LEN - Earnings call transcript Q3 2020

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Operator

Welcome to Lennar’s Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Today’s conference is being recorded.

If you have any objections, you may disconnect at this time. to reading call of like Lumpkin to now the for the would turn over the Alexandra I forward-looking statement.

Alexandra Lumpkin

good statements financial and forward-looking prospects. cash you morning. call and conference Thank may flows, statements, strategies, including results regarding condition, business, Lennar’s of operations, Today’s include

yesterday's occurred, those Lennar’s call Annual assurance and statements represent Risk statements yet Lennar to as anticipated recently may assumes and include subject no have statements. in future Because in press or forward-looking forward-looking materially under Factors, conference to the our contained activities to to Form inherently estimates any not matters intended not forward-looking that date on of in Lennar’s on cause filed factors could actual Please statements release Forward-looking are filings, the to relate to statements. that SEC the with Many the Lennar’s actual results SEC. update uncertainties. and differ and this affect caption, including only activities most are and XX-K results these These Report give any described from obligation those note results. results future risks factors

Operator

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

Stuart Miller

the our participate we're question-and-answer morning in David Good of California, Today, in Officer; from; going heard our And Colorado; line scaled-down Collins, Jon on in everyone. is who President Jon Services. Officer our period. crew CEO to California. morning, and Bruce Jaffe, Lennar our in is This Alex, again, Financial Financial thank Controller; our here Miami, they're you this that in Bessette, our brief. Rick once keep and you, with morning, us I'm Executive Chief remarks includes and Chief Beckwitt, of will and course, Jaffe Diane just Gross,

leave when defined a your we to guidance, more then We and give improving broad have been a I'll possible. and will answer financial clearly information give overview, a as overview will market strong your many Today, questions highlights questions. brief however, Therefore, Diane attempt as market with have of given time will conditions historically and uncertain. and for

As per and follow-up. one one question customer usual, to questions please limit

our an can and quarter from for our strong, third the quarter rates housing as controlling the reflects and So, focus press country. state remains and Inventories it and you limited release, of see excellent are market was on driven their Lennar, robust across owning demand low by customer interest the lifestyle.

to of year-over-year, solid targeted which Our growth our XX% to approach excess rate of in is very of excellent growth rate execution pace. sales well sales of a X% X%, disciplined reflects

and lumber throughout accelerate started witnessed quarter, sales today's on sold yet-to-be we limited we prices current deliberately As the homes. inventory tomorrow's

in longer to condition in only current and appreciation term price future with be margin the the maximize while enable inventory escalation Simply inventory focus flow, appreciation strategy could cost current patient offset our singular to future. volume, been Our while escalations selling a more with improves and and but stronger is market turn. sales cash cover to sales margin, price instead, drove we allowing have put, growth on cost

the have assets. margins best replace managing supply Accordingly, measured sustainably return As sales has ramp remained produces land-constrained our materially grown on labor-constrained even it grown, higher while to pace, this at market, our inventory high I've and as in this in challenging and more limited. has Therefore, demand our challenging noted market. calls, is production best to it's strategy growth land margins, prior and entitled in turns

than our market We're and bottom XXXX, and by foreseeable careful we faster strong Our power line. and future our our XX.X% represents throughout gross pricing margin team. oversight management the grow margins and top XX.X% strong margin historically expect the expecting net for line day-to-day to in

impact continued Alongside expected, as the on May, as LFS's took XXXX. which in normalize assess quarter quarter we As sequential by States March, production so deliveries recovered, technology-enabled one-time increase. the this $XX homebuilder, was the the million we limited were housing the move Lennar as into realized Financial attention market focused and Title, quarter, and its excluding pause compared we to April XX% a and a closings COVID represents our We starts will $XXX production profit Services as of increased contribution pre-tax production last from in to third efficiencies. the market. million

team we the confident grow industry market and the to These the the market. With positions robust, lumber questions our to how particularly management very meet manage both continue will continue and flow, Lennar materials demand, be costs. have drive and are are And land the margins this we that right and with able to undivided demand, attention to cash for we're the of high dominant now. grow questions while meet we'll that labor,

well are demand. extremely and to short positioned term, the already meet costs For we manage

While brought while we will well costs And we're positions are risk. are managing to actively lumber, selling sales faster started than manage to that cost be online. strong that communities particular, order expected, in through are land rising, homes with in we pace, somewhat other primarily fortified and

