Lennar (LEN) 15 Dec 222022 Q4 Earnings call transcript

Thank you, and good morning. 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. Form described those press Factors under Lennar’s Report those SEC and contained include filed Annual including recently filings, the on factors in SEC. release yesterday’s our in with These the most XX-K caption Risk assumes Please update any obligation forward-looking note no to statements. that Lennar

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

and good in our co-President; of joining us our President Beckwitt, will is I'm CEO here Miami Bruce And course, have Very Financial Alex, joined in to on -- Collins, who for our Bessette, co-CEO Officer; good. and is Bruce heard Financial and this our Vice Diane Thanks is and co-CEO Thank our of Jaffe, line Services. out Chief Controller on you morning, everyone. the Happy Jon participate here, you seat. President; Rick and and Gross back in California by the David morning. and just remotely. Lennar and from.

usual, to last and to going our than is Rick land strategic well. give on Company. Jon's as little costs, he After update want introductory overview cover. a macro did I'll a through some be going of remarks, longer and overview and as time to supply markets construction chain, walk time going to As around. cycle little We've overview matters that the got my strategic we give usual. a I'm

and Rick that both a think I land. will bit talk little Jon about

looking and And as as usual, the we'll yourselves And some will we usual, please answer rough up. a and thinking many one boundaries give and for modeling. in quarter assist can. Diane question first one give we'll to questions as detailed follow highlight financial limit then to As forward,

the market conditions our well-documented intersected fourth conditions. fourth saying a landscape sudden XXXX, experienced evolving very enhance sales underwriting by quarter a sales the as down elongated continue rapid which material and XXXX So, results chain, change and to across in very complicated markets months the the continue market and being to conditions to has now pricing criteria, existing team new the movement curtailed Market for in correction the and to bring resulting for with in once The stressed properties both, consumer and very both, begin the rent home year Sales affected again, to driven supply rate me given go costs ahead positioning and past interest times and Lennar labor demand. cycle very and quarter interest still quickly close. deteriorate commercial six year over make has rates and confidence, in materially turned prices for in are well. affordability that new lending and and slowdown the as high a for are excellent let end

million homes Our housing current exacerbating the view between that million years Numerically X per approximately drop a supply of year produced production down family around couple be XXXX, produced. over dwellings shortage. that will X.X nationally single in third and that to the multifamily is to quarter homes means national past will of

minutes. review a our through in going market go platform and Rick's conditions Now, market to few across

chronic materials what supply the wedge limited grown builders created or cycle existing home have duration that have will resolve. home short that stay extremely correction multifamily two mortgage over in be labor business home shortfall quarters of reflected note, inventory as of through a fairly and in So, to on decade tuned past But quarters -- Florida, and exists. the the results. we past adjusted as correcting, overhang positive over and rates and over the Limited brief to industry housing the that lot that. low we've quickly the Jon very now a inventory to detail in to will for Lennar very overview. believe give high has an navigate. with unusual over hold existing the two quarter and we Lennar on middle the first costs overhang the chain, that. year-end on stubbornly strategy the are production strategies focused at new a that And have been an model. without backdrop, We production have left detailed addition out services financial hurricanes swept exists home and to quickly, a efficiently very and more have Against as a disrupted our months, supply demand even successes the misses cooled and building laid that homeowners production the the the and by past although this very and leaves team like have give and our business playbook times On strategies, those combines I'd executed limited

are So, maintain to that we conditions strategy, going volume. reasonable first, we the sell to first homes and continue as market and to detailed playbook adjust pricing

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our While it the our future. below XX% of last than XX% from normalize higher fourth decidedly in near been cancellation we our in the used peak we to and year, is pricing the reached fashion in October, falling has it volume. Also orderly rate XX% to strategy the XX% maintain quarter, in of expect

XX,XXX which is X% to compared that to While flat and potentially reduction our sales gives only in year-over-year, XX% favorably us reported and XXXX start market homes some year-over-year XXXX, a over still has were conditions result to enabled down visibility deliveries. us

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optionality. tremendous have We

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So, please be patient.

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and reconciliation we're Additionally, year to delivery costs market of and volume land full as product adjustment and and managing volume targeting to SG&A. be margins for costs flattish through we efficiency, the build while carefully drive pickup share, construction

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to let with me over turn Rick. So, that,

Stuart. Thanks

tell can overall increase in to comments, Stuart’s reacting home affordability you rates, has from the As has market a opening buyer significant impacted housing which been and mortgage confidence.

we While adjust to sales our and rate in to more have incentives, regain areas, increase strong continue maintain base challenging had to or sales many we've mortgage provide prices, markets, buydowns momentum.

as many and As requires a product price sentiments. possible, In market solving and for -- financing a specific to pricing, payment community understanding strategy buyer has not on programs, the sales our been each our accordingly. our strategy homes community by of sales inventory price community find monthly clearing cases, as homes a quickly traffic basis a and to and levels, we're to This detailed trends, price. of sales

quarter, fourth the from XX% During the declined a prior year on year community count. X% orders over lower new sales our year

as walked the count he away beginning was projected you and our lower Our this through discusses year-end land Jon as community at strategy. walk many will we communities. we the renegotiated on of than year

of increased per basis buydowns points quarter of declined and new pace rate sales To accounting created as XXX mix momentum, for from basis base third was and quarter decline, incentives, sales incentives successfully throughout XXX price a adjusted fourth most strategy basis X.X% environment. cancellation maintain the have quarter, and with XXX rate for order sequentially respectively. executed more reductions pricing of combination community and regain points our sales points, price and the The flat accounting third our from pricing sequentially and stabilized in orders relatively fourth sales our quarter, and the markets. While we our our sales our

