Q4 2025 Lennar Corp Earnings Call

December 17, 2025

Speaker #1: Welcome to Lennar's fourth quarter earnings conference call. At this time, all participants are in listen-only mode. After the presentation, we will conduct a question and answer session.

Operator: Welcome to Lennar's fourth 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. I will now turn the call over to David Collins for the reading of the forward-looking statement.

Speaker #1: Today's conference is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to David Collins for the reading of the forward-looking.

Speaker #1: statement. Thank you.

David Collins: Thank you, and good morning, everyone. Today's conference call may include forward-looking statements, including statements regarding LENNAR's business, financial condition, results of operations, cash flows, strategies, and prospects. Forward-looking statements represent only LENNAR's estimates on the date of this conference call and are not intended to give any assurance as to actual future results. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many factors could affect future results and may cause LENNAR's actual activities or results to differ materially from the activities and results anticipated in forward-looking statements. These factors include those described in our earnings release and our SEC filings, including those under the captioned risk factors contained in LENNAR's annual report on Form 10-K, most recently filed with the SEC. Please note that LENNAR assumes no obligation to update any forward-looking statements.

Speaker #2: And good morning, everyone. Today's statements, including statements regarding Lennar's operations, cash flow strategies, and prospects, are forward-looking statements. Forward-looking statements represent only Lennar's estimates on the date of this conference call and are not intended to give any assurance as to actual future business, financial condition, or results.

Speaker #2: Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties. Many conference calls may include forward-looking factors that could affect future results, and may differ from the activities and results anticipated in forward-looking statements.

Speaker #2: cause Lennar's actual activities or earnings release, and our SEC. These factors include those described in our caption 'Risk Factors' contained in Lennar's annual report on Form filings, including those under the SEC.

Speaker #2: Please note that the 10-K, most recently filed with Lennar, assumes no obligation to update any forward-looking statements.

Speaker #1: I would now like to introduce your host.

Operator: I would now like to introduce your host, Mr. Stuart Miller, Executive Chairman and Co-CEO. Sir, you may begin.

Speaker #1: Mr. Stuart Miller, Executive Chairman begin.

Stuart Miller: Very good, and good morning, everybody, and thanks for joining today. I'm in Miami today together with Jon Jaffe, our Co-CEO and President; Diane Bessette, our Chief Financial Officer; David Collins, who you just heard from, and our Controller and Vice President; and Katherine Lee Martin. Don't want to forget the Lee. Our new Chief Legal Officer, I guess you're not new anymore, Katherine; and Bruce Gross, CEO of Lennar Financial Services, along with a few others as well. As usual, I'm going to give a macro and strategic overview of the company. After my introductory remarks, John is going to give an operational overview, updating construction costs, cycle time, and some of our other metrics. As usual, Diane is going to give a detailed financial highlight, along with some limited guidance for our Q1 2026 and for the year.

Speaker #3: And good morning, everybody. And thanks David Collins, who you just heard for joining today. Services, along with a few others as President, and I'm updating construction costs, cycle time, and some of our other well.

Speaker #3: In Miami today together with Jon Jaffe, our Co-CEO and President; Diane Bessette, our Chief Financial Officer; and our Controller and Vice—statements. Catherine Lee Martin, don't want—very good.

Speaker #3: To give a detailed financial metrics, as usual, Diane is going to highlight, along with some limited outlook of 2026 and provide guidance for our first quarter of the year. And then, of course, we'll have a question and answer period. As usual, I'd like to ask that you please limit yourself to one question and one follow-up so that we can accommodate as many as possible.

Stuart Miller: And then, of course, we'll have a question-and-answer period. And as usual, I'd like to ask that you please limit yourself to one question, one follow-up, so that we can accommodate as many as possible. Before we begin, however, let me note, as I'm sure you're all aware by now, that this will be John's last earnings call as he has decided to retire and will officially step down on 1 January, which is now right around the corner. John has been a partner and a leader at our company for well over 40 years. We stop counting here after 40 years. And his leadership will certainly be missed. Affectionately, John has been known as our company's plow horse. And as such, John has driven LENNAR's operations with relentless dedication and commitment.

And then, of course, we'll have a question-and-answer period. And as usual, I'd like to ask that you please limit yourself to one question, one follow-up, so that we can accommodate as many as possible. Before we begin, however, let me note, as I'm sure you're all aware by now, that this will be John's last earnings call as he has decided to retire and will officially step down on 1 January, which is now right around the corner. John has been a partner and a leader at our company for well over 40 years. We stop counting here after 40 years. And his leadership will certainly be missed. Affectionately, John has been known as our company's plow horse. And as such, John has driven LENNAR's operations with relentless dedication and commitment.

Speaker #3: Before we begin, however, let me note, as usual—as I'm sure you're all aware by now—that this will be Jon's last earnings call, as he has decided to retire and will officially step down on January 1st, which is now right around the corner.

Speaker #3: Jon has been a partner and a leader at our company for well over 40 years. We stopped counting here after 40 years. And as leadership, he'll certainly be missed.

Speaker #3: Affectionately, Jon has been known as 'horse,' and as such, Jon has, as our company's plow, driven LENNAR's operations with relentless dedication and commitment. He joined the company just one year after I started full-time, and together we've learned every facet of this business, continually adapting and evolving.