And our communities term, sustained of accelerating will foreseeable inventory housing the wherever also be that up intermediate an are market, under new limited for has expansion the for the decade, communities, supply will production been and ramping control past rates, the starts as focused a to term, for of continue With the while land driver and economy. believe with readiness together short accelerating of housing deficit is in purchases we homes the the that industry affordable especially homebuilding we the and we historically future. new on for production are and possible. we longer For construction, low essential the have interest have and defined the and

land versus grow the strategy year. offerings and had target. expanded of option we XX% earlier we we've we our options end XX% quarter, from future, towards the remained third At manage owned to our As will percentage in to focused for continue a XX-XX the the on

dream and by investments on to investments to flow be low in have our quarter they and point. a a next and and economic Lennar, buyer in returns Less all iBuyer helping level. friction their disruptor Lennar our the more developed historical to home, their the and home, shifts, debt-to-total experience redefining and within readiness current our not technology Opendoor their we our while to capital $X Lennar focus a Opendoor of transactions companies Wu, only move-up a equity announcement leader, and becoming on the also in Investment frictionless, say, a own industry early contributed right. continue cash revolver cap pioneered joyful first jointly as at take customer billion take on Space of XX.X%. parties standard. is structural seamless a Opendoor move-up informed to and the moving program a By is ended drawn drive X%. an well-known and our the becoming like case cash business coordinated and successful means Needless and and proving to sale is to engagement. our SG&A their at to improve to I'd X friends meaningfully coordinating moment with more almost meaningful initiatives lower larger that engaged. a vision healthy to while congratulate We hand, quick of today and Eric their Concurrently, on change as to of up technology are have but Opendoor transactions cost core Today's for

our expansion quality to the turning quarter. and ignited let it essential office, automated. is our the to and now is in and from an It environmentally Opendoor's It a of our returns. to continue expectations define by say, your reflect In to all growth, been and our a flow Today, respects created is The slowdown were some balance they of more will our home, a is our of third In this transforming honor Diane to to has just becoming of and and part space. over multiple quarter But COVID It welcome Lennar, our shelter quarter more been leader advance market iBuyer their the housing on space. WiFi third is as to quarter public center additional is the home a say Diane, the For strategy execution to which you the markets, results shelter and our life. with learned cash we hub you on for to before we generations and COVID. a solid and has fourth the connected adjusted third margin, sensitive. us together in color is for live health have the way and focused lives. becoming sustainable by me be the completion general, let used pivot It the thus and at the our the numbers to like forward point both of as of far we the In Social is in would our be journey our it conclusion, give Capital, that a between in home healthy path transaction clear me our minute, recreation gym, and build system. school. It innovator shelter. just Opendoor industry

toughest needs the as change aspirations will over the time, the the new me over Diane. of been we as become families With that, better financially, world, we way refuge Regardless, turn through times focused and organizationally never them well thrive elements these our through and sometimes the the challenge where home on some this technologically changing of At and meet some of of and to to and a is let are have While Lennar, will changing life. meeting as positioned well demand. times. of best appetites of

Diane Bessette

morning to thank Stuart, you, and everyone. So good

provide to like guidance detailed few a then QX. begin and QX for I'd with So highlights

And our with sheet. so let's balance start

focus of As $X.X end Stuart on ended QX, cash On on borrowings a revolving quarter of continued the have flow a flow. through credit year-to-date basis, we billion with facility. of cash result homebuilding the our cash $X and of no $X.X generation, as mentioned, billion outstanding our generated billion we

become to to progress lighter. continue land also make We

controlled of As homesites. supply to years to stated, and increased homesites XX% decreased total our our X.X owned years,

$XXX was and spend was spend acquisition million. million, land our our quarter, $XXX development land the For

Additionally, goal debt. we our reducing with of also made progress

of a result, During lowest achieved. ratio capital XX.X%. debt-to-total was we the approximately off as debt-to-total we And homebuilding quarter-end ever the ratio This is $XXX paid quarter, have million our debt. capital

which notes, debt we fourth CalAtlantic annual reduction pay off to and approximately in the of repaid as have we including of November. results in we intend in of continue $XXX $XXX acquisition notes due will the Our $X.X million. Since will billion pay notes senior focus million on savings senior an of interest off the quarter,

Our was stockholders' to and increased billion share equity $XX.XX -- $XX.X $XX.XX. per book value our sorry,

sheet so review And me performance. those operating briefly now our balance highlights, with let

ended the order As starts with we X%. XX%, quarter XX% with and Sales said, dollar billion, starts up of new new matched we $X.X value year-over-year. was our our were XX,XXX, orders were up and up

the the Our And was X.X% sales X,XXX compared year. for we quarter, prior We ended in pace communities ended X.X% communities. the quarter the with X,XXX. to with

cancellation XX% in QX compared prior sequentially XX% Our was the rate of XX% QX to year. and in

For and new for history. company's highest and in up the deliveries third the a XX,XXX, quarter, were quarter totaled both deliveries the X%, orders