keep starts many give like reductions either partners, are we've of our lower seeing by point, our three, October, margins, cleared backlog, found a market cancellation our that As three as at regained discuss, prices, we our markets we of in new that and home starts sales, will as strategy our these update performing and rate country. has we're in pricing Jon more or this December. in the on stopped contracts generate into have cash thus a fundamentally across November, focus, markets targeted to absorption can peaked going. you lower market out and significantly may reflects sales incentives, for price stability adjustments regain our believe increase trade we've two, significantly reset that well; To maintaining market rates. this seen pace, and our to and to adjusted share end, in and our They We competitors far building where been fall markets its from our cost sheet really our I'd price balance get momentum; now closed One, backlog categories: an flow, pace. maintain many machine where the our declined able To or toward trend pricing slowed and that admittedly to markets and cancellation successfully this altogether. our additional continued starts to reduction older and we've some require

extremely the markets inventory Florida, many include economies. had Florida, Southeast well. Charlotte, are eight strong low Tampa, Atlantic, employment quarter, and These San and that During markets December, and are fourth New so performing are benefiting These from we Palm and strong benefiting from Indianapolis, in Jersey, Diego. Southwest far local

these continue and vote, offer strong, we've had be programs, buydown incentives. normalized markets to to While mortgage

Sacramento, Houston, markets. XX Maryland, Nashville, Minnesota, and Vegas, markets, Coastal, Virginia, Tucson, successfully Empire, Atlanta, Inland Dallas, include two reflect Colorado, Area, Central sales Raleigh, and Las momentum, Bay California Coastal markets Our significant where category Carolinas, the Boise. the San Philadelphia Seattle, made The we've have Antonio, Ocala, adjustments Valley, Metro Jacksonville, These regained more Area, include which Chicago,

momentum. adjustments aggressive specific these is homes financing, week. of offer adjust size incentives regain price to and size a avoid we've and/or homes community varied and more limited community cancellations, sales While backlog. to been had base each on increased markets, the inventory The often to in cases, -- some basis in the pricing limited of reductions, has by we've had to on adjustments our each In to is

not sell us We’re avoid This allowed homes said, building and to has and the being very share. and up proactive inventory. reactive. with I our We're finished our outselling as increasing market pricing competition,

Our reflect Portland. include markets significant category which Orlando, markets. eight Austin, more correction three the include Northern and Alabama, Pensacola, These softening and Phoenix, Utah, Reno,

of While these pricing we generates have sales hit somewhat, and cancellations. mix base incentives, fear the need is required driver to is and of sales cancellations. prices the taking dynamics are There offset led elevated required time haven't new achieved of growth to to is focusing individual time programs. buyers establishing traffic In markets cancellations, buy. slowed, to to that prevent has these mortgage to to a vary price now's convinced and that more that also adjustments, on with that. bottom, many purchase markets, This It's which be our we're the buydown work backlog the

track markets and keep areas need The these progress and in picture one day. a some back country made adjustments markets our going. of activity of quarter. and gives markets unsold I these one hope make all completed the limited however we're going every we're we've progress very are have in fluid sales fits on our across the While that fortunate making -- forward. making to these first size we're we're of able better solution. strategic a size what be adjustments There's we each confident I'm doing to in each areas, not so and still we inventory, proactive decisions fits to very this to should you get

now starts a as keep to it our We we're homebuilding address over to going as I’d This turn future going said in to are past, committed changes. we've to Jon. and first focus. price the management machine balance market. homes any to our sheet our And is our team like to market maintain

Thank you, Rick.

construction set Rick to Our market maintain Stuart pricing starting homes flow, of of we'll volume plan, continuing have homes. sales strategy us well for part our executed and put, cash Simply next to game by detail, as generate sell and keep the up our to strategies.

us primary construction even allowing costs, improve the both, areas these to profitably the homes. construction flow and production. Properly Our executed, reducing net to lowering has cycle cycle focus, playbook finding gross of three and of market continue time, sell achieving strategies margins,

each me in in conditions. change have address Let construction area. Reductions the costs market historically lagged

resulted that is true the different in call. is in cost total respectively. reduction year-over-year, the time, this the market a the and XX% is X% at to excesses. both and our quickly Increases in speeding of turning years and into starts, thus of wide caused a speed materials quarter, industry change costs availability While earnings is of two has look and back direct labor construction we construction conditions sequentially labor last sharp materials a fourth This Taking up last Lennar. continue very what the increase increase for as guided of in our on shortages

the the trade working second, to of Moving three-pronged engineering reduce is a first, our cost approach and all specifications in an review. labor materials; forward, evaluating home; value intense our of process partners with third,

have We strong trade relationships very with our partners.