Stuart Miller: He joined the company just one year after I started full-time, and together we've learned every facet of this business, continually adapting and evolving. Over the years, we have tried new things. Some have been successful. Some have been successful. Others, not so much. We've navigated both the best and the most challenging of times. Through it all, John's partnership has been a joy and a privilege. John, I hope you find plenty of time to improve that ugly golf game of yours, and perhaps you'll find some time to work on that singing voice as well. With that, let's get started. Let me begin by saying that we are very pleased to present Lennar's fourth quarter and year-end 2025 results against the backdrop of what is still a stubbornly difficult housing market.

He joined the company just one year after I started full-time, and together we've learned every facet of this business, continually adapting and evolving. Over the years, we have tried new things. Some have been successful. Some have been successful. Others, not so much. We've navigated both the best and the most challenging of times. Through it all, John's partnership has been a joy and a privilege. John, I hope you find plenty of time to improve that ugly golf game of yours, and perhaps you'll find some time to work on that singing voice as well. With that, let's get started. Let me begin by saying that we are very pleased to present Lennar's fourth quarter and year-end 2025 results against the backdrop of what is still a stubbornly difficult housing market.

Speaker #3: Over the years, we have tried new things, some have been successful, some have been successful, others not so much. And we've navigated both the best and the most challenging of times.

Speaker #3: Partnership has been a joy and a privilege. Through it all, Jon, I hope you find plenty of time to improve that ugly golf game of yours, and perhaps you'll find some time to work on that singing voice as well.

Speaker #3: And with that, let's get started. So, let me begin by saying that we are very pleased to present Lennar's fourth quarter results against the backdrop of, and year-end 2025, what is still a stubbornly difficult housing market.

Speaker #3: While our margin is under pressure as we focus on bringing affordable housing to an affordability-constrained consumer base, we can see that underlying demand is still strong, while supply is short.

Stuart Miller: While our margin is under pressure as we focus on bringing affordable housing to an affordability-constrained consumer base, we can see that underlying demand is still strong while supply is short. During the past three years of difficult market conditions, we have maintained volume, we've grown market share, and we've re-engineered our operating platform for a better and more efficient future when the market bottoms and normalizes. We're extremely well-positioned with very strong market share in strategic markets, and our margin is leveraged to the upside. As you may recall, last quarter I noted that declining interest rates could signal the start of a market recovery. Unfortunately, that turnaround has not yet materialized. As rates slowly moderated in September, eased more in October, and remained flat in November, the customer response remained fairly tepid, suggesting that a combination of affordability and consumer confidence issues were continuing to limit demand.

While our margin is under pressure as we focus on bringing affordable housing to an affordability-constrained consumer base, we can see that underlying demand is still strong while supply is short. During the past three years of difficult market conditions, we have maintained volume, we've grown market share, and we've re-engineered our operating platform for a better and more efficient future when the market bottoms and normalizes. We're extremely well-positioned with very strong market share in strategic markets, and our margin is leveraged to the upside. As you may recall, last quarter I noted that declining interest rates could signal the start of a market recovery. Unfortunately, that turnaround has not yet materialized. As rates slowly moderated in September, eased more in October, and remained flat in November, the customer response remained fairly tepid, suggesting that a combination of affordability and consumer confidence issues were continuing to limit demand.

Speaker #3: During the past three years of difficult market conditions, we have maintained volume, we've grown market share, and we've re-engineered our operating platform for a better and more efficient future when the market bottoms and normalizes.

Speaker #3: Well-positioned with very strong market share, and we're extremely strategic in our markets. Our margin is leveraged to the upside. As you may recall, last quarter I noted that declining interest rates could signal the start of a market recovery.

Speaker #3: Unfortunately, that turnaround has not yet materialized. As rates slowly moderated in September, eased more in October, and remained flat in November, the customer response remained fairly tepid, suggesting that a combination of affordability and consumer confidence issues were continuing to limit demand.

Speaker #3: Of course, the coincident threat of government shutdown in September and the actual shutdown from October 1st through mid-November further eroded already weak consumer confidence.

Stuart Miller: Of course, the coincident threat of government shutdown in September and the actual shutdown from 1 October through mid-November further eroded already weak consumer confidence. While traffic was consistent, customers were both hesitant and limited by what they could afford to purchase. With that said, our Q4 results reflect a continued softening of market conditions and affordability. Sales volume has been difficult to maintain and required additional incentives to achieve our expected pace and to avoid an unintended buildup of excess inventory. While we exceeded our delivery goal for the quarter and while we sold in line with the low-end guidance during the quarter, these accomplishments came at the expense of further deterioration of margin, which came down to 17%, even though we eased back the pressure on sales and pulled back our delivery goals for 2025.

Of course, the coincident threat of government shutdown in September and the actual shutdown from 1 October through mid-November further eroded already weak consumer confidence. While traffic was consistent, customers were both hesitant and limited by what they could afford to purchase. With that said, our Q4 results reflect a continued softening of market conditions and affordability. Sales volume has been difficult to maintain and required additional incentives to achieve our expected pace and to avoid an unintended buildup of excess inventory. While we exceeded our delivery goal for the quarter and while we sold in line with the low-end guidance during the quarter, these accomplishments came at the expense of further deterioration of margin, which came down to 17%, even though we eased back the pressure on sales and pulled back our delivery goals for 2025.

Speaker #3: While traffic was consistent, customers were both hesitant and limited by what they could afford to purchase. With that said, our fourth quarter results reflect a continued softening of market conditions and affordability.