X% result And an Our a technology. the and X% as gross platform achieved. power from continuing a our of we result third as pricing costs. have construction of focus creating and efficient margin quarter benefits The SG&A our in ever strong -- XX.X%, was on SG&A was

in to closed were operating a of reporting earnings. of in million earnings They lower in volume. and orders. an $XX Services. mentioned, XX% Mortgage year. due also prior $XXX in primarily of million increased had million rate cash higher due increase compared year, securitization $XXX increased commercial compared at buyers, capture increased levels, the XX% LMF title combined earnings a versus compared high operating to million last earnings to Mortgage through earnings year, an earnings with million Financial executed $XX increase operating percentage margins. from and million to Title prior million, in the secondary benefited of increase $XX lower as in to prior year, Turning to operating $X with $X delivery, an the And Stuart primarily volume primarily

detailed more And that me with summary, that guidance you little earnings so in included let release. with provide quick our Starting a homebuilding. what QX for with we

between We and expect active should the with and new orders XX,XXX approximately communities. X,XXX year end XX,XXX,

and XX,XXX XX,XXX to between homes. deliver We expect

around Our average should $XXX,XXX. sales be price

be services to to sales for between we should of joint the homebuilding expect Corporate SG&A We X.X% and G&A, between %. million. expect XX.X, and million. quarter. the million $XX of X.X be be And margins and combined the $XX that ventures, the We in multifamily of our and $XX $XXX expect million our our in we gross believe category And and range Other a segments, of both XX.XX range to others, $XXX be for loss earnings our for a expect financial we slight million loss. to Lennar will around land

let’s that questions. We turn count million. combine for this produce the And find tax $X.XX hope should of The you helpful. expect of guidance an be when it XX.X%. EPS rate weighted all range to share And our you operator the be to $XXX approximately guidance approximately that We to this, average $X.XX. with should

Operator

Thank you.

begin today’s is Zelman in And Ivy at Associates. [Operator We Zelman the of conference. our first session from question Instructions] now will question-and-answer queue

is open. line Your

Ivy Zelman

and you see over highlighted XX% you quarter. have you great Stuart, builders and posting MDC on grown other like rate sort guys, mentioned could fact growth. numbers stronger the Thank a that congratulations, while at we today although a of

we think your longer-term because perspective founding course, and order the results an don't I you're share which, losing a from is over looking market basis. see on that market of

measured share. on – returns, to benefit and growth, some and grow in talk metrics maybe through not the the of more providing faster really gain trying of risk us risk mentioned more to maybe befits specifics? continue flow, But cash You'll walk costs detail, the and about and maybe and the you

Stuart Miller

that getting we'll prices comments. we highlighted find risk time. cost in constrained. ramps over see our to the as upward, we our this and exposure on the know, know a industry. wait has lumber this out the there's new have We'll spiral benefits We of that cost You the as noted market that across entrants We We are to of in labor production as we number know up. possible with ahead all It's been unemployment There equation. levels, some real We country, with recognize see. of is across it. associated watch the and the market that side way time,

an not sales that chosen homes returns cost the can increases get race as go cover see sales we can to on so the equity. have current on the focus but And inventory in return Jon, have production want and inventory on forward. that We forward, we have, up focus we many course, into of turn, we to that? which on weigh instead, appreciation capital, how have Rick, to price carefully focus limit on going inventory, under that you to just helps ramp on helps do really

Jon Jaffe

Jon. it's Sure,

quarter. almost of increased As the beginning Stuart from mentioned, on to the it lumber, of our end our XXX% quarter

that will is at the environment helps out look And chain, sales match offset run as the so it's labor, benefit but that increase. not our price there's patiently we very pace there, from sales, it's to increasing And of supply meaning constraints. measured you with why appreciation it price just an leverage from manufacturers, that, as probably we taking really advantage

and do. measured And is to feasible to so of to to quickly We is our which be a capacity not again, it measured our trade it's ramp able production appropriate to what terms more instead up, trying in being really vendors much of communicate exactly very think approach.

Rick Beckwitt

and make sale we that on pricing Yes. there's looked And when have I'd for that the to at people a really as because early command thing or the really price market, us completion premium do Ivy, sense Stuart, available sell they are limited available only inventory things the it that's higher is, dirt for to to can want add Jon, into. completed. a move so close can something doesn't or I

Ivy Zelman

That's really helpful.

