plan. trade our increase this of when on partners developers and we make regional were we option and we plan, with going the regional program. So, to

different what those what haven’t seeing other markets with into new is to increase. in Rather, that’s and entered done relationships the footprint you’re We necessarily we’ve expand developers. the arrangements of

have the in out their increase of our relationships leveraging to are really all to percentage. addition markets In they that, there that teams

Okay, guys. thanks,

Thank you.

Our question Alan with Ratner next & from Zelman Associates. comes

open. Your line is

the very strong good guys, on Hey, morning. Congrats performance.

hoping allocation. I right drill little capital your was of in bit terms So in on thinking a to the just now

focus on times. so spend as was that the by for down flow debt the several mentioned, look about were expecting, million. balance cash sheet $XXX great on were to You huge see you this about If you a came I this to cash million, fruition. it return And at your year buybacks year come year, $XXX how

I know can do off first use lot you is cash enviable cash a the a where position of and and certainly the growing builders lot in for it say you’re but of like business, seems pretty main throw a that of flow.

that thinking down we that and type at has XX% is capital should you’re prioritizing year of cash level? the your to think is kind use about about now the, this to generally, of that reduction fact how the So debt towards debt buyback or that shifted all given

expect comments, we due. certainly, as to as our comes debt to pay So, in noted down we continue it

I due. $XXX over of we million have about XXXX, noted think that the next over coming we year, debt longer-term

can You flow. down we’ll expect cash out that that of pay

shareholders something properly is that balanced. and returns returning to capital to focus will continued be But on of additionally, shareholders

and our looked cash operations are normal flow our we’ve at today business As looked at expectations, positive. growth

As we billion, noted, is year expect $X.X to excess trend be And and last noted. continue capital we produced and as more. exactly balanced we to going that that

our return. on sheet, on focused very focused very We’re balance total shareholder

question, you second that, Stuart. there. on expansion the And the Thank if I for SFR, could

rental? homes the flowed build that can line orders towards this these off, and communities, more you compete? just Is that is that, geared is I business, any for more sale if the guess, differently so, about that that building that, for existing being Were works there cannibalizing product? or priced piece you’re little talk shouldn’t And through SFR? your product start any that bit First And quarter about of housekeeping. the comparable it high-level, concern it order to there it guess, a to I as you

we’ve really something me small let this now, the done on saying that, grow grand of what is is in business is positioning just start by substantive. to focused scheme So that’s And off very right things.

with So is orders de business the for from on order quarter, What market products last this minimis. that focusing perspective providing focused a we the the associated can an markets good that been that identifying build on needs. were really we’ve is

done or communities, will off community Within other sections really completely different phases for the what our priced our be looked differently product. existing that is sale at sectioning of than we’ve

lower street. a the lot features smaller home-to-home not down identical change So footprint, levels, pretty from of right specification

it. Got

of program second sales a But and dilated we a let we It’s and that. over focusing up and continuation been our kind of the have more in years, a for looking been It’s innovating mom-and-pop-oriented. both innovated for me more thinking on plan way past branding It’s and in about for where which for structured and a basis. going at we’ve single-family of back a this. the It’s been our forward years we Reno. a past the rent program What say new basically communities, been on part company two single-family one-off SFR is of rent. have this others. has

for an We the this. the of stages early evolutionary are at It company. been track has

we be rent, talking around is as Capital – single-family there’ll But You’re that we’re this and for be that single-family community. going a follow for an understand the to to go story suit. is be will forward. this others business, rent starting will see circle communities about which emergent

get might competitive, directly it’s product, Lennar but consumer similarities product single-family, won’t While wants branded going be a to sale for about a be able quite but other to that program, uniquely and be instead, enthusiastic this with very this there not into program. is enable single-family it a will

product cannibalize that two will mentioned, It’s really Stuart product. our It’s existing points. need, we afford filling of all. buy. a the to don’t doesn’t to buy just sense as at the just it same and I them think for is, had One can consumer make

the of The volume volume. higher on enhance position even and this focus other our is have with will consistent this and for point as further is, the trade us more choice we more builder

So complimentary being to construction we very platform. as see that our

guys. Good lot, a Thanks Great. luck.