Florida have of flow as year. them and per of for to the And our working $X.XX closings we understand the with to of compared the demonstrated quarter for has improvement this by availability experiencing in years from their These closely in small foot. contracted to supply and prices. square the of home, already that our Carolinas. to of our see despite This labor lumber last cost started construction quarter, first have in impacted steady lower We dynamic primarily per this the time increase months. baked the into We will have sequentially costs sales foot starts flat and by last four lowering in third overall that costs time is half chain we beginning a course the disruptions This or the second $XX,XXX Cycle demand square understand savings was area drive will cycle effect labor costs the in as Since meaningful homes sales, the start reverse they're primarily and quarter. and reduced the second us and of backlog production taken half slow year. in and step over construction per the amount strategy. this the our approximately two first quarter, to area few be six cumulative a for fourth results as reduced seen our with first prices as lower the in our focus materials our by is second quarters is will parts second will driven throughout grow improvement to back for the hurricanes been accelerates. quarter, reduction in through in What they earlier these of

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up up strengthening bringing significant noted, our Stuart next our tied sheet. cash of inventory, throughout that cycle few the free balance will further quarters time As is down amount in

only absolutely for time maximizes choice then of parties. efficiencies them. all being fields even the for builder adhered information manufacturers, driven Lennar field enabled Lennar’s is It related to and distributors, as critical between of for the scheduling of core through pillar back with is to and and Level From trades, in processes. us, to rigorously to start our and both starts efficiencies for technology The projected production. and tools offices as and is for and chain dates G&A with steady pandemic such flow the margins by is focus was flow field supply third pace The flow to open it drives completions area even day homes key trades both. and production a the the day construction improved achieved Prior us. focus real rhythm disruptions, communication to of is for trades its a and

both with purchasing construction Stuart this regional myself, divisional focus and an is teams. of noted, As Rick national, along our and intense and

us of production. cost, time cycle even and of every on single lowering are day focused reducing flow All achieving

just light focus primary our generation have we of in to partners notch a has over balance we finish past leading it And several the relationships sheet banks land strategy, worked our the Turning sites land taken flow this quarterly and years, the homebuilding basis. company's strategic to in next current history. to our home been a land strongest behalf established purchase Quarter-after-quarter, and cash land up machine on environment. in to driver we time our our on have deliver with the where have

restructured from of our terms, deliveries The were payments reassessed During just quarter The purchases. utilizing the million quarter, fourth we duration deal either transaction. updated XX% were and/or of underwriting, the land every partners. of land timing, we or purchase result or purchases time did the this our pipeline, approximately proceed focus price, short $XXX or small land we and of was in in the made land the with option up not banks in land remaining $XXX million the that land

the each. land under quarter purchased XX% in about million of fact, for the $X In were transactions first

$XX the forfeited of land of XX%, home site There ending also with in land The we up During on about focus strategy resulted percentage totaling these home some associated deposits year. XXXX terminated million last XX% ongoing in light quarter, with controlled fiscal our terminations. XX,XXX sites. contracts was a from approximately

owned Additionally, from the now to turn I'll fourth Diane. it three X.X of And years we Thank quarter reduced the at to year. down last the end over sites years home years you. of

then deal Rick, additional and morning, Jon points provide Thank Stuart, details. everyone. you, and few minutes ‘XX. level have our of I'll spend results great and a homebuilding other color provided high so good our a already for our I thoughts some provide on any QX the of don't need to noted, and Jon, segments sheet, regarding Therefore, business balance performance,

certainty turning offered operating provided compared a increases. operating our to per our as million locked cost volume We So earnings between $XX as interest in teams as on Mortgage $XXX results of compared segment. $XX in prior homebuilding together they technology. attractive this Financial buydown $XX a prior the the to than team to rate solid rates level Then million million. as Services, the higher the expected interest earnings $XX Services fourth focus our million buyers successfully buyers through primarily our transaction discounted Financial decrease in Services rates to team produced as for continues higher programs. benefited Other and were a with future year. accomplished operating These Title year. a earnings connectivity increased starting from earnings potential Financial executed Title great through rate result with volume and quarter, choppy lock the were to to These were of Lennar in of million our environment. result efficiencies of avoid

non-cash segment loss This For the our had million. an result loss losses on $XXX the technology publicly totaled of quarter, mark the which investments, was Other operating fourth million. of primarily $XX Lennar traded to market

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also no and we As starts of balance our cash we our pace, we market This market, of and We sales quarter, generating and conditions. billion -- as and results homebuilding is with underwriting that The as every we've land $X.X pace today's aligned on the laser-focused noted, $X.X this to total these pricing of our inventory quarter we with billion by of with on sheet. ensure on provided mentioned, matching actions to on our facility. all Jon credit were borrowings reevaluating cash turning revolving our a deal cash ended the preserving pipeline focused focused in thus liquidity.

controlled, lighter. sites, controlled to year-end from controlled home from and sites, than and XXX,XXX XX% translates we XXX,XXX owned becoming home sites continued This exceeded into of During X.XX our sites. which XXX,XXX owned, land years owned X.X years quarter-end, home goal of we At quarter, our the home progress option for a XX%. of into goal of sheet of since our we lower was Since We and our control we that sites these When is greater of was of basis. we we calculations the balance in at calculate sites provide homes a from to on a and go just since future years homes they assess calculations and time, with present goal in is years prior year's terminated XX,XXX XX% which the our three an our inventory. exclude turn percentage owned vertical this approximately to Last forward contracts to quarter. our improvement construction home lower risk we cash risk walked include year. in slightly home related look period was away home business industry. sites way others that in in total to better homes will a the plan short inventory comparability It's inventory

those and years under November sites exclude was homes If we owned at calculations, XXth. reference, home from for we mostly had controlled X.X construction So, years approximately homes in the our inventory, was XX%. XX,XXX

focus on to shareholder returns. committed also our increasing We remained

million XX outstanding million fiscal year beginning X% of the the our year. or about the we During at of shares totaling shares XXX repurchased

ever, at our we lowest paydown notes Additionally, of at benefit our debt dividends from our of From brought earnings, improvement to a negative was to was XX.X an our and paying quarter-end, shareholders leverage to during we in cash $XXX by capital as to to senior the year. the which million. year, from X.X%. And prior debt perspective a of our net total total XX.X as quarter-end continue homebuilding returned we generation capital which strong down we mentioned, mentioned,

forward, any note ‘XX. fiscal in maturities have we As do look not senior we

is December ‘XX, of fiscal $XXX a few million in due maturity balance just points finer is sheet. ‘XX. our our next on which And Our

$XX Our increased stockholders’ to equity billion.