Stuart Miller

growth forward. We're have margin able the to and assets to -- we day and approach on increased just the end the end measured to and the that comes going have margin us, let returns that focus. going of be for a down At it the at day, margin of say me

ramp production difficult to very one market it's just sales be the only there's lag, that time. in I rate market coming when this see production at brought very can at much has in so an at think rates a we to rate up accelerated to any high

Ivy Zelman

in have the there's challenging add maybe that over just time being share that. would to going two-year a the no are growing market just If a question questions I about And builder leading next period very think to this these off the you have about had market thinking frame year, because a share U.S., builders we of bunch question of morning. we and

comment you about So, and comment -- returns. market share, Thank to just if would, market aren't luck. you around But please. guys recognizing good share, about and just maybe you on it's

Stuart Miller

Okay. Rick, ahead. go Thank you. Jon,

Jon Jaffe

measured do time, we've scale But us relative size a for that position. or that instead, very builder the for really to all up. virtually And the a advantage two scale number land environment, pace, and think it's for give this very the And both strategic sellers go-to gives we're it's as and and is that the long in very to we builder I talked we're constrained for not important in and said, us one creating -- Ivy, to as size trades. in. going markets And and trades. steady predictability position for and a that the one go-to positions we're land as about our land an

Rick Beckwitt

Ivy, I'd just is math. the other add, And which I guess thing

rate that compare to take for on plus rate gaining builder, share. we're a XX% in $XX,XXX much a quarter the smaller a of just sales you growth and higher If on still run growth type a

Stuart Miller

Okay.

question. Next

Ivy Zelman

guys. Thanks Perfect.

Operator

you. Thank

BTIG. from Our next is Carl Reichardt question from

open. Your line is

Carl Reichardt

of seen pretty approvals, come if COVID entitlements normalization sort of of had Are know a I Can about We in couple bit talk everybody. end well. the about terms in been questions product a from my to there's Thanks here? land since some we've labor perspective. time little normalization on to a and constraints perspective, a market? it from you get takes processes, we seeing permitting back some Hi.

Jon Jaffe

John. it’s Carl, Hi,

I COVID they in under up down. many under hitting cities them are to clearly They’re all stress. was compared have constraints, budgetary virtually. first of think, when But closed cities certainly, opened operating us

it's in better normal process, is COVID the It's it's an exist. those but it of and so between not pre-COVID, somewhere definitely at was not So back than it worst experience. the that to constraints given part easy

Carl Reichardt

Okay. Thanks in about builders Jon. last you has Are a lots, land the of markets gotten year say, lots, or of there a over as big And we've talk there can that change then, as two? a expanded? a couple out follow-up, where seen the pricing lot. -- have availability appreciably where tighter, Thanks

Rick Beckwitt

whack. I any don't seen are markets of we've think out that specific

benefit the relationships relationships transactions continue We doing solid to have been for years land from and to mentioned. with provide land as We've are continuing us the And we community. Stuart those deep strategizing opportunities, community. the with

Carl Reichardt

Thanks, Rick.

Stuart Miller

and we I XXXX. on enables maybe to grow we of we like and you'd ahead across that access community us look to comment think our some as looked position count strong ahead, we that? as market think have board, look as the share towards our position, land Rick,

Rick Beckwitt

Yes.

So for year-over-year. community anticipating a XXXX, count we're XX% increase

very XXXX. of with those those comfortable We the are have in throughout of And today. rollout communities the balance hand all

Carl Reichardt

Great. Thanks, guys.

Stuart Miller

Very good.

Question. Next

Operator

you. Thank

Next from Evercore we have ISI. Stephen Kim

line Your open. is

Stuart Miller

morning. Good

Stephen Kim

I of morning. about good think that Yes, comment kind guys. we Yes, the were for. much, that was very something waiting communities Thanks Yes.

for so about of longer-term So helps all your and forth. frame that plan commentary really growth your

away in data time, mix. be the So ask been see. pretty to from can years. at mix at the we reversal seems question past least, positive like you what same seeing I pointing the a from to resale for resale It's builders And market, about nationally want moving to a The yourself, occurring market. several dramatic though, we've the from

points inventory market. lot a you're in the new You market resell have into that the getting lower so the price of little demand spillover at

And maybe to bringing market trying hand trade to got the mix. home out buyers out larger the lower the you same wanting one I'm market, So into up you footprint at on to and demand new a time, got, spillover of larger the of little homes. figure resale the kind flowing

mix look going or the So over buyer the out effect resale a year, you from as factor, which trading coming effect to be next up, bigger market? the is mix positive the first-time negative

Rick Beckwitt

Jon. Go ahead

Jon Jaffe

But of for you that it's vary continue home from we're housing think from as segments. a conversion I good tremendous move-up time a and looking in our into looking from expect for of of both. mix buyers from renters new, we're benefiting And first-time seeing within lot may of a market. in that those that the mix submarkets. really see segment, noted. away we And fluctuation the And great we'll amount seeing markets moving we're with strength density, people spillover, for demand both to specific

