Lennar Announces Q1 2025 Financial Results
Lennar Corporation, a leading U.S. homebuilder, has released its financial results for the first quarter of 2025, which ended on February 28. The company posted net earnings of $520 million, or $1.96 per diluted share. Excluding mark-to-market losses on technology investments, net earnings reached $567 million, or $2.14 per diluted share. This compares to the first quarter of 2024, when net earnings were $719 million, or $2.57 per diluted share.
Key Financial Highlights:
- Net Earnings: $520 million ($1.96 per diluted share)
- New Orders: Increased 1% to 18,355 homes, with a total value of $7.4 billion (down 4%)
- Backlog: 13,145 homes valued at $5.8 billion
- Deliveries: Increased 6% to 17,834 homes
- Total Revenue: $7.6 billion
- Homebuilding Operating Earnings: $809 million
- Gross Margin on Home Sales: 18.7% (18.8% excluding purchase accounting)
- SG&A Expenses: 8.5% of home sales revenue
- Net Margin on Home Sales: 10.2%
- Financial Services Earnings: $143 million
- Multifamily Operations: Breakeven
- Other Operations Loss: $89 million
- Homebuilding Cash & Equivalents: $2.3 billion
- Controlled Homesites: 98% (highest in company history)
- No Outstanding Borrowings under the $3.0 billion revolving credit facility
- Debt to Total Capital: 8.9%
- Share Repurchases: 5.2 million shares for $703 million
Strategic Developments:
During the quarter, Lennar completed two significant transactions:
- Spin-off of Millrose Properties, Inc. on February 7, aligning with its asset-light strategy.
- Acquisition of Rausch Coleman Homes on February 10, expanding its market footprint.
Leadership Commentary:
Stuart Miller, Executive Chairman and Co-CEO, emphasized Lennar’s disciplined approach to balancing production with sales pace to maintain operational efficiency. Despite macroeconomic challenges such as higher interest rates and declining consumer confidence, Lennar’s focus on efficiency helped sustain stability.
Jon Jaffe, Co-CEO and President, highlighted improvements in cycle time, which decreased to 137 days (down 11% year-over-year), and an increase in inventory turnover to 1.7 times from 1.5 last year.
Market Conditions & Outlook:
The housing market continues to face affordability challenges due to high interest rates and inflation. To support sales, Lennar has offered incentives such as interest rate buydowns while maintaining disciplined inventory management.
For the second quarter of 2025, Lennar anticipates delivering 19,500 to 20,500 homes, with a projected gross margin of approximately 18%, depending on market conditions. The company remains focused on managing cash flow and inventory to adapt to evolving market dynamics.
Operational Performance:
Homebuilding Segment:
- Revenue Growth: Increased 5% to $7.2 billion, driven by a 6% rise in deliveries, offset by a 1% decline in average sales prices.
- Home Deliveries: Increased from 16,798 in Q1 2024 to 17,834 in Q1 2025.
- Average Sales Price: Decreased to $408,000 from $413,000 in the prior year.
- Gross Margin: Declined to 18.7% from 21.8%, due to higher land costs and lower revenue per square foot, partially offset by reduced construction costs.
- SG&A Expenses: Increased to $616 million, or 8.5% of revenues, up from 8.2% last year due to higher marketing and selling costs.
Financial Services & Other Operations:
- Financial Services: Operating earnings rose to $143 million from $131 million, driven by higher mortgage volumes.
- Multifamily Division: Achieved breakeven, improving from a $16 million loss in Q1 2024.
- Other Operations: Reported an $89 million loss, primarily due to declines in technology investments.
Shareholder Returns & Capital Allocation:
Lennar maintained a robust balance sheet, with $2.3 billion in cash and no borrowings on its $3.0 billion credit facility. The company repurchased 5.2 million shares at an average price of $134.40 per share, totaling $703 million.
Conclusion:
Despite economic headwinds, Lennar’s focus on efficiency, strategic capital allocation, and an asset-light approach positions it for sustained growth. As the housing market stabilizes, the company aims to leverage its well-managed inventory and disciplined strategies to drive profitability.
