Lennar 10-Q 2025-05-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2025

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from _______ To _______

Commission File Number: 1-11749

Lennar Corporation

(Exact name of registrant as specified in its charter)

5505 Waterford District Drive, Miami, Florida 33126

(Address of principal executive offices) (Zip Code)

(305) 559-4000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Common stock outstanding as of May 31, 2025:

Class A 227,601,639

Class B 31,405,194

Part I. Financial Information

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

(1)Under certain provisions of Accounting Standards Codification (“ASC”) Topic 810, Consolidations (“ASC 810”), the Company is required to separately disclose on its condensed consolidated balance sheets the assets owned by consolidated variable interest entities (“VIEs”) and liabilities of consolidated VIEs as to which neither Lennar Corporation, nor any of its subsidiaries, has any obligations.

As of May 31, 2025, total assets include $2.3 billion related to consolidated VIEs of which $56.0 million is included in Homebuilding cash and cash equivalents, $3.1 million in Homebuilding receivables, net, $37.8 million in Homebuilding finished homes and construction in progress, $342.0 million in Homebuilding land and land under development, $1.8 billion in Homebuilding consolidated inventory not owned, $72.3 million in Homebuilding deposits and pre-acquisition costs on real estate, $0.3 million in Homebuilding investments in unconsolidated entities, $8.2 million in Homebuilding other assets and $35.1 million in Multifamily assets.

As of November 30, 2024, total assets include $3.7 billion related to consolidated VIEs of which $67.0 million is included in Homebuilding cash and cash equivalents, $6.0 million in Homebuilding receivables, net, $9.7 million in Homebuilding finished homes and construction in progress, $602.9 million in Homebuilding land and land under development, $2.8 billion in Homebuilding consolidated inventory not owned, $71.8 million in Homebuilding deposits and pre-acquisition costs on real estate, $0.3 million in Homebuilding investments in unconsolidated entities, $42.3 million in Homebuilding other assets and $33.9 million in Multifamily assets.

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Balance Sheets (Continued)

(In thousands, except share amounts)

(Unaudited)

(2)As of May 31, 2025, total liabilities include $1.7 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $31.0 million is included in Homebuilding accounts payable, $1.7 billion in Homebuilding liabilities related to consolidated inventory not owned, $6.0 million in Homebuilding senior notes and other debt payable, $0.8 million in Homebuilding other liabilities, and $1.0 million in Multifamily liabilities.

As of November 30, 2024, total liabilities include $2.7 billion related to consolidated VIEs as to which there was no recourse against the Company, of which $67.3 million is included in Homebuilding accounts payable, $2.6 billion in Homebuilding liabilities related to consolidated inventory not owned, $6.0 million in Homebuilding senior notes and other debts payable, net, $45.8 million in Homebuilding other liabilities, and $1.0 million in Multifamily liabilities.

See accompanying notes to condensed consolidated financial statements.

Lennar Corporation and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(In thousands, except per share amounts)

(Unaudited)

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes included under Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and accompanying notes included in our 2024 Form 10-K.

Outlook

In the second quarter of 2025, our company navigated through a challenging economic environment. Despite these challenges, we remained steadfast in our strategy to drive volume and growth, matching production and sales pace while using margin as the shock absorber to enable affordability and avoid the build-up of excess inventory. Our focus on volume and even-flow production enabled us to re-rationalize our cost structure in order to find a floor and rebuild margin even as the overall housing market continues to soften.

The macroeconomic landscape remains challenging, with higher mortgage interest rates and diminished consumer confidence being affected by a wide range of uncertainties, both domestic and global. At the same time, supply remains constrained by years of underproduction. New construction has slowed as builders have pulled back on production due to mixed demand signals, exacerbating the chronic supply shortage. Additionally, restrictive land permitting, along with higher impact fees, remain as constraints on supply, while labor and material costs, and costs of lumber, in particular, are generally increasing. Demand, however, is still high, as people want and need homes. Millennials are reaching the prime buying age and are realizing the benefit, and perhaps importance, of homeownership. But affordability and waning confidence are sending confusing signals. Actionable demand continues to cool. This is a difficult cycle, as low supply fuels high prices which lock out many of our homebuyers.