Speaker #3: Sales volume has been difficult to maintain, and required additional incentives to achieve our expected pace and to avoid an unintended buildup of excess inventory.

Speaker #3: While we exceeded our delivery goal for the quarter, and while we sold in line with the low-end guidance during the quarter, these accomplishments came at the expense of further deterioration of margin, which came down to 17%, even though we eased back the pressure on sales and pulled back our delivery goals for 2025.

Speaker #3: As we look ahead to next quarter, we know that margin will remain under pressure, and sales and closings will be seasonally light. Nevertheless, we're very well positioned to provide the affordable supply that the market needs when demand is ultimately activated by either lower interest rates or government-sponsored programs to enable affordability.

Stuart Miller: As we look ahead to next quarter, we know that margin will remain under pressure and sales and closings will be seasonally light. Nevertheless, we're very well-positioned to provide the affordable supply that the market needs when demand is ultimately activated by either lower interest rates or government-sponsored programs to enable affordability. We are situated with a lower-cost structure, efficient product offerings, and strong market positions to accommodate pent-up demand as rates moderate and confidence ultimately returns. We believe that we have gotten ahead of current market realities, and we've built what we believe is a stronger long-term margin-driving platform. We know the market has remained weaker for longer, but we also know our strategy has helped build a healthier housing market and has positioned Lennar for strong cash flow, higher returns on equity and capital, and stronger bottom-line growth in the future.

As we look ahead to next quarter, we know that margin will remain under pressure and sales and closings will be seasonally light. Nevertheless, we're very well-positioned to provide the affordable supply that the market needs when demand is ultimately activated by either lower interest rates or government-sponsored programs to enable affordability. We are situated with a lower-cost structure, efficient product offerings, and strong market positions to accommodate pent-up demand as rates moderate and confidence ultimately returns. We believe that we have gotten ahead of current market realities, and we've built what we believe is a stronger long-term margin-driving platform. We know the market has remained weaker for longer, but we also know our strategy has helped build a healthier housing market and has positioned Lennar for strong cash flow, higher returns on equity and capital, and stronger bottom-line growth in the future.

Speaker #3: We are situated with a lower cost structure, efficient product offerings, and strong market positions to accommodate pent-up demand as rates moderate and confidence ultimately returns.

Speaker #3: We believe that we have gotten ahead of current market realities, and we've built what we believe is a stronger, long-term, margin-driving platform. We know the market has remained weaker for longer, but we also know our strategy is health-filled, a healthier housing market, and is positioning Lennar for strong cash flow, higher returns on equity and capital, and stronger bottom-line growth in the future.

Speaker #3: Accordingly, we will remain focused on volume and even-flow production; we will maintain responsible volume to maintain an affordable cost structure, and we will find our floor and rebuild our margin as the overall housing market continues to remain short on supply.

Stuart Miller: Accordingly, we will remain focused on volume and even-flow production. We will maintain responsible volume to maintain an affordable cost structure, and we will find our floor and rebuild our margin as the overall housing market continues to remain short on supply. Let me turn to a quick macro view of the housing market. Consistent with our Q3, the macro economy remained challenging through our Q4. While mortgage rates drifted marginally lower in the Q4, consumer confidence became even more challenged by economic uncertainties and, of course, became even more challenged still by the government shutdown. Clearly, inflation-driven affordability concerns rose to the center of the national conversation, shaping headlines and policy debates across the country. Cost inflation has clearly had a significant impact on the lifestyle of the average American family.

Accordingly, we will remain focused on volume and even-flow production. We will maintain responsible volume to maintain an affordable cost structure, and we will find our floor and rebuild our margin as the overall housing market continues to remain short on supply. Let me turn to a quick macro view of the housing market. Consistent with our Q3, the macro economy remained challenging through our Q4. While mortgage rates drifted marginally lower in the Q4, consumer confidence became even more challenged by economic uncertainties and, of course, became even more challenged still by the government shutdown. Clearly, inflation-driven affordability concerns rose to the center of the national conversation, shaping headlines and policy debates across the country. Cost inflation has clearly had a significant impact on the lifestyle of the average American family.

Speaker #3: So, let me turn to a quick macro view of the housing market. Consistent with our third quarter, the macro economy remained challenging throughout our fourth quarter.

Speaker #3: While mortgage rates drifted marginally lower in the fourth quarter, consumer confidence became even more challenged by economic uncertainties, and, of course, became even more challenged still by the government shutdown.

Speaker #3: Clearly, inflation-driven affordability concerns rose to the center of the national conversation, shaping headlines and policy debates across the country. Cost inflation has clearly had a significant impact on the lifestyle of the average American family.

Speaker #3: At the same time, concerns about job security have become increasingly prominent as advancements in modern technology and artificial intelligence raise important questions about the future of employment for the American workforce.

Stuart Miller: At the same time, concerns about job security have become increasingly prominent as advancements in modern technology and artificial intelligence raise important questions about the future of employment for the American workforce. The current housing market is entrenched in an affordability crisis, leaving many average American families feeling excluded from the traditional promise of upward mobility and homeownership. Against this backdrop, some advocate for what many call sweeping and sometimes "socialist solutions," offering broad promises of free and readily accessible resources as an appealing answer to the affordability dilemma. This narrative gains traction, especially when there is a lack of clear, actionable alternatives that address the challenges facing American families today. The "capitalist framework" has yet to speak and present tangible, practical strategies that effectively confront these realities and restore affordability and access to homeownership for the broader population.