Our to $XX.XX. book value per share increased

on sheet, we me let and It first to significant ‘XX. low was targeted financial provided, the In our inventory and that XX.X% the given be summary, balance now have for continues upcoming year. leverage provides quarter equity us the guidance the XX.X%. flexibility return to brief was liquidity that with with historically And of strength of our Our turn return the on overview, difficult to conditions. market uncertainty provide of strong

So, of to as our the providing did broad some give quarter, for each last of first quarter. boundaries we very ranges components we're

produced to QX prior we year to new of away XX,XXX flattish be would also count the So, active range to deliveries be anticipate homes QX communities. XX,XXX the community XX,XXX starting walked We QX new to with be as homes. new our orders, range in deals we expect ending from XX,XXX orders expect to the of with have and that about in

market. in range Our as average price price XXX,XXX we XXX,XXX sales to should continue QX be the of to to

on We to a expect about result field This XX%. costs. adjust policy the be number primarily number gross based margins as deliveries, to of our will somewhat of expense

to be deliveries QX see for margin expect about will margins homebuilding we And gross we SG&A the year. and As be the today, on Stuart adjust revenue. things low X%. expect as gross based too we for point our will mentioned, This

have our our and million. of land loss we business other $XX And For sale anticipate venture and Services Financial QX to joint will categories, of other a earnings $XX $XX about segments, -- for million. homebuilding we the range at the combined in to million expect be looking

for We multifamily the at expect quarter. the loss a does that and determined by of category of Other our Lennar potential our end not technology any stock mark-to-market the about business will loss our This of also investments, for million. prices be include million to about adjustments guidance $XX since $XX a adjustment

our of efficiencies. to corporate about continuing technology G&A total be initiatives revenues to lower produce to X.X% internal a investment QX and percentage result X.X%, our in as expect We

be foundation approximately be share million to weighted average count charitable per The shares. home delivered, XXX be approximately we and should XX.X%. rate will Our quarter our the $X,XXX contribution on based expect for tax

pull a approximately So, when $X.XX EPS quarter. for range should per a this you together, of the an $X.XX produce to first this guidance share

providing boundaries Finally, only providing the of market for given year we're deliveries details the to not the are but uncertainty, at time. XX,XXX for XX,XXX, full further

earnings another to forward look on next call. do our we However, update giving

operator. to over that, the me with turn let it So,

from comes Kim go from question ISI. Stephen ahead. first Our Instructions] Please Evercore [Operator

guys. the low the for you to gross information, your all be most outlook very times the here. exciting on thing commented XQ today Thanks I was for thought the year. point in much, I appreciate that margins interesting very

And so that wanted a explore I to little bit.

think I were there components. -- you few a

start lower you XQ -- of said that think I the think would you back through of half the year. back about in the half costs flowing I into talked mostly and

in is already mentioned, XQ. also You lumber benefit the that think, numbers I Jon, for

So, reason. that's probably not the

margins improve. why two there's potential So, see I could might reasons other

so seen of in One is them and of that U.S. QX? of an finish -- or Or level weeks. finishes, Maybe the from benefiting would several buyer be maybe specifications level in demand those maybe and improvement cost homes, having delivered that you've you're its the the lower in over past

to could see what assuming I those. us so, rate are if either was you And tell comment And on you mortgage outlook? range also wanting of in of your

So, Steve. questions, that's a of lot

a quarter margin, we start think, saying me by let low to be So, expect that is do first our point. going we

process and large derives by pricing. as And a than it price flexibility. by with we it's in the order incentive therefore, part to it strong land. regard that is move done noted. volume we very position migration in from mind, downward ahead have direction. right we machine, With a very reconciliation think land in out the in first much Remember, the shorter past. keep been notion, structure, in in And general I and We've we've took the gotten term the is moving in of our that started reduction that

partners think labor been working and we've able I pricing. trade I land clear, reconcile both was we so, as are far be partners, as And concerned, some our think trade on with that material. to we'll And

some the those volume through other lot partners. at our do lumber And very market are in like out pickup there's and build share, with our of already the to hand sales refine hard through, as at to a that of work, margin positioned looking We changing in we given best hand that working are that access lot are are just will able go stages are filtering people of price labor, interest materials our filtering to at business a there and of additionally, homes the rates we reductions we'll built, the with bring as year. we early But where Some think go product the been higher And through we've that pricing reconciling to be year. at us. the be our we and down. appropriate in making market efficiencies prices, able we that sure through

tenure dynamic the had pricing of interest our of is flexibility, been I has question continue rates. You numbers. trending our what down. We noted relative program place. asked shock nature is own, assumption are a likely numbers a flexibility rates. the But recognize and as focused the raising have mind to our its a in Fed interest absorber that rates the wage and that to unemployment kept We've have program, on our numbers mortgage we and in

through keep customers it is to can year, going almost the agnostic order our pricing to moving to to rates. we for do what volume. interest maintain of and in affordability We're adjusting the our All

indications be But much we are to All So, view defines toss-up to as though a we're see to interest spiking question. through going to not our evolves rates the how we're a probably on moderating it have program more that working, that's relative rate don't is the adaptable that going year. interest interest rates. more forward and

is gross over said And be in is the quarter. the is -- positive that that description, have the field that that I to is closing, absorbed her of guess every add we thorough by gets Diane impacted impact margin closings QX as most I is that as close has at a more only margins. likely would thing volume volume overhead our level on the we to I going homes, think very so spread lower more And -- quarter.

