Lennar Corporation Q1 FY2026 earnings call

• Macro overview: Housing market remains challenging with high home prices, mortgage rates over 6%, affordability issue, consumer confidence tested, Middle East war as wild card, employment uncertainty. - Operating strategy: Focus on three core tenets - driving consistent volume, refining asset-light-land-light balance sheet, engaging new technologies. Progress in cost and efficiencies in operations, technology initiatives traction, land bank administration improvements, overhead right-sizing. - Jim Parker: Area President for eastern half, enthusiastic about company progress, visiting divisions for quarterly operations reviews, local market focus, market position strong with number one or top three in many markets, growth in community count. - David Grove: Area President for West, focus on asset light and even flow production, cost savings and cycle time improvement, marketing and sales machine refinement, improved qualified leads, response time, quality scores, pricing strategy.

In the first quarter of 2026, Lennar started 17,425 homes and sold 18,515 homes. Average sales price was $374,000, down 8% from prior year. Gross margin was 15.2%, SG&A was 9.8%, net margin was 5.3% with net income of $229 million and EPS of 93 cents. Inventory turn improved to 2.5 times, return on inventory was 17.4%. Community count was 16.78, up 6% from a year ago. Asset-light side: less than 5% of land on balance sheets, home building inventory reduced from under $20 billion two years ago to $10.5 billion today. Land bank delivery rate was 86% this quarter. Financial services had operating earnings of $91 million, lower due to mortgage business mix. Balance sheet: ended quarter with $2.1 billion in cash, home-building debt-to-capital ratio at 15.7%.

• Q2 new orders expected to be 21,000 - 22,000 homes. - Q2 deliveries expected to be 20,000 - 21,000 homes. - Q2 average sales price between $370,000 - $375,000. - Q2 gross margins expected to be 15.5% - 16%. - Combined home building, land sales, etc., expected loss of ~$20 million. - Financial services earnings expected between $100 - $110 million. - Multifamily business earnings expected ~$10 million. - Other expected loss of ~$25 million. - Q2 corporate G&A expected about 1.9% of total revenue. - Foundation contribution based on $1,000 per home delivered. - Q2 tax rate expected ~25.5%. - Weighted average share count ~$243 million. - EPS range for Q2 expected ~$1.10 - $1.40. - Full-year delivery target of 85,000 homes.

• Macro economic uncertainties including Middle East war impact on gas prices, inflation, interest rates. - Employment uncertainty due to technology disruption affecting consumer job security and hesitation to make large purchases like homes. - Tariffs and immigration issues keeping upward pressure on material and labor costs. - Institutional purchasers sidelined reducing market demand. - Volatility in mortgage rates and its impact on affordability and market activity.

Q: Alan Ratner asked about incentives and rate buy-downs amidst recent rate volatility and how it's contemplated in margin guide.

A: Stuart said they haven't seen significant movement, Jim and David said no impact seen yet but early to tell, they're in touch with local markets.

Q: Stephen Kim asked about determining optimal volume and market share.

A: Stuart said it's market - specific, David said based on land positions and pace, Jim said built from bottom up of communities.

Q: Susan McCleary asked about inventory turns and core plans.

A: Stuart said financial transformation and core plans have potential for inventory turn improvement, David said core product helps with lower cost and faster cycle times, generally 65% of deliveries from core plans.

Q: John Lovallo asked about cash flow pressure and delivery targets.

A: Stuart said related to average sales price coming down, Jim said teams buying into programs, David said room to adjust based on market and cycle time reduction.