At the same time, concerns about job security have become increasingly prominent as advancements in modern technology and artificial intelligence raise important questions about the future of employment for the American workforce. The current housing market is entrenched in an affordability crisis, leaving many average American families feeling excluded from the traditional promise of upward mobility and homeownership. Against this backdrop, some advocate for what many call sweeping and sometimes "socialist solutions," offering broad promises of free and readily accessible resources as an appealing answer to the affordability dilemma. This narrative gains traction, especially when there is a lack of clear, actionable alternatives that address the challenges facing American families today. The "capitalist framework" has yet to speak and present tangible, practical strategies that effectively confront these realities and restore affordability and access to homeownership for the broader population.

Speaker #3: The current housing market is entrenched in an affordability crisis, leaving many average American families feeling excluded from the traditional promise of upward mobility and homeownership.

Speaker #3: Against this backdrop, some advocate for what many call sweeping and sometimes 'socialist solutions,' offering broad promises of free and readily accessible resources as an appealing answer to the affordability dilemma.

Speaker #3: This narrative gains traction, especially when there is a lack of clear, actionable alternatives that address the challenges facing American families today. The capitalist framework has yet to speak and present tangible, practical strategies that effectively confront these realities and restore affordability and access to homeownership for the broader population.

Speaker #3: As I've noted on prior calls, mayors and governors across the country, both Republican and Democrat, understand this, and continue to list the housing shortage as a priority concern. They point to affordability or attainability as a real crisis.

Stuart Miller: As I've noted on prior calls, mayors and governors across the country, both Republican and Democrat, understand this and continue to list the housing shortage as a priority concern, and they point to affordability or attainability as a real crisis. But they also understand that this has been a difficult cycle as low supply has fueled high prices, and high prices, especially with higher-for-longer interest rates, have locked out many buyers. Inflation and short supply have kept home prices higher. Supply remains constrained in most markets, driven by years of underproduction. Additionally, new construction has slowed recently, exacerbating the chronic supply shortage as builders have pulled back on production due to slow sales and affordability concerns. But short supply can't be fixed by simply adding supply. It is important to recognize the downside of artificially lowering home prices or boosting inventory solely to drive prices down.

As I've noted on prior calls, mayors and governors across the country, both Republican and Democrat, understand this and continue to list the housing shortage as a priority concern, and they point to affordability or attainability as a real crisis. But they also understand that this has been a difficult cycle as low supply has fueled high prices, and high prices, especially with higher-for-longer interest rates, have locked out many buyers. Inflation and short supply have kept home prices higher. Supply remains constrained in most markets, driven by years of underproduction. Additionally, new construction has slowed recently, exacerbating the chronic supply shortage as builders have pulled back on production due to slow sales and affordability concerns. But short supply can't be fixed by simply adding supply. It is important to recognize the downside of artificially lowering home prices or boosting inventory solely to drive prices down.

Speaker #3: But they also understand that this has been a difficult cycle, as low supply has fueled high prices, and high prices—especially with higher-for-longer interest rates—have locked out many buyers.

Speaker #3: Inflation and short supply have kept home prices higher. Supply remains constrained in most markets, driven by years of underproduction. In addition, new construction has slowed recently, exacerbating the chronic supply shortage as builders have pulled back on production due to slow sales and affordability concerns.

Speaker #3: But short supply can't be fixed by simply adding supply. It is important to recognize the downside of artificially lowering home prices or boosting inventory solely to drive prices down.

Speaker #3: Such actions could negatively affect the 85 million Americans who already own homes by diminishing their property values, which, in turn, could further weaken overall consumer confidence.

Stuart Miller: Such actions could negatively affect the 85 million Americans who already own homes by diminishing their property values, which in turn could further weaken overall consumer confidence. Moreover, if builders are unable to achieve sufficient returns, they may be forced to slow or halt construction, disrupting the production levels needed to address ongoing supply shortages in the housing market. On a positive note, the federal government has intensified its focus on the national housing crisis with a strong likelihood of taking decisive action to enhance affordability. In a constructive move, federal officials have initiated discussions with builders and industry associations, among others, to gain a comprehensive understanding of the challenges and work towards practical solutions. Although the specifics of potential programs remain to be seen, it is clear that significant attention is being paid to developing impactful initiatives while thoughtfully considering possible unintended negative consequences.

Such actions could negatively affect the 85 million Americans who already own homes by diminishing their property values, which in turn could further weaken overall consumer confidence. Moreover, if builders are unable to achieve sufficient returns, they may be forced to slow or halt construction, disrupting the production levels needed to address ongoing supply shortages in the housing market. On a positive note, the federal government has intensified its focus on the national housing crisis with a strong likelihood of taking decisive action to enhance affordability. In a constructive move, federal officials have initiated discussions with builders and industry associations, among others, to gain a comprehensive understanding of the challenges and work towards practical solutions. Although the specifics of potential programs remain to be seen, it is clear that significant attention is being paid to developing impactful initiatives while thoughtfully considering possible unintended negative consequences.

Speaker #3: Moreover, if builders are unable to achieve sufficient returns, they may be forced to slow or halt construction, disrupting the production levels needed to address ongoing supply shortages in the housing market.

Speaker #3: On a positive note, the federal government has intensified its focus on the national housing crisis, with a strong likelihood of taking decisive action to enhance affordability.