Rick Beckwitt

it's the that new just side. is And of entry-level a Yes. package The move-up real whether on home or incredible just home. following dead spots home growth, automation automation up the no connectivity, the the we're in offering demand, WiFi on driver is

Jon Jaffe

services. newer to a least and technologies today's access to And gym. innovation, newer attributes automation, clean so using the time for whether the technologies that home, of technologies with designs market. the same multigenerational. remarks, environment benefiting lines, at in look office. is It's very my are home The friendliness anymore. and being, driving along people newer definitely home homes home at question, remember ways, the in many facilitated buyer your are it's Temporarily, a added market. all whether by recreation. today I to it's in shelter a earlier It's first-time home or to part whether It's just Steve, that market their forward, it's said ignites are connectivity, the better is new It's And as home the that it's health move-up or an home going back an completely advantage. It's access healthy and way of new those an just not

enables the to large are yesterday first-time homes, in buyers time are at looking brand-new up. buyers homes first-time And technologies whether move buyer part looking that of at different also first and because resale first-time designs. of So

all talking all driver primary we that So population, so been in The for past of are the production moving that decade-long together. deficit the across the about you've It's segments means production the same market supply mashing time. that we've a board deficit short it's seen been are is years. which at given the the

Stephen Kim

Yes. Thank preferences yourselves you of for been you you what build that of that. preferences. a when price kind new to because change see thesis new quickly buying It's would home what the premium increase you home see to changed ours that and as sell can builders adjust those you such

bringing that out that so lot ones regard, sales, obviously, of. a And you're burning of in new about of next selling increase year, with a you're count the you sort communities to community online of strong offset out talked that's – XX% in or a

that if online, and upgrade to could year So last how the mix? in enhancing at course packages your we maybe included next-gen? or discernible we your for and that other you brought -- kinds new there's directly upgrades compare Would more communities features the of of of included way about have difference talk were things amount and that everything the Or communities? a communities communities opportunity you the the Whether or would is to were the online reflecting that some are your future we some next in mix maybe if look those or And some these year. over so. options be you with the see it options are over bringing the of we

Stuart Miller

change. see not the the you're At It's level level, to community see discernible change. much at you of product going will a that

or is product, home seeing emphasize the additional we home has within in next-gen product offerings within product that But you're embedded more moving. office gym homes more our a mix or us home deliver. seen home, You've the that a and which within additionally, a been an

homes home other like a community you're And package our of elements We that offering. rolling today's These and as lifestyles in on of across defining emphasis more not for action family out at customers, the the attributes are we product you're looking is appetites items seeing that that automation new people for at the market. is designed are healthy and are much level, seeing product speak, are this and it so Rick? the tomorrow. level,

Rick Beckwitt

Yeah.

and drive So is thing productive that have just drive cost Jon to to those margin value with team our job what to a see to were you done highly capture us continuation you'd combined, the to at of and really continuing the only I'd and that's the That utilizing move-up, see entry-level market you'll is. where add talking that a time the product regard on efficient, we that increases. flag going out. continue engineering, about first that phenomenal focus to extremely the built growth

Stephen Kim

very Thanks Appreciate guys. Great. much it.

Stuart Miller

Okay. Thank you.

Operator

you. Thank

have we Next, Michael Rehaut from JPMorgan.

is Your line open.

Michael Rehaut

Thanks. Good morning, everyone, and congrats on the results.

price pricing. talk results are about margin gross of Obviously, managing and the First, I certainly a versus pace on wanted to hit impressive. lot just

if price ability which more, product mix? if able some on give you implement you your I that you mentioned part sense could any for color to that, inventory, perhaps this price were build-to-order on type price you Just -- more overall pricing our -- range community any give had trying for of your able And increases there's typical if on what you you the us moved. of spec also a magnitude of more average get to increases base. to to were as well price to or across quarter premium on as as of achieve, move able were the or

Jon Jaffe

pricing strong single across to seen one our really seen power reflected that anywhere We've guidance. another. out product We've outshines across improvement that really board. from strong. all okay. power and markets. it'd type -- be And of So pricing It's hard almost had price good that's point or And really or market we to very sales pace our over that strong margin in the

said, really Rick our to As applied inventory. we that

very forward. that we into in and quickly So backlog third and reflected turned our margin in in our our margins quarter deliveries our our very as deliveries look well

inventory Usually housing. in by to So consumer out it desired situation move new the about their what trouble environment unusual to want But as premium. are you is a into to the have is really is a think move homes old this moving. that now, move inventory