Our operational strategy is clear: we are building and delivering consistent volume by meeting the market at affordability and pushing efficiencies through our platform. We strongly believe this will produce greater efficiencies and drive down costs. Financially, we are focused on driving an efficient, land-light balance sheet to effectively have land banks and third parties hold and develop our land assets while we build cash flow. We have intentionally maintained volume rather than protecting our margin. In the past, we protected margin as market conditions slowed. However, we have learned that once we step backwards and lose momentum, it becomes difficult to restart and recapture volume. The recovery is difficult and expensive, and we end up coming back as the exact same company that we were before, with no significant changes for the future. We believe we are starting to see a bottom in the free fall in our margin that began with the spike in interest rates in 2022. Our construction costs have decreased over the past two and a half years, and we believe our margins will stabilize as we use our growing volume to work with our trade partners to reduce costs and build efficiencies.

With regard to our financial strategy of driving a land-light balance sheet, the Millrose spin-off was a critical part of this strategy, but there is more to accomplish. Predictable volume creates greater certainty for the capital markets and will help build more capital-efficient land banking vehicles to interface with our business. We are continuing to drive certainty with dependable volume for our land banking partners. That dependability will translate into certainty and predictability for us.

Additionally, this part of our strategy benefits from efficiencies derived from our technology-enabled solutions. We have spent considerable time working with, investing in, and exploring technology, and we believe that productivity and efficiencies can be significantly enhanced when these solutions achieve company-wide adoption. But modern technology is not plug-and-play. It requires substantial monetary investment, management time, and widespread engagement.

Looking ahead to the third quarter of 2025, we anticipate selling and delivering between 22,000 and 23,000 homes. Our average sales price is expected to be between $380,000 and $385,000, as we continue to see pricing pressure on homes sold during the quarter. We are focused on driving sales and closings and maintaining strong current cash flow even at reduced profitability. We expect our margin to come in at approximately 18%, depending on market conditions. For the full year, we expect to deliver at the low end of our previously stated range of 86,000 to 88,000 homes in 2025.

While the short-term road ahead may seem choppy, we are optimistic about our future. We are well-prepared with a strong national footprint, increasing community count, and growing volume. Our strong balance sheet and land banking relationships, along with our technology-enabled solutions, will afford us flexibility and advantaged opportunities for strategic growth.

(1) Results of Operations

Overview

We historically have experienced, and expect to continue to experience, variability in quarterly results. Our results of operations for the three and six months ended May 31, 2025 are not necessarily indicative of the results to be expected for the full year. Our homebuilding business is seasonal in nature and generally reflects higher levels of new home order activity in our second and third fiscal quarters and increased deliveries in the second half of our fiscal year. However, a variety of factors can alter seasonal patterns.

Our net earnings attributable to Lennar were $477.4 million, or $1.81 per diluted share, in the second quarter of 2025, compared to our second quarter net earnings attributable to Lennar in 2024 of $954.3 million, or $3.45 per diluted share. Excluding mark-to-market losses on technology investments, second quarter net earnings attributable to Lennar in 2025 were $499.5 million, or $1.90 per diluted share. Excluding mark-to-market losses on technology investments and one-time gain on the sale of a technology investment, our second quarter net earnings attributable to Lennar in 2024 were $935.3 million or $3.38 per diluted share.

Financial information relating to our operations was as follows:

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We are exposed to market risks related to fluctuations in interest rates on our investments, debt obligations, loans held-for-sale and loans held-for-investment. We utilize forward commitments and option contracts to mitigate the risks associated with our mortgage loan portfolio. Since November 30, 2024, there have been no material changes in market risk exposures associated with interest rate risk.