Speaker #3: In a constructive move, federal officials have initiated discussions with builders and industry associations, among others, to gain a comprehensive understanding of the challenges and work towards practical solutions.

Speaker #3: Although the specifics of potential programs remain to be seen, it is clear that significant attention is being paid to developing impactful initiatives while thoughtfully considering possible unintended negative consequences.

Speaker #3: Despite the public scrutiny and debate surrounding various pros of proposed programs, it is encouraging to see that many bold ideas are being carefully elevated with the goal of improving affordability.

Stuart Miller: Despite the public scrutiny and debate surrounding various proposed programs, it is encouraging to see that many bold ideas are being carefully elevated with the goal of improving affordability. Increasing affordability has the potential to spark new demand in the housing market, which can in turn drive an increase in construction activity and help address ongoing supply shortages. Although the specific outcomes and programs remain uncertain at this time, it is significant that for the first time in decades, the federal government is actively recognizing the vital role that housing plays not only in the broader national economy but also in the well-being of American families. I am confident that housing will emerge as a central element in addressing the affordability crisis and providing meaningful solutions for the future. So now let me turn to our results.

Despite the public scrutiny and debate surrounding various proposed programs, it is encouraging to see that many bold ideas are being carefully elevated with the goal of improving affordability. Increasing affordability has the potential to spark new demand in the housing market, which can in turn drive an increase in construction activity and help address ongoing supply shortages. Although the specific outcomes and programs remain uncertain at this time, it is significant that for the first time in decades, the federal government is actively recognizing the vital role that housing plays not only in the broader national economy but also in the well-being of American families. I am confident that housing will emerge as a central element in addressing the affordability crisis and providing meaningful solutions for the future. So now let me turn to our results.

Speaker #3: Increasing affordability has the potential to spark new demand in the housing market, which can, in turn, drive an increase in construction activity and help address ongoing supply shortages.

Speaker #3: Specific outcomes remain uncertain at this time. However, it is significant that, for the first time in decades, the federal government is actively recognizing the vital role that housing plays not only in the broader national economy but also in the well-being of American families.

Speaker #3: I am confident that housing will emerge as a central element in addressing the affordability crisis and providing meaningful solutions for the future. So now, let me turn to our results.

Speaker #3: As we noted in our press release, in our fourth quarter we started 18,443 homes, delivered 23,034 homes, and sold just over 20,000 homes.

Stuart Miller: As we noted in our press release in our fourth quarter, we started 18,443 homes. We delivered 23,034 homes and sold just over 20,000 homes. While we were just above the low end of sales expectations and exceeded our delivery expectations, and we were able to grow our community count to 1,708 communities, or 18% over last year, positioning us for a better next year. As mortgage interest rates moderated and consumer confidence declined, we continued to drive volume with our starts, though at a slower pace, while we incentivized sales to enable affordability and limit undesired inventory buildup. As we approached the beginning of the year, we intentionally focused on building inventory above our two completed unsold homes per community level to almost three per community to provide ready supply for the new year.

As we noted in our press release in our fourth quarter, we started 18,443 homes. We delivered 23,034 homes and sold just over 20,000 homes. While we were just above the low end of sales expectations and exceeded our delivery expectations, and we were able to grow our community count to 1,708 communities, or 18% over last year, positioning us for a better next year. As mortgage interest rates moderated and consumer confidence declined, we continued to drive volume with our starts, though at a slower pace, while we incentivized sales to enable affordability and limit undesired inventory buildup. As we approached the beginning of the year, we intentionally focused on building inventory above our two completed unsold homes per community level to almost three per community to provide ready supply for the new year.

Speaker #3: While we were just above the low end of sales expectations and exceeded our delivery expectations—and we were able to grow—we were able to grow our community count to 1,708 communities, or 18% over last year, positioning us for a better next year.

Speaker #3: As mortgage interest rates moderated and consumer confidence declined, we continued to drive volume with our starts, though at a slower pace, while we incentivized sales to enable affordability and limit undesired inventory buildup.

Speaker #3: As we approached the beginning of the year, we intentionally focused on building inventory above our two completed unsold homes per community level to almost three per community, to provide ready supply for the new year.

Speaker #3: During the first quarter, sales incentives remained relatively flat at 14%, but reduced our gross margin to 17%, which was slightly lower than expected, on an average sales price of $386,000.

Stuart Miller: During the first quarter, sales incentives remained relatively flat at 14%, but reducing our gross margin to 17%, which was slightly lower than expected on an average sales price of $386,000. Our SG&A came in at 7.9%, which produced a net margin of 9.1%. As we look ahead to the first quarter of 2026, we expect our margins will be lower, as is expected in the first quarter, between 15 and 16%, of course, depending on market conditions. We expect to sell between 18,000 and 19,000 homes and deliver between 17,000 and 18,000 homes. We expect our average sales price to be between $365,000 and 375,000. And as I noted earlier, we expect to deliver approximately 85,000 homes in 2026. We expect our overhead in the first quarter to be approximately 9.1% as we continue to invest in and evolve our various Lennar technology solutions that will define our future.

During the first quarter, sales incentives remained relatively flat at 14%, but reducing our gross margin to 17%, which was slightly lower than expected on an average sales price of $386,000. Our SG&A came in at 7.9%, which produced a net margin of 9.1%. As we look ahead to the first quarter of 2026, we expect our margins will be lower, as is expected in the first quarter, between 15 and 16%, of course, depending on market conditions. We expect to sell between 18,000 and 19,000 homes and deliver between 17,000 and 18,000 homes. We expect our average sales price to be between $365,000 and 375,000. And as I noted earlier, we expect to deliver approximately 85,000 homes in 2026. We expect our overhead in the first quarter to be approximately 9.1% as we continue to invest in and evolve our various Lennar technology solutions that will define our future.