J. ahead, to Jon And add wants know I Go something.

I just said about on construction want to costs. what I clarify, Steve,

throughout the the our will As trade the a in through what pricing. I mover down was of we adjusting quarter. benefit second second of That's I flowing throughout we're contracted quarter. noted, The which with see that in referencing half of biggest terms start moved year, lumber closely currently and is needle will and second working the entire

you. Got

helpful, That Okay. is Jon.

you're on words, back I the the you're XQ starting deliveries XQ, about pricing. half other to of stuff lower with in contracted talking going half So, That's in that back be guess. in of not of sort

even of quarter benefit open and will full starting and -- on It's the started. the see summer No, already latter in and in we 'XX. happen the renegotiated prices that the those commitments quarter, full on that see homes first now we'll started of of the starting some lumber with quarter happening to of part reductions just the trade throughout second through the benefits

That's helpful. Okay. that. appreciate I

third lot your you on about straight from in know is number owned lots I quarter, actual all XQ. the declined XX% for owned question almost and ratio it's count. that. Second and years But talked down lot the your a of

next I'm count actual so, much lot can to of start market owned anticipate rising count to lot need the would you help challenging the if conditions again? conversely, for And might wondering, over market how few you kind us owned quarters see fall conditions stay and your what

Diane, do you want to off? that one start

always I owned site way been desire Yes. that protect The the has I that positive it, risk. and count reduce our is think look direction -- to sheet the a mean, Steve, home I balance going it's down. at

primarily can and finished home ground be to put level. pretty much going a we're So, shovel the home owned where as at quickly. really the But our owned really growth the should lower comes much from as sites keeping on we controlling a sites

of percentage. as by and the keep reduction not bothered I'm growing The So, controlled as owned. goal keep that possible low is to the

what that pipeline really embedded building the land think I in and you if to basically, just bank and the our bankers, execution to strategically, continue going land doing build our we're And confidence. that's strategy programming. Well, about programming our volume-based think between

value-add think adequately pipeline stable be be that provide growth and future. that owned building site continued count either that I business to the confidence for is to to levels you'll think able right home we delivery moderate for I choose. as or and the to see our relative sized we're really But levels that

I that that. thought I you. It's Diane. good thing. bad agree thing, a was I a certainly imply didn't to Great. that mean with Yes,

better. getting good, It's Very and it's good.

Yes.

Next, Goldman we'll go to go Susan Sachs. ahead. Please from Maklari

the be And perhaps next My to cash first hold that in you we you sales even environment does thinking normal level as on thinking to controls it pace sales that talk your inventory pace, XXXX? the that The around, ability kind everything and maintain how this can can actually on, generation, that's elevated of cash mean question the of ahead to for is about and the last about historical we the through assuming that for will despite should to ground. level broader in generate of continue tie year? going quarter, do strategy you would this what you that move have

above for to in to sales feel So, operational maintain it's know active. looking forward pace is our we from we as as pace, pace going -- Stuart where standpoint going keep a last We as keep move as pace we were and by from keeping the at focus an get overhead we're our our we're to quarter that greater going that standpoint sales go-forward XXXX leverage and that XXXX. and sales keep into said, well machine and

and maintain about consistency. base our basis, I how a is think lot probably really pricing it we're at pace. right sales but do spent our day-by-day the core it for I time business, the affordability that of how on expect for customer doing a get can of on today's haven't you running pricing focusing dynamic the we're enough we talking to model,

that I hard think in working you're going to continue to see us direction.

banking priced the noted, we're or higher-priced our And ancillary we'll more the they market current I land land be they'll conditions. pipeline our informing that to get. was bought dependability yesterday's it the but and that has land pipeline, As of priced moving expected is pricing, of in is through dependability appropriately business bringing to

All synergistically to of and of keep really pace volume this inform to sales us works that that kind consistent.

we remind as add pace, very our matching we our tool pace that. to start inform and sales move our been that have a model has into will exactly do pricing directly strategy operators I the as dynamic That that and you remains sales forward. ties to and steady pace use would a start that our just

of to all do I about uses very And next the leads also guess That's Okay. think helpful. you of that it the question how cash.

priorities? are relates cash radar? more you net obviously quarter. in anything position You You else a you're Would now your on in sheet. to past it back What consider there, that's of bought stock your getting as mentioned or some the that balance aggressive this

Yes.

that the So, follow I'm happy I many investors We're of question. of on know people ashamed minds that having you asked Company. of it's not too much our the cash. and

fact, -- in these and In produces times a in advantage tremendous been it's lot in, a optionality. we've of like

going two more, do and that know those a generate of in and balance with Stock likely in place. our focus looking we backwards we Looking in coming table. of program complicated to continue to a purchase chain repair, multifamily constantly quarter we to good We're -- to exacerbated we're opportunistically this quarter. we a on go rolling buybacks also We some production primary by this generation. to the a and caution, stock. quarter, But think, quarter. stock third, Stock it's reduction, with the was down in But you of our homes, to slow reconciling before supply But, with this through are clash prices we that's clearly markets. avenues. cash This was that fast. in body going the of Again, what the we cash around, just are in was are by did in on production decided of very to as have buybacks come single-family. we go remember sheet tough abundance the at I hurricanes a a sit this very both reduction messages, sit my here be cash, one repurchasing maybe

the inventory have to And see to a rates. in We protecting market, because place lot going existing we're are supply buyers are interest putting an not overhang. not home of going low

operate is is enables be to when it of us to this So, to And signals our more opportunistic as duration in we limited. our be smaller in how our belief And capital you in those case come start well. us past. way that the somewhat will we first People to growing Lennar as tends know the correction be be seen a from past. having going business additional well. the probably have or mover; this

all and and to best these to back fortunate to where garnered. first go and book of and are viable uses then cash. of returns to pay down grow and debt, buy pick business are to stock choose have the So, the our to to We're accelerate slow optionality