In May 2025, we issued $700 million in aggregate principal amount of 5.20% senior notes due 2030.

In May 2025, we paid off $500 million aggregate principal amount of our 4.75% senior notes due May 2025.

As of May 31, 2025, we had $400.0 million of outstanding borrowings under our Credit Facility.

As of May 31, 2025, our borrowings under Financial Services' warehouse repurchase facilities totaled $1.2 billion under residential facilities and $80.4 million under LMF Commercial facilities.

Information Regarding Interest Rate Sensitivity

Principal (Notional) Amount by

Expected Maturity and Average Interest Rate

May 31, 2025

For additional information regarding our market risk refer to Item 7A. Quantitative and Qualitative Disclosures About Market Risk in our 2024 Form 10-K.

Our Executive Chairman and Co-Chief Executive Officer, our Co-Chief Executive Officer and President (together, “Co-CEOs”) and our Chief Financial Officer (“CFO”) participated in an evaluation by our management of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on their participation in that evaluation, our Co-CEOs and CFO concluded that our disclosure controls and procedures were effective as of May 31, 2025 to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and to ensure that information required to be disclosed in our reports filed or furnished under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including both of our Co-CEOs and our CFO, as appropriate, to allow timely decisions regarding required disclosures.

Both of our Co-CEOs and our CFO also participated in an evaluation by our management of any changes in our internal control over financial reporting that occurred during the quarter ended May 31, 2025. That evaluation did not identify any changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

We are party to various claims and lawsuits relating to homes we sold which arise in the ordinary course of business, but we do not consider the volume of our claims and lawsuits unusual given the number of homes we deliver and the fact that the lawsuits often relate to homes delivered several years before the lawsuits are commenced. Although the specific allegations in the lawsuits differ, they most commonly involve claims that we failed to construct homes in particular communities in accordance with plans and specifications or applicable construction codes and seek reimbursement for sums allegedly needed to remedy the alleged deficiencies, assert contract issues or relate to personal injuries. Lawsuits of these types are common within the homebuilding industry. We are a plaintiff in a number of cases in which we seek contribution from our subcontractors for home repair costs. The costs incurred by us in construction defect lawsuits may be offset by warranty reserves, our third-party insurers, subcontractor insurers or indemnity contributions from subcontractors. From time to time, we are also a party to lawsuits involving purchases and sales of real property. These lawsuits often include claims regarding representations and warranties made in connection with the transfer of the property and disputes regarding the obligation to purchase or sell the property. From time-to-time, we also receive notices from environmental agencies or other regulators regarding alleged violations of environmental or other laws. We typically settle all of the foregoing matters before they reach litigation for amounts that are not material to us.

We do not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on our business or financial position. However, the financial effect of litigation concerning purchases and sales of property may depend upon the value of the subject property, which may have changed from the time the agreement for purchase or sale was entered into.

Our business is subject to a variety of risks and uncertainties. These risks are described elsewhere in this Quarterly Report on Form 10-Q, including in Management’s Discussion and Analysis of Financial Condition and Results of Operations above, or in our other filings with the SEC, including Part I, Item 1A of our 2024 Form 10-K. There have been no material changes in our risk factors from those disclosed in those reports, other than the impact of inflation, increased interest rates, possible effects of tariffs and increased enforcement of restrictions on immigration, which are discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations above.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about our repurchases of common stock during the three months ended May 31, 2025:

(1)Includes shares of Class A common stock withheld by us to cover withholding taxes due, at the election of certain holders of nonvested shares, with market value approximating the amount of withholding taxes due.

(2)In January 2024, our Board of Directors authorized an increase to our stock repurchase program to enable us to repurchase up to an additional $5 billion in value of our outstanding Class A or Class B common stock. Repurchases are authorized to be made in open-market or private transactions. The repurchase authorization has no expiration date.

Items 3 - 4. Not Applicable

During the period covered by this Quarterly Report on Form 10-Q, no director or executive officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

• Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.