Speaker #3: Our SG&A came in at 7.9%, which produced a net margin of 9.1%. As we look ahead to the first quarter of 2026, we expect our margins will be lower, as is expected in the first quarter, between 15% and 16%, of course, depending on market conditions.

Speaker #3: We expect to sell between 18,000 and 19,000 homes and deliver between 17,000 and 18,000 homes. We expect our average sales price to be between $365,000 and $375,000, and as I noted earlier, we expect to deliver approximately 85,000 homes in 2026.

Speaker #3: We expect our overhead in the first quarter to be approximately 9.1% as we continue to invest in and evolve our various Lennar technology solutions that will define our future.

Speaker #3: These initiatives have been and will continue to add to SG&A, as well as corporate G&A, for some time, as they represent a significant investment in our differentiated future.

Stuart Miller: These initiatives have been and will continue to add to SG&A as well as corporate G&A for some time as they represent a significant investment in our differentiated future. As I think about our results in the fourth quarter, two additional components really stand out. First, we have now rebuilt our entire company with an asset-lighter inventory structure. Currently, less than 5% of our land is on our balance sheet. Accordingly, our overall inventory has been reduced from just under $20 billion one year ago to just under $12 billion today. With our now greater focus as a manufacturing company, we have also consistently reduced our vertical construction cost to build over the past two years from 2023 to 2025 by approximately 10%. While costs generally have been going up, we have been bringing ours down.

These initiatives have been and will continue to add to SG&A as well as corporate G&A for some time as they represent a significant investment in our differentiated future. As I think about our results in the fourth quarter, two additional components really stand out. First, we have now rebuilt our entire company with an asset-lighter inventory structure. Currently, less than 5% of our land is on our balance sheet. Accordingly, our overall inventory has been reduced from just under $20 billion one year ago to just under $12 billion today. With our now greater focus as a manufacturing company, we have also consistently reduced our vertical construction cost to build over the past two years from 2023 to 2025 by approximately 10%. While costs generally have been going up, we have been bringing ours down.

Speaker #3: As I think about our results in the fourth quarter, two additional components really stand out. First, we have now rebuilt our entire company with an asset-lighter inventory structure.

Speaker #3: Currently, less than 5% of our land is on our balance sheet. Accordingly, our overall inventory has been reduced from just under $20 billion one year ago to just under $12 billion today.

Speaker #3: With our now greater focus as a manufacturing company, we have also consistently reduced our vertical construction costs to cost to build over the past two years, from 2023 to 2025, by approximately 10%.

Speaker #3: While costs generally have been going up, we have been bringing ours down. Additionally, we have reduced our cycle time from 138 days a year ago to 127 days today for detached single-family homes.

Stuart Miller: Additionally, we have reduced our cycle time from 138 days a year ago to 127 days today for detached single-family homes. This has enabled us to improve our inventory turn to 2.2 times from 1.6 times last year. These measures tell us that we are now built for materially improved efficiency in the way that we execute our business, and we have a lot of room for additional improvement in each of these areas as well. We have certainly positioned Lennar for the time when market conditions normalize and our margins improve, and they will improve dramatically. We always keep in mind that incentives in normalized market conditions run in the 4% to 6% range as opposed to the 14% incentives today. That gap defines our opportunity as market conditions change. The second item is that we have now officially completed the Millrose transaction.

Additionally, we have reduced our cycle time from 138 days a year ago to 127 days today for detached single-family homes. This has enabled us to improve our inventory turn to 2.2 times from 1.6 times last year. These measures tell us that we are now built for materially improved efficiency in the way that we execute our business, and we have a lot of room for additional improvement in each of these areas as well. We have certainly positioned Lennar for the time when market conditions normalize and our margins improve, and they will improve dramatically. We always keep in mind that incentives in normalized market conditions run in the 4% to 6% range as opposed to the 14% incentives today. That gap defines our opportunity as market conditions change. The second item is that we have now officially completed the Millrose transaction.

Speaker #3: This has enabled us to improve our inventory turn to 2.2 times from 1.6 times last year. These measures tell us that we are now built for materially improved efficiency in the way that we execute our business, and we have a lot of room for additional improvement in each of these areas as well.

Speaker #3: We have certainly positioned Lennar for the time when market conditions normalize and our margins improve—and they will improve dramatically. We always keep in mind that incentives in normalized market conditions run in the 4% to 6% range, as opposed to the 14% incentives today.

Speaker #3: That gap defines our opportunity as market conditions change. The second item is that we have now officially completed the Milrose transaction. This quarter, Lennar launched and completed the split-off exchange offer to swap our remaining 20% stake in Milrose—approximately 33.3 million shares—for outstanding Lennar shares tendered by our stockholders.

Stuart Miller: This quarter, Lennar launched and completed the split-off exchange offer to swap our remaining 20% stake in Millrose, approximately 33.3 million shares, for outstanding Lennar shares tendered by our stockholders. While this transaction resulted in a $156 million one-time paper loss, this paper result was simply a function of the book value of the shares on Lennar's books on the day of the trade versus the stock price of the trade. More consequentially, this transaction resulted in an approximately 8 million share cashless repurchase of Lennar shares. Finally, and before I conclude, let me briefly talk about our operating team as Jon retires. As you all know, here at Lennar, we have a deep bench of experienced professionals who have been here at the company for many years. Of course, Jon has been an important part of the execution and culture at Lennar.