you. Thank

comes Rehaut JPMorgan. question next Our from with Michael

Your line open. is

you don’t just focusing was question about heard go? give, two could get I what get sense the the over first inventory the end your a if balance a us on results. just years, if number to don’t some flow. to where that returns Thanks. I down is, of trying inventory Good wondering resulting comments $X inventory, billion on of I and of is was the number I cash everyone, you sense could year, totally and around morning, just this and when maybe and that know My having give next of at talked your or I but driving had congrats

balance you’re $X.X with inventory you the expecting amount have due with want acceleration debt of assume, on a cash I an can push debt And you’d mean, But up? sheet I debt of given be kind that some billion next out. of should would of share the of balance reduction, year. that cap, still we that use potentially declining to you as obviously, repurchase that, maturity frees and

numbers finer how sense we get again think and a that, should cash? about inventory around of to reduction the use So that of that the just trying

Well, XXXX. that buy different years land let the look We land generally about our Yes, do And at purchase, want to it’s difference. you of – off told year billion we we’ve supply you three years one X.X we year. back you it, start and look step you can $X a dollar if which of ways. two at so about calculate – from to how just you own that by we by take value telling what is me

of So up sums sort $X billion that number. to

– Looking some homesite billion underdeveloped, is next we year. it different don’t that, with finished cases, or for our finished in based XX,XXX you way, guidance a XX,XXX our average buy number. lot which associated about homes have to XX If same the XX,XXX, homesite to in homesites of $X the our at to on gets XX,XXX,

direction. billion We is, And is to expect things debt we this in your shareholder of that we And do benefit to capital that and pretty a look does inventory return additive it’s at decidedly, as number. that so, the that this that cash correct land that mean flow, the flow math yes. migrate accelerate shareholders? continue cash to from I answer strategy. our question a think like – And Mike, straight to calculation you’re in will is look, $X highlighting to and

to or growth could year-end and be you community if over a X% clarify order believe, for you. little thank that just about quarter guess, to the growth expected for count a how I as year? guidance the well X%, Great, gave first I as tuning think – granularity and second question X% to bit finer Obviously, upcoming around you year-end as as year that? soon

we market But we entry-level, other improve shift other you bit component sales rates more buyer little which about cetera? to well bit, is sales broader a how the that, expect towards mentioned versus are you’ve of given given kind segments, to continue and that you’d higher, where that, to the continue should a pace pace with et that as affordability, segments, of think expect the fact little as to

single-digit out that, perhaps So, kind pace would the quarter expectations pieces first to the very are for year sales think low any growth. how be I to type just around thoughts in break helpful? the and of trying thinking mid a you’re for of full about But of that range

Hey, Mike, it’s Jon.

of all, comparison. year-end to It’s that First your year-end correct. is

approach think very pace, my disciplined to and back we goes about a about commentary matching As that. pace really production to sales it

is accordingly. pricing So or extent not, adjust to the market the that stronger we’ll

over of do we the in soften, some the So we that we reflection margins to one. that be a expect in we the extent improvement we’re To we’ll pace projecting. stronger, pace the consistent that and expect hope our were margins. market see our consistent to is market the to And would extent, would to be what

focused returns. been pruning that, some are And part CalAtlantic our looking additionally, we’ve clearly some our those that, communities that have and of on greater on decidedly communities more and of I’d clearly we management and as absorption. legacy say more inventory communities focusing drag a with come of slower-pace higher-paced have of land internally, of on program, might that the our from

part returns. program. community enhancing to therefore, our is management of that by enhance inventory all absorption the So this And we’ve been rate, looking community

Okay.

for just exceed growth expect you’re for? would rate shift So clear, looking count given the that year Stuart, then, order an you’re unreasonable that that be wouldn’t community the it growth describing that to be to

regard I the that at higher than I growth just Well, we communities. think the in you definitely. to deliveries, if increase look with is gave the mean, delivery guidance

get a you’ll overall growth X% community X% increase to in than natural So in sales that greater are count. the

more efficient, that’s business model. more And a effective

focused to rate. higher right. opposed That’s at a community, of getting We’ve velocity as growing higher out each strategically communities on

Right. Thank you.

you. Thank

Reichardt Carl BTIG. question next from Our comes with

open. is line Your

Thanks. Happy Year, everybody. New

morning, Good Carl.

and sort the like business Jon, little lot subcontractor year, a velocity for significant wanted about for also started last growth enough ask increases which to How trade units thinking of a a one, reporting are entry-level, they of I obviously, a this bit about really overcapacity the it the two better. number or we order starts move to build you didn’t trades? costs, work flat of just and had reasons: not is You year? seem some

is, year combat pricing Is everything’s how you just Are included that? perspective just also this I’m they a just maybe or scale maybe trying and with their a curious for going on Is get do you? but product look it to your your And two? what just not even flow? and on year, scale? aggressive simplicity and it focus to even to more

you labor don’t aging is particularly industry, And because out as skilled really labor. the you severe the a there backward, the Well, a and see Sure. workforce. there lot of look from forward, look in improving, as labor is actually that of shortage out we

to that we pressure So expect continue.