Ken we'll Please Next, go line from the KeyBanc. go ahead. to Zener of

unit be when your you balance most Stuart, land, cyclical how asset. reduces movie which considering an margins A your as closing, first with iconic starts unit investors could inventory to is, simple or to economics actual says, perhaps strategy think leading requires you optimize inventory overlook start turns, goes alone. nice, incremental because is is always the versus that idea the ABC, much homes comment orders, flow which flow cyclically from My many cash question that the lower on but comes margin, your you income the choices of, land as cash more is say, XX% statement decline selling the I when your down the these let's of X% XX% important. units

your so look reducing to low producing us inventory. that been extremely backwards, But SG&A of embedded still pricing turning enables yesterday's reality is same in inventory, if bottom land strategy our I our purchased in have turning and price down, our time, Well, cash land profit noted, our inventory, question, margins tougher as come we basically producing the we're you and line. you it to the higher as because the entirety time continue to our at we're levels

turning that. continue we'll cash and is productive purchases that will It redeploy repriced future. land for We into the

profitability. is trains works inventory and keeping generating of replenish balance drive improving this All cash appropriately flows, cash running symbiotic the sheet to and positioned maintaining on the time while and flow,

is that basically the So, plan. game

comments you years absent my question Within [ph] second question, annualized, if do it WIP on think XX,XXX XX,XXX Diane, make year-over-year down because amount Thank that unit your versus you. that ending probably Great. is just XX,XXX units new. context, starts inventory going And simple, an does suggest that's -- cash from owned X.X or that X.X I enormous will closing potentially is of reduction? imply be then versus versus your flow to be your land, to at

Yes.

that's I share. about right, some we're our as heard volume on enthusiastic consistently, chain capturing keeping very supply you've We're say market the focused Ken. think up, mean, issues. of I resolving us

balance sheet billion. think be heard that Stuart mention You in we about embedded $X.X our might

directionally, But is the point lot that's whether is our a not sitting So, we cash debate. of balance or exact can there's sheet. number right the on

home inventory of believe that would and as lead construction -- And so, and see to unwind me you'll lower low level all construction. that, we that

talking way, by reminds exactly or meeting ago, the we of years say one I’m and investors X a X had ago, where I or when And me like it about X mapped out our years we some that where -- strategy. the some, we of with mapped out

Rick? remember that, You

Yes.

is what plan. we're do, exactly all We and and the the to exactly is this in to this said, out mapped inventory reduction that level, down the the game going way strategy

Matthew Our go from Barclays. from next ahead. is Please question Bouley

of to kind margin? clearly, cash the line? point and successfully sort just does And the to you of I XX% Basically, the further? The somewhere sales on levels But model how trade pace is I conditions when and I to the low the, margin you're taker mentioned scenarios. generation where between keeping the draw question for price is my were balance elevated would if where Thank market you model guess, margins kind ask about margin that. these be know the downside change there of Is to out the limit that potentially willingness of get year. your getting you or to So, is the going your pace, deteriorate, to gross is price, wanted you. -- gross

as that let quite for I for we've long time. minute preparing this Well, just say just me noted a ago, been a

basis the been we our efficiencies, the level doing building cost basis on reducing have division years, quarter-by-quarter, especially focused the business. into points been at sticky of have points, efficiencies over past We by SG&A, refining,

were I to to consistent if into conditions market to lean continue think that program the going to going forward. we're continue deteriorate,

lot adjustments. room to of able have those We a make to be

I deterioration, some impairment. with through significant there's the going be might programming some in seen but modest notions impairments kind There that it's of further about that concern you've think not of to be past. the that flow been

to market. really alterations you downside think platform even of scenario, the shock got the to look at terrific I volume a operating through as and program our we've continue we'll able continue be focused within to absorbers if building -- even be

said, And get our we're If down be the to as for in you continue, we ones homes, engineer and order we're the the to across out get cost higher from starting concessions, really margins. from to do are our trade make things bringing underestimate value we as land our can't that just in re-specify cost partners, affordable, can and concessions working have -- so partners trade leverage Jon we're board. partners, looking going more going going slow product People with it there to work. to more

about just the to to And ask I it, wanted but impairment you Stuart, one, alluded second side.

small kind about of next to clear would I you as mentioned, might the as walkaways? But expect deck, that think and quarter. of owned write given of just there going so did is market in communities this where that on guess, be then quarter, risk? option forward. of decile some what kind did any just elaboration did deterioration, impairments the sounds -- number kind land or It further of speak, like write-downs what you Just potential you you're You smaller take down kind ones that you one, the

the understand black I concern impairments the and Look, Okay. that naturally box of feel. people

been look of get quick very ahead to you curve. historically, the we've If

And additional we and visibility on a think give right We're going answer The deteriorate, to is And the and always I to always if give visibility put we that is that's think the what question, how it. mean. there's and decks, possible. market clear about be to don't continue can't to straightforward clearing we're we the as did going so, might as ask you the as much decks boundary when now.