Michael Rehaut

No, better are however, certainly next higher think, part appreciate at over Great. of and fast over that, returns. strategy turning you and several and couple continue I guess, to returns obviously, maybe I helpful. to your to a that's way shifting achieve guys Jon. There secondly, try the levers, I is years inventory your look pull, drive turns. great of that as to

lots. in the I has have various of billion two talked kind focus and option One, in areas: highlighted and increase are, maybe itself was shift your $X.X Opendoor, sheet Lennar strategic, obviously investments that Multifamily. hoping you You the about you've about with other as balance ask to important

You of about in the do investments unconsolidated on also, year about share in over think you those forward? $X two? around assets squeeze that billion. repurchase, going How have thinking how And we next should if can start other I or the

Stuart Miller

that? Rick, to you want take

Rick Beckwitt

Yes.

I investments. ways value the think those constantly of maximize evaluating to we're underlying

of over focused that on over focused the the on enhancing we're returns very maximizing core. very assets. reverting said, to the Stuart As value and We're and

have A whether they components, great various chip, blue at Multifamily LMC, franchise. which If machine, created you Class a is look a it's the production

talk investments and about we regard really but increasing operations, on has returns the the said, technology, I'll great efficiencies been lay and some for, the Jon Stuart the really made those groundwork Stuart in But of the of investments have to to as Moving also with let themselves. benefit core our hopefully, there that that.

Jon Jaffe

our that to the and earnings just that that The no earnings that it add that a me dilutive have on enhance a virtually take longer not reported does nothing is the to created. that value So we've it. have returns our because benefit that investment, focused the It not does achieve. two Accordingly, to attention as to reported returns. our are escape to is we striving relative of pieces strategic and we're book us Multifamily fact sizable accumulated opposed it to on very let for

a asset, is properly platform, looking it our our program relative will so in operating on we're blue-chip program, it And are iteration. blue-chip for focused very land we its to as Rick next where Multifamily next focused on and notes, LMC, a

both this been Rick. working So, We're day-to-day on for and regularly. a has for focus myself that

question buyback. about the also asked stock You

COVID-XX moment; remember You'll a prior basis. to stock were buying back the we regular that on

lower. we drive debt that But clearly We've have as we well. already a and as cash and pay not We which wait in that We're continued past back the we latency day-lighted. how strong even extraordinarily we as quarter saw position, -- see looking to have attitude. market COVID took We during postponed at way. an attitude and our the we stock deploy down liquidity and we've going clearly look looking ahead, capital bought are

We will, returns. properly ways buyback other a capital in enhance some deploy to to at stock program form, look and resume

So, that's our focus.

Michael Rehaut

All so right. Thanks much.

Jon Jaffe

You bet.

Operator

Thank you.

Wells we Patterson from Fargo. Truman Next, have

open. line Your is

Truman Patterson

and everyone thanks good my for Hi, morning questions. taking

on question land. first So,

given could Or plan holding bit You've free cash of owned more? market, post-COVID? mentioned a to seeing maybe little elaborate few land help $X all on times overall, bit your just you freeing flow? years bit competition, the level what more land a you on land tightness a in especially community market. your bringing you growing down land, you're then billion the little just And tightness Do in owned plan more still a the on up three do and in count to

Rick Beckwitt

land the We're level three-year that we'll land XX% of that And acquisition of all laser-focused on bringing to get focused, our laser-focused land very option. goals. folks So, confidence owned on degree those we on have said, hold the or getting to Stuart achieving of that high owned are side, company, entire The down as are less. a there. we

Jon Jaffe

a we a land Yes. And we and percentages land. from a pushed and deal. didn't single repurchased away greater percentage shifted deal. land We that We during of Truman, lose you postponed -- single COVID, add so saw, of continuing -- quarter, as I'd walk our purchase to this didn't that in control. started

and we're and what described So, with stated what goal just constrained execution land in is we're even though our a Rick market, towards. driving our focus consistent

Stuart Miller

there. market to we land just-in-time in and of saw than that in COVID. a way, been getting strategy The stronger on Truman, midst is working We're of delivery fact much, changing much be model any continues towards and Yes. given have migrating our no the for the us focusing the strategy, coming

and we level We've going and model, delivery towards order which includes be a relationships in greater go land where you've can Rick cash And areas that flow as about just-in-time land migrate to been much much greater we're at heard the heard returns. to highest on strategy in You've relationships you focused programs emphasis on cash corporate and option a specific as continued Jon forward. land, expect talk and markets. and deploying programs producing well, move that in

Rick Beckwitt

that when basis, about end time homesites work to builder's of basis. to a their flow an at a a ability of at one the of accelerated on we the because given the Truman, you're think If leading, our a deal, of they is biggest the drivers offer your is make those landowner deal. on a not solution money fact that through the ability And the you takedown industry cycle asset landowner, it, cash to great the on beginning make