pressure the we system. ago, why grows, as And builder started really being reinvented as really the several thought its we that focus of volume And that’s about fact years choice. with there’ll we be more on the ourselves of

volume strategically site than because most has with desirable, up that a predictability not even be platform ready critical, to a itself that’s of us short real trade and go out labor for but for or inefficient that they use really one and on is do supply, positioned big issues. it everything of more already obstacles job in included the much flow and part, to production is has that to them. scale it’s it’s just trades gives So everything that’s backed That this big and is creates

trades us than And favorable find have to more the options don’t and stops predictable. get of because to jobs for starts the of more and They upgrades. run the smoother work that,

at to even on focus least, that, do even more at we how are so And disciplined we continuing better about get even flow.

make able them paying actually because on we’re move money not we efficient, as business, to our because that, So more forward, trades the you’re it’s more.

the using pricing, power as pace? this past, seen more sensitive with pricing to price past, helping try the demand? pace, is such seen And it’s production sense. obviously, catch do But to builders you pricing, robust is that makes price hold than what’s sure shoving to We’ve you look be entry-level Rick, just up. But Stuart this pace we’ve mix a again, That again, control How what actually changing. so I’m use in the then customer. to consumer? more head And off? into different But year you’re and dynamic your manage likely even the flow on in where or to at price sensitive the running mix can were your price builders

would as for very our It’s now, is have be, And it’s pricing exactly we market is as going and able had But like. – Yes. that at on said, we’ve signs is market And Stuart of strong, that. we said, last go consistent I that currently will And what it see we if to think strong. us, to don’t a across expect two. we to the from in as as now, strong. power see months than by, year right, greater be pace. look the showing unfold, it’s the be the benefit is markets to right we That or it will different. they’re it’s we’ll

on, to focus to we that’s we’re but lower thing price on price, for each the net think solve price, or community. whether I And will higher focused margin operating very Yes. a

Rick. all. Thanks, Thanks,

Thank you.

from comes Stephen Evercore ISI. Kim Our with next question

Your line is open.

the gave that the for versus first for margins order I when the and and Yes. guess, of And in Thanks year low margin to the a very little fairly in a pretty expected the give said is I the cadence the interplay for see be sense up you your for information Thanks in for healthy and you the Good meaningful full-year? the question your since suggested outlook you guys. that, general, quarter. much, in quarter. the question that in assumption margin? to about you guide the year the my the expecting a you’re regarding XQ. year, us the quarter you had quarter year Can step

the something the if to that Is in be going like is it current will like made order of envisioning that sort about the you suggest? reflection better is, you’re XQ than XQ, you as the that that to as a quarter, of would environment soon up events? comment And later X% is second how year? to happen Or allowing get price

Jon. it’s Steve, Hey,

first bigger impact an always overview, on has from that is quarter spread It field a you lowest and quarter. with our see that the remember, in As And volume trend always has a the first us. our therefore, our perspective, out. margins

on throughout volume. as So what purely we we get will just leverage, don’t greater field see the year, sequentially improve our margins it based

our based what we and and SG&A expect through this is margin though, gross flow of of to and the all we’re margin throughout year, with systems numbers. more efficient, the efficiencies, out operating our see in costs improvement that gaining both on The our should our

things combination the really those throughout the it���s year. of progressing So two

look add that maybe we’re highest in the expecting gross the give what of proxy only the increase is, you would think, thing I’d the margin. you margin in good XXXX having I Stephen, a back-half of if really the Yes, year for at with XXXX growth in

that’s right, All it. Got helpful.

business the Secondly, there. this how cited in initiatives you you’ve about you really of and Financial I intrigued the the saw and I some Services got improvement Stuart, mortgage going specifically, tech the on made comment, origination by you that business guess, was

you company. see might we initiatives your what for believe, word the proxy I the across many of used other tech from As