is we time the as about always we the the cash sheet -- decks, scale and there I and took as do, tree of as think say. really shook we the that -- you is. really an what and -- and given cleared especially all We balance size impairment and this everything else,

going think do with always Diane, it? I you Lennar. the been to Lennar. to consistently add It's you're with see want case that to

say, you where about going if impairment, it's think to for you're Matt, was what I margins. Yes. looking you're negative finding an net

not it's surprise active our so you split that backlog margins gross our impairment look between at And where and a are, if communities.

it we X and communities communities, the was active side, On X,XXX. have

articulating. So, there's communities be are given margin average, company always negative going some that have the some concern net margins. be as people that we I don't net should where great a But as think on as to anywhere are for I the going always voicing are are we're think over. that but going adjustments. the There's below impairments near norm, be don't backlog to communities people widespread some to that There's concern some always be

line Truman Next, to the Patterson we'll go from Research. of Wolfe

balance. Diane, congratulations the on cash

three below level December you is different, every then November, of versus perhaps communities could giving kind could nearby more you through just you of too an competitively, us understand accelerated you of kind move One, elaborate sat you orders, generally year But much second, market model. in will. just first that the maybe all, your question incentives not maybe three, is with Any in quarter, I generally inventory. pricing dynamic a discounts. if away said is needed with it kind way part ago? to could competing a Stuart, the of believe, what on And understanding bit pricing give you discuss where I just So but

So, he was part model? that was the about asking pricing first the

yes. Dynamic,

Yes, yes, the dynamic pricing.

one the questions... And the of

into Moses, internally. To to be doesn't the he want talk talk answer Jeff that, the Diane? and ahead have and and to to able But, model, understand you get Keep anyone. pricing do to inimitable really it you'd go to

plan and the market. do that time. of looks competition exact I'm each really for time. than each -- assessment, home, what over tool, in Truman, involved more some market, spend that each incredible you for a happy much imagine. community, an plan And that to happy should community It's really it also the and we would market looks that home-by-home that, -- tool at we've It's sold and in I'm spend really to It's

level, but the planned be information when it of is of truly as We detailed We you as that's pricing use down. price. really conditions. pricing is market lot it only a it very tool flexible talk well because going high all a an up in the a point amount unbelievable is can the it's community So, to allows level. us detail, but us at is at market about really And pricing real-time really gives way that going

and between. And it is market to the well to available office real-time as local as the corporate everyone in

engagement enables of close And pricing and really all company. us so connected that close to the the the levels to stay to at interactive very market,

Yes. quickly. And react

about make and our and all the time tool the tool pace. we This strategies, pace metrics to can just behind other at. thing you getting start that referenced talk we're hear to that that real connects us pace, not does, ever that The be want Diane of sales so dynamics adjust in we sure pace throughout to

competitors demand to much I'm the might maybe move to needed -- some how just to elasticity then with And trying nearby? Perfect. Okay. understand any be of relative

commentary, what the what's regional and and as Well, in the on we said with inventory going fluid conversation this is, that very pricing what have their they their Jon evaluating are generating we're with other I is, division And presidents. a constantly is position competitors, sales? the presidents

over of do. the and anything that's ahead a to with we're all not someone need move on we extent adjustment really We it. And familiar to that out are we pricing stay going if to there. going something, have we're move and hopefully what this. them And there's to make We it not want follow

dovetails this all of with our marketing focus. dovetails it -- digital And

data dynamic We component group science program. have marketing a with robust with exactly digital the that pricing dovetails

pricing we're the and customer is that to appeal -- the generating building we're generating the intersection. going base So, and creating

in would mic less. right that more. proof And the Jon, some we've Stuart many is, ways, I’d homes I he'd now. completed the XXX that pudding to I tell the or like got in like the think mentioned drop and And only Jon said in Company

them match and machine even inventory. we have amount and as being produced got are We homes to sales, flow we've the going our perfect of

I'm because inventory. you standing say we XXX be actually as going today's long customer that more better in inventory to homes with And have would brought Yes. as it of We up, is... of

Premium.

sales what clear there Yes, trust premium. you you don’t no And more want to discounted were I'd at time emphasize inventory. bulk one And always it’s to read. rates

from there. So, let's go

do call the Perfect. Okay. it, specifically, And just vendor materials, on today? then we'll cost the as savings you savings of, are products, and XXth, certain contractor inning are on outside there the what December savings primarily we're labor of think side, in lumber? And of or

to homebuilding lag the so see -- year, production down down always very for in as fourth -- that's largest moving costs between has and and of prices labor have the you why innings really I is has the clearly busy a builders prior you sales all then down. industry noted, the quarter Stuart the while we're the noted market construction And Look, has because been remained early fourth the quarter. completing typically it's slowed moving as quarter,

that. industry. like in we'll move clearly I got of innings earlier, we're feel as the I traction. reductions. primarily significant starts of tremendous pace. think happen kept And quarter consistent as have will We've we've second terms a we our start We slowed And So, because our that movement in within our into through level early see noted quarter, first dramatically the at

for that as also that of production. of cost the But that frees up, brings the as so starts down, down. more And manufacturing labor labor availability creates come the materials

it's So, where a material down because a prices tends little bit longer is more come behind production immediate. as labor got well. cycle labor That also lag to more

Our & next question go is from Associates. Please from Alan Zelman ahead. Ratner

a kind surprise. to bit is, love My targeting year. the way reaction when industry-wide about little little kind I'd I of And Stuart, initial of the XX% of you for threw flat thinking a guess was a bit for your year. down you drill guys I'm it a are next pace pretty in out outlook starts on

