Lennar Corp reports a strong Q2: ‘we’re focused on affordability’

By:
on Jun 21, 2022
  • Lennar Corporation reports strong results for its fiscal second quarter.
  • Executive Chairman Stuart Miller discussed the earnings report on CNBC.
  • Shares of the U.S. homebuilder are up nearly 5.0% on Tuesday morning.

Lennar Corporation (NYSE: LEN) is up 5.0% on Tuesday after the homebuilder reported solid results for its fiscal second quarter in the face of inflationary pressures.

Executive chairman’s remarks on CNBC

Lennar homes, on average, were priced 17% higher in the recent quarter but Executive Chairman Stuart Miller reiterated the company’s commitment to affordability. On CNBC’s “Squawk on the Street”, he said:

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We are very focused on affordability. We’ll have to adjust pricing to make sure that the interest rate offset is reflected in the pricing. So, prices may come down a little bit in order to accommodate affordability.

Miller is convinced the homebuilder has enough room to adjust prices all the while maintaining “healthy margin” amidst rising costs.  

Notable figures in Lennar Q2 results

  • Net income printed at $1.32 billion versus the year-ago figure of $831.4 million
  • Per-share earnings of $4.49 were significantly above $2.65 in Q2 of previous year
  • On an adjusted basis, per-share earnings stood at $4.69 in the recent quarter
  • Revenue jumped 30% YoY to $8.36 billion as per the earnings press release
  • FactSet consensus was for $3.95 of EPS on $8.12 billion in total revenue
  • New orders were up 4.0% in fiscal Q2 – slightly ahead of the FactSet consensus

Homebuilding revenue went up 32.4% in the second quarter, helping the segment net margins jump from 18.6% to 23.5%.

Lennar future outlook

For the current financial quarter, Lennar forecasts 16,000 to 18,000 new orders, in line with the experts’ forecast. Miller added:

We’re going to see a fairly aggressive Fed moving forward. Against that backdrop, guidance is more like guessing. The short-term numbers will be a bit less certain, but the longer-term volumes will be consistent after some pausing along the way.

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