Truman Patterson

price guys costs really you lumber Thank you How and a a been been lumber costs. It futures the have you know and over do two next in been cover have like but costs? more about lot. costs seems to three said, to the over type need do you Okay. on bit that. bounding all have lumber And to you XXX% I lumber think increased what believe labor I the points for key costs, industry's both the around quarter, labor during quarters? lever. leaning of pricing talking about Jumping these

able cover of you'll rolling kind be looking out imagine probably couple everything this, a of I to quarters, together. So but

Jon Jaffe

at peaked August, the of it quarter, it's terms come XX% Truman, Well, about already end end in really of future has our back of lumber and Jon. future's pricing. --

roll So, a three more see would decline maybe look probably I up as months. of a little about we'll as XX%, forward forward, we you bit expect probably

Lennar somewhere I current different of because we impact I will lumbar cycle will October. about times. impact, XX% QX, be to of for QX just that, in And That's we XX% It so, the will half half and QX levels. closings in prices pricing. about in think or as re-lock probably the said, And as about expect half our lumber of other of

do see we So coming that down.

much quarter, third were both pretty flat As sequentially we our look our and year-over-year. and material labor at costs

Rick mentioned be think value labor And we particularly on manage so, cycle which huge even focusing on Rick the And the continue side, over our through hit strategy, enhanced this great as and just earlier, really year-over-year. is plan on job is that can trades to costs actually the in a I the just prior selection, time And of on engineering, flow they we constraint. benefit was our quarter. to to strong let's sure as make strides, manage mentioned, laser-focused team’s our to say, done really as well. we labor a It continue really quarter

for should that continue beginning to the continue we higher-margin we in way So to I us. for we about that the if all cost call. mentioned, sure making so those advantage us, we we match are, not far think, the too those well of take And And we results are power. spoke ahead, focuses, you selling can as pricing as bode we're of out

Truman Patterson

good Okay. quarter. Thank you luck upcoming the on and

Rick Beckwitt

Thanks.

Operator

Thank you.

KBW. Next, we Jade from Rahmani have

is open. Your line

Jade Rahmani

your you mix lower perhaps a buying believe more current people I if insights opposed as further uptick any the the speculates particular you short of long-term and or housing trend perhaps there's spec, term? And represents in mortgage gives out very much. demand extent perhaps to Thank historically? was than wondering you something data, what company that to

Rick Beckwitt

expansion urban many of think housing? But or So a one horizontal that the has attributes and around is production in has theme I of country ignited day, single-family across both in country population. as the deficit not dissipate. for Is from to housing, are left the to dwellings suburban to deficit. this growings for are migration and dissipate – happened Multifamily the or end a we COVID recent had there rental what vertical that might Or the phenomenon? we've sale, that really goes the that for and in past the for years back this past the might both – a short-term might from with sustainable at still the a

have enter millennials We seen market.

We have move-out of and space the formation ownership enter parents more with and market. household a seen their co-living

live, continue where we're People how think live I to they see greater are to in they valuing way. much trends. these going a

the in as time was partially to was by formation COVID, it but think gave realities Family grew as happen homeownership. ignited moment family this formation I of with it way post-COVID destined to

future. is is at next seen the XX-year just in how So we're going the not expansion thinking fuel view which for of what end the that That's the market. day, production the is deficit, be our the and we're how short covers that's we've an about to a term viewing for our years

Jade Rahmani

compared a And just could spec? comment give historically? of the or that deliveries percentage this ago a were from year on follow-up how is, you with quarter that And

Rick Beckwitt

you I hand, able it later. give will later. and it off accumulate know information Diane don't I it have to but that be Yes, on to we'll pass

Diane Bessette

Yes.

Jade Rahmani

Thank you.

Diane Bessette

bet. You

the wells. you historic inventory levels at part now that Jon, community that on or question, our of to per board say as Rick, just answer want do me -- they right that Let are because to the comment across

Rick Beckwitt

is we're very on We've right. we well aggregate as on on cash efficient completed going. is be fill a I'll gap. we're lean to which that right want community, Yes. to assembly an to exactly basis that a highly now, construction as under homes, model we're keeping inventory be. that which flow exactly producing line we that an on homes homes tell And got where level around where want per community one less means you It's completed or basis,

Stuart Miller

Okay.