This quarter, Lennar launched and completed the split-off exchange offer to swap our remaining 20% stake in Millrose, approximately 33.3 million shares, for outstanding Lennar shares tendered by our stockholders. While this transaction resulted in a $156 million one-time paper loss, this paper result was simply a function of the book value of the shares on Lennar's books on the day of the trade versus the stock price of the trade. More consequentially, this transaction resulted in an approximately 8 million share cashless repurchase of Lennar shares. Finally, and before I conclude, let me briefly talk about our operating team as Jon retires. As you all know, here at Lennar, we have a deep bench of experienced professionals who have been here at the company for many years. Of course, Jon has been an important part of the execution and culture at Lennar.

Speaker #3: While this transaction resulted in a $156 million one-time paper loss, this paper result was simply a function of the book value of the shares on Lennar's books on the day of the trade versus the stock price of the trade.

Speaker #3: More consequentially, this transaction resulted in an approximately $8 million share cashless repurchase of Lennar shares. Finally, and before I conclude, let me briefly talk about our operating team as John retires.

Speaker #3: As you all know, here at Lennar, we have a deep bench of experienced professionals who have been here at the company for many years.

Speaker #3: Of course, John has been an important part of the execution and culture at Lennar. But that means that many of our leaders have worked together, and together with John, and are very prepared to pick up where John leaves off.

Stuart Miller: But that means that many of our leaders have worked together and together with Jon and are very prepared to pick up where Jon leaves off. Specifically, Jim Parker and David Grove, both tenured regional presidents, will each oversee operations for about one-half of the country, and they have and will continue to work cooperatively. Additionally, Greg McGuff will move from his regional president position to a new leadership role taking on strategic corporate functions. Greg will begin by working on our land banking programs by refining the execution around that very strategic part of our business. All three of these leaders, Jim, David, and Greg, are very enthusiastic about their new opportunities to perform and in their new positions, and they are anxious to get started. That doesn't mean they're kicking me out, Jon. Good to know.

But that means that many of our leaders have worked together and together with Jon and are very prepared to pick up where Jon leaves off. Specifically, Jim Parker and David Grove, both tenured regional presidents, will each oversee operations for about one-half of the country, and they have and will continue to work cooperatively. Additionally, Greg McGuff will move from his regional president position to a new leadership role taking on strategic corporate functions. Greg will begin by working on our land banking programs by refining the execution around that very strategic part of our business. All three of these leaders, Jim, David, and Greg, are very enthusiastic about their new opportunities to perform and in their new positions, and they are anxious to get started. That doesn't mean they're kicking me out, Jon.

Speaker #3: Specifically, Jim Parker and David Grove, both tenured regional presidents, will each oversee operations for about one half of the country, and they have and will continue to work cooperatively.

Speaker #3: Additionally, Greg McGuff will move from his regional president position to a new leadership role, taking on strategic corporate functions. Greg will begin by working on a land banking program, refining the execution around that very strategic part of our business.

Speaker #3: All three of these leaders—Jim, David, and Greg—are very enthusiastic about their new opportunities to perform. In their new positions, they are anxious to get started.

Speaker #3: That doesn't mean they're kicking me out, John.

Jon Jaffe: Good to know.

Speaker #2: Good to

Speaker #2: know. We will be

Stuart Miller: We will be hiring or we will not be hiring a replacement for Jon because the experienced leadership from within the company is part of the Lennar culture and are all three capable and qualified to carry the company forward without missing a step. So let me conclude and conclude by saying that while this has been another difficult quarter in the housing market, it's another very constructive quarter for Lennar. While the short-term road ahead might seem choppy still, we are very optimistic about our future. We are well aware that our numbers aren't where we'd like them to be, but neither are market conditions. We are very well positioned with a strong growing national footprint and growing community count and growing volume. We have continued to drive production to meet the housing shortage that we all know persists across our markets.

Speaker #1: hiring or we will not be hiring or replacement for John because the experienced leadership from within the company is part of the LENAR culture and are both and are all three capable and qualified to carry the company forward without missing a step.

Speaker #1: So let me conclude by saying that while this has been another difficult quarter in the housing market, it's another very constructive quarter for Lennar.

Speaker #1: While the short-term road ahead might still seem choppy, we are very optimistic about our future. We are well aware that our numbers aren't where we'd like them to be, but neither are market conditions.

Speaker #1: We are very well positioned with a strong, growing national footprint and a growing community and growing volume. We have continued to drive production to meet the housing shortage that we all know persists across our markets.

Speaker #1: And as we have driven growth, production, and volume, we've positioned our company to evolve and create efficiencies and technologies that will make us a better company, built for the future.

Stuart Miller: And as we have driven growth, production, and volume, we have positioned our company to evolve and create efficiencies and technologies that will make us a better company and built for the future. We have materially reduced our inventory, our construction costs, and our cycle times, and we have and will continue to increase our inventory turn. We are determined to build more with less capital deployed so that as margin begins to grow, our returns on capital and equity will grow even faster. In that regard, we will focus on and refine our manufacturing model and continue to use our land partnerships to grow with a focus on cash flow and high returns on capital and equity. Additionally, our strong balance sheet and strong land banking relations afford us flexibility and advantage opportunity to consider and execute on strategic growth for our future as well.