D.R. largest kind Horton has articulated Your competitor of similar. something

production capitalize through been start starts You of sharply There's are guys year advantages in But spring. clearing the We're ramp as we of you if said kind were of as heading pace some this on other they have of the to single-family kind going lot XX% to that of up see spec. the that built the well. they back very on pulled builders a spec spring market. our of into the

expecting the getting of impact is, that argument's say, for kind I than do you decline arrive say, that savings XQ confidence guidance for my is low that XX%. your margin the you're clearly as at kind on you question number? gave So, far year let's the less And guess, how and the as the XX% Does sake, cost that, of that let's watermark? or being

to it. one So say of adjust all, the fleeted of they'll realities But that we has their participants. smart switch relative in look industry, could pace some some I'd first and I'm lot what larger builders, strategy actually a the are across there not of now. how the and smaller start no builders builders very the a Alan, and markets And that practical make sure some. at are country. a for capital the of get are you question right markets Remember, are question the that It's we larger complicated supporting It's a capital proportion. just can of started

really like back, that for My smaller stuff personal to and it I land might I XX% reductions the complication know XX% pulled that the are don't paid or it XX%. view looks many is that. what's of price like think builders or is been percentage be only be. what of the and going

The up right other side is markets frozen multifamily capital third are of And of production the it, a makes which up multifamily. very about now.

because of the seized coming up for communities rent of are markets buyers single-family multifamily new and I number think out of even the of the kind for ground that considerations. capital

starts So, it market let's standpoint, a be can't portion to very in sizable feels me, just under strategy limitation. going are next prove capital year of throw a from that, for to not even

ends it I only know being believe housing this. instead of looking across country. housing opinions the that a if are with a XX%, many still, been I Now, different you're there's on at production up shortage. shortage shortage, XX% there

major affordability. you to the workforce and in the shortage it's limited XX%, every and country, their more It of If will this there is state. biggest that and that some whether that city talk mayors we is is is still across supply supply, almost drumbeat single be I compounded by short governors be feel that concern a And production be downturn. there XX% housing every to to and going or going is a out and reduction fact think and a

appreciate there, I the insight Stuart.

little Secondly, I bit. a think you on kind it of touched

seen thus moderation far? You November explicit. power for about October, just any the last kind you home changes a in you have and pullback in with to in rates? but highlighted over weeks even additional what pricing your the need can or December And just peaking incentives demand the early improving? seen maybe more back coming you so far Have Can in of X talk rate be X, buyer

combination And those So, which we've led level of that all in generally higher are on to buyer traffic, but greater the definitely before website, both seen power our pricing community quite increase, you of -- been increased sort yet, just has demand, the pricing of some [ph] traffic and stabilizing a cams, on fewer noted. we environment, hasn’t accounts. happened gain

order think to XX incorporated I is incorporates... just so to that of And clear, in down guidance percent XQ XX% or your be that

Yes. expecting point we're that time. That's at this the range in

Our Mike Rehaut go from JPMorgan. final ahead. question comes from Please

First clear. gross be not the first there comments. improving year fully your around around I being the of from or on the outlook question, in. or if to of am view quarter just on elements wanted lowest grasping I'm But and margins sorry guidance

gross what incorporate? or a months that type bit point into more what pricing relief wanted incorporating be margins over -- as back guess, amount on perhaps how basis standpoint the But next importantly, the half. going Just clear view or reflect? appears to X Because is. it view it's does curious outlook certainly, type the to articulate fiscal cost I'd on trends cost does could you be little of that some 'XX that price of X that of much relief, price of I a for you're throughout

is standpoint, do the see extent So or price ASP we upside there. That's view we're out able happen underwriting the with and incentives what ASP, to from there's in in increase incremental any financing what there's will benefit our a that's we we that market, price just the a to not XXXX. appreciation what at. assuming appreciation in we're To market. That's our what

expensive to see being if sales come making biggest rate Rick's To Michael, is in, tool from this mortgage if really the cost you potentially about buydowns that in. extent in of could rates think the probably emphasize buy point, that come Just that benefit very and a you becomes that in environment. effective less down the

side, But any baking So additional price appreciation. flip you're the just well terms from slip on any be baking continues from pricing market price in not to incentives then, in to trends softening of as obviously, discounts here? if on the you're or clear in not needed in, in further here

That's correct.

attract order incremental So, volume. price the offering incentives We appreciation, price we're good, prices that been in to no that solid assuming reductions. no are the base think incentives and we've

been things. Jon the cost time, continue extent in several going value to as and It’s you about we're to going low product throughout One, to to year cycle side, talked the margin engineer is we through noted upside went need went be going that to Jon the to. that come Stuart the can from The see through the we've I that land think QX generating. really we numbers the point.

embedded prices extent to And bit are curtail of that savings that ahead been think to more, cost gotten a going. some going that. where have the the prices be to I offsets But of we've

looking we're now. right field of a level kind so, at And

count But lot the And out. progresses? appreciate as away obviously, amounts on the growth one of community I lots walking thoughts just I and from any might around know that. that No, movement impact or the option two year different been side secondly, oftentimes Okay. I on side. years guess there's

count versus year-end where might by be 'XX So, the around community any thoughts 'XX?

about it's right because talk not picture. community count very rather now a we moving So

just expect repositioned too should of soon to deals any count could might those or half since what back to grow that But would the guidance community numbers give it's be. in right now, renegotiated, You 'XX. we’ve as think I

give Thank and but longer been first I we call. our forward everyone. quarter. us if wanted of normal, a reporting back And a It's on Thank have joining Mike, that are detail. Look complicated year-end us. little we lot you, in for went complicated a thank know Okay. you, to give you a and than these everyone, questions, you, times. to further

That conference. you for Thank participating. all concludes today's