question. Next

Operator

you. Thank

have Bouley we Barclays. Next, Matthew from

open. is line Your

Matthew Bouley

around for it seasonally, as which sounds steps and normal QX addition, bit. And to about order limiting in guidance. intentionally it ask you lower sales of count, you selling in pace, Thank taking the like questions. is Obviously, the community a I hear Morning. suggesting wanted new deceleration I well. a a bit the

a sustainability really of how similar in Or drivers? I you So guide? mentioned around the that are QX just say much macro of Is as majority all but baking I in of last level stronger and you in that, did fair around it understand just versus is that the to strength? the conservatism of the light came housing quarter what

Stuart Miller

was what marketplace. efficiency to as And start a of a think remarks, maintain targeted function I growth It's the well year-over-year in demand above that, put rate flow. our rate. to can our new of production a of function the the in and up rate. ramp we said as effectiveness. look, It's we to targeted we cash in in we into also XX% function actually Well, orders our continue short-term industry It's and that's believe the we meet that

over are at our guidance, growth fourth as started We give element an production get But over is we of time, chasing horizon. constrained there are. we and far get to perhaps ahead managing conservatism. out to same we quarter is to the something simply than more the to to and looked rate perhaps others So want a relative out don't that rat our want of to We what is don't way into levels doable skis. we race that recognize the

rate up also a and ramp the request in it's production but can the and can is actually function So market into market, of that's we giving we or the demand market just now. function accommodate right not what what the sell a what of the

Rick Beckwitt

starts newer communities and Yeah. COVID, both the the And some of slowed one of mentioned things the we our it the development from down opening. pause you on is when activity during

you'll count as QX. that. a highlighted, But XXXX, said, see I in you as dipping of is in So community rebuild

Matthew Bouley

Thanks wanted understood. level. guess, then as on ask Okay, a the a color. well, higher And I for of I little a bit margin to question that gross

So exiting XXXX. as seen Lennar haven't over level that like looks we pre-CalAtlantic, guided, since like it XX%, perhaps a XXXX you

or volatility there and of perhaps any gross of kind with type kind persists? away thinking we we these of understand in be at we Or carried too assuming power there's mix should margins can should structurally Lennar that you. shouldn't levels? aside, if sustain that's that that putting near-term get So Thank pricing that lumber

Stuart Miller

to where for they that No, determined remarks, expect gross quickly the going industry have the we how given is the what how backlog an moves we and by ramp how recognizing that's forward, be levels move, business that be actually that that there I aggressively say will part towards We higher for manage the for production. we foreseeable costs automatic in spotlighted will margins in think is opening up future. our expectations the we that go the and caveat to

our more said, And one mark. future, that so and margins look for the question? that you we see I higher where at take as if question are and there Lennar think can have that leave side, towards But don’t migrating to expect out as we you going situated we a how we the to foreseeable the is Why be future.

Operator

Thank you.

Next, we from SIG. have Jack Micenko

Your open. is line

Jack Micenko

one's the new around guess think as XXXX, it now, that, than of call or the market how back some rates smaller you you are of you're defensive? about for Is and demand light thoughts I'm the How in how how at collectively, year? can you and on coming risk shift in growth strategy surprised is about fitting somewhat Thanks operationally Stuart, Hi. change quickly decelerated if I'll in. think the most conversation I in have – that general reining up. going being pushing in clearly the with this that are that me risk wrap And a is quickly although it scenario? comfortable curious there about the thinking because asked. there. think of – how we industry place home manage price, see up no bigger might most spike of certainly, XX curious just us sort one I direction And XQ a you about in. And and since do moved when to questions picture

Stuart Miller

consistently but manage positioning, over and returns to on be to strategy of quarters focus rate past this Yes. that's direction. to capital that at It our to and look daylighted our would the in that the easy cash is as We've defensive flow pretty our deploy strategy. growth root at not

controlled of in instead, returns production program also way expanding in production. fashion, making we're that I growing focused so certain, ramped of an costs not what head, a the our as you're are our focusing orderly But and turns where the increase homes but has business on business our up market doing inventory seeing forward out are and very sure our as sales under on way think that inventory is that that we're quickly, dirt that of the less selling moving managing well.

dynamics I it's very a detailed continues that for poised now future very executed. So is market said that of we as growth way a – rate the I'm the we're for talking think we've for earlier, remain lines strong, to an for overall. likely the that see pleased I'm future. are we're with you're the for industry We enough that the seeing market And is strategy think right talking that along this not and homebuilding foreseeable today. the expansion Lennar, and to that the is strong likely not

Jack Micenko

you. Thank

Stuart Miller

everybody I forward joining at and you. welcome, and quarter. You thank to us our we of fourth for want Thank to look end reporting back the today,

Operator

for all in you Thank participating today's conference.

rest You your of the and may line, disconnect your day. enjoy

Lennar (LEN) 15 Sep 202020 Q3 Earnings call transcript