And I little of you meant by curious a you us bit to preview what as if was a could that. give

you’ve that? obviously, buyer homebuilding had think flow construction intrigued be the lead but customer initiatives in even in we proxy investments this – acquisition as which particularly of in said, flow to even – a I’m customer be open origination saw construction for in I management, your what in mortgage and business about management. improvement eye you door, I could think got, way costs some acquisition How you could costs. the Could have by

many toe said. technology thank wow, where starts more in to Services this more that’s there than what that the the we loop So was for leg is call more had team way we Yes, as became of it dip began. initiated feedback found, listening could we stream. entrenched, to that we Financial into have And you change with our of the exactly did, which more start a we And That fact really the the technology I carefully, kind have Steve. that, group, explored, that impact. the This can they really operates. a initiatives, a our said, foot business management the And the our a does we import. than really

origination. was a deeper $X,XXX I adventure of short it loan business from or a of successes, comes from before. early you the step about of new it management and focus If from, of think and time. more. been integration fairly tried the That’s trying comes of $X,XXX, doing done And technologies the And a or that new X,XXX hadn’t in ways feedback cost per feeding loan per over period migration X,XXX towards sizable XXXX think, that drilling

it We’ve for accelerate start starting to into that see starts of some Early to see those cost But turns. those we’re real to in the accelerate, way and reductions. inventory efficiency start to starting successes earlier our real start to sometime talked around adoption to before. program. breed our in pricing things early successes, dynamic and about it We’re takes many happen translate

configured that which in bottom If we back way has think to the year driving year’s and last having look our the that, will impact line back with year’s at year-end, accelerate. through that is real the we efficiency year-end business closings from we’re this

them way a talked one that, we’ll a driven-focused lead and relates inefficiencies acquisition, customer but as approach start consultant acquisition, As about to other others customers. open internally about our door we up. that initiatives, are scoring, costs to then into being customer we that we’ve them, adoption, it to to of focused of number – of our the think We developing handle Internet down as drive drive starts sales drive it more

going a scenes. So behind there on lot are of initiatives the

have help? adoption its we’re group it that the in you the down. at I that If early to come that would a the regard would things been but focus, of as on this is drives innovation well. and to starting where homebuilding Financial Financial way me costs in management cycle the cycle hard from, and specific demonstrate structure would think the the beginning And side successes that areas, ask happen the that question Services proxy that cost seeing Does Services, for

No, has very what mortgage that your be I part costs been. improvement my that, implying out you that’s Yes. you’re little traced gave been you clarification from mortgage for on than just interesting. better the the origination guess, overall industry would the the one declining. I assume us that numbers believe cap, you around has

just is a well, that’s that issue. that not these Lennar industry that’s other as similarly, an avenues correct? And you So issue, in expect

industry been the micro are Listen, a level. at level, what doing really outlier at look within the of higher in from have rest we an that migrating what we I and the can’t understand a at But the industry is macro regard. costs

much. very Thanks Great.

You’re one welcome. more about How question?

Thank you.

Susan will Goldman come with from question Our Sachs. Maklari next

is line Your open.

morning. Brown my congratulation for strong results. Thanks filling is and taking for Charles question Good This on in Susan. actually

you. Thank

wondering update think such your your markets, key success And Texas, your some of initiative I market? region for you you was also on just recent and Texas of in California? an reflective if this if can specifically Florida, is this provide in as

let’s sales entry-level are our XX% can up up below The had And Texas of driven was and we’re we tell $XXX,XXX you all our markets, much orders. that Houston, a each XX% performance Texas. are XXX,XXX. Dallas So and strong high communities I our product. Austin, San region Antonio, in in start is repositioned digits. with fact one of double year-over-year communities higher that to price really of about about now, Right below and point, completely percentage the XX% of by we’ve it

that’s of really the it’s that there. the strength market So fueling reposition

points time regard to are very to board. that lower about since the about North move-up, first It’s do and price California? the and want that Jon, the With strong, West. really Florida, and is on Florida you across talk East particularly

in California has California the prior describe paces. the it fallen much country. you off at seen recovery, a clearly more a other What a was a saw recovery Bay in than that Area, in robust year, was really healthier. a we sales impaired by clear if look back year-over-year healthier wouldn’t fourth of and come parts perspective, to market, but affected pause the from as I back Even perhaps the the quarter any most lot life. seen California which quarter slowdown XXXX. certainly the that a market perhaps fourth market normal to We’ve yet,

guys. time, you your for Thank Okay.

right, I thank, We call. All everybody, in good. our joining very look Well, for XXXX. on reporting forward to us

hear, enthusiastic to all you forward we’re joining. pretty to As year about for look and the Thank can you apprised. come

That participating. concludes today’s Thank you for conference.

at this time. disconnect You may