And as we have driven growth, production, and volume, we have positioned our company to evolve and create efficiencies and technologies that will make us a better company and built for the future. We have materially reduced our inventory, our construction costs, and our cycle times, and we have and will continue to increase our inventory turn. We are determined to build more with less capital deployed so that as margin begins to grow, our returns on capital and equity will grow even faster. In that regard, we will focus on and refine our manufacturing model and continue to use our land partnerships to grow with a focus on cash flow and high returns on capital and equity. Additionally, our strong balance sheet and strong land banking relations afford us flexibility and advantage opportunity to consider and execute on strategic growth for our future as well.

Speaker #1: We have materially reduced our inventory, our construction costs, and our cycle times, and we have—and will continue to—increase our inventory turn. We are determined to build more with less capital deployed so that as margin begins to grow, our returns on capital and equity will grow even faster.

Speaker #1: In that regard, we will focus on and refine our manufacturing model, and continue to use our land partnerships to grow, with a focus on cash flow and high returns on capital and equity.

Speaker #1: Additionally, our strong balance sheet and strong land banking relations afford us flexibility and advantageous opportunity to consider and execute on strategic growth for our future as well.

Speaker #1: Lennar is extremely well positioned for the future, and we look forward to keeping you up to date on our progress. And with that, let me turn it over to

Stuart Miller: Lennar is extremely well positioned for the future, and we look forward to keeping you up to date on our progress. With that, let me turn over to Jon. Good morning, everyone. Thank you, Stuart, for a very special partnership with the Lennar team for what's been an amazing journey. As Stuart described, we remain steadfast in executing our strategy. Every day, we work on driving home building efficiencies in our operations. This execution is reflected in achieving our targeted sales pace, record low cycle times, overall cost reductions, and increased inventory turn. Starting with our sales and marketing machine, in Q4, we achieved a sales pace of four homes per community per month, meeting our sales plan. This starts with attracting qualified leads to our digital funnel, followed by rapid, high-quality customer engagement.

Lennar is extremely well positioned for the future, and we look forward to keeping you up to date on our progress. With that, let me turn over to Jon.

Speaker #1: John. Good morning, everyone.

Jon Jaffe: Good morning, everyone. Thank you, Stuart, for a very special partnership with the Lennar team for what's been an amazing journey. As Stuart described, we remain steadfast in executing our strategy. Every day, we work on driving home building efficiencies in our operations. This execution is reflected in achieving our targeted sales pace, record low cycle times, overall cost reductions, and increased inventory turn. Starting with our sales and marketing machine, in Q4, we achieved a sales pace of four homes per community per month, meeting our sales plan. This starts with attracting qualified leads to our digital funnel, followed by rapid, high-quality customer engagement.

Speaker #3: And thank you, Stuart, for a very special partnership. And to the Lennar team for what's been an amazing journey. As Stuart described, we remain steadfast in executing our strategy.

Speaker #3: Every day, we work on driving homebuilding efficiencies in our operations. This execution is reflected in achieving our targeted sales pace, record-low cycle times, overall cost reductions, and increased inventory turn.

Speaker #3: Starting with our sales and marketing machine, in the fourth quarter, we achieved a sales pace of four homes per community per month, meeting our sales plan.

Speaker #3: This starts with attracting qualified leads to our digital funnel, followed by rapid, high-quality customer engagement. Our average response time for customer-submitted RFIs, which we view as a critical metric, dropped to 42 seconds in the fourth quarter, with a 12.5% improvement over the third quarter.

Stuart Miller: Our average response time for customer-submitted RFIs, which we view as a critical metric, dropped to 42 seconds in Q4, a 12.5% improvement over Q3. This responsiveness now extends after hours, with digital agents available to assist customers at any time, even at 2:00AM if that's when a customer is online looking for their new home. We analyze customer interactions and our RFI responses to drive improvement in the quality of engagement. Improving our speed in responding and the quality of those responses drove a 15% year-over-year increase in appointments in Q4. Our pricing strategy focuses on continuous evaluation of demand patterns, inventory levels, and price discovery data designed to set the price and incentives for each community to maintain the targeted sales pace. This maximizes sales efficiency and maintains our inventory at appropriate levels.

Our average response time for customer-submitted RFIs, which we view as a critical metric, dropped to 42 seconds in Q4, a 12.5% improvement over Q3. This responsiveness now extends after hours, with digital agents available to assist customers at any time, even at 2:00AM if that's when a customer is online looking for their new home. We analyze customer interactions and our RFI responses to drive improvement in the quality of engagement. Improving our speed in responding and the quality of those responses drove a 15% year-over-year increase in appointments in Q4. Our pricing strategy focuses on continuous evaluation of demand patterns, inventory levels, and price discovery data designed to set the price and incentives for each community to maintain the targeted sales pace. This maximizes sales efficiency and maintains our inventory at appropriate levels.

Speaker #3: This responsiveness now extends after hours, with digital agents available to assist customers at any time—even at 2:00 a.m., if that's when the customer is online looking for their new home.

Speaker #3: We analyze customer interactions and our RFI responses to drive improvement in the quality of engagement. Improving our speed in responding, and the quality of those responses, drove a 15% year-over-year increase in appointments in the fourth quarter.

Speaker #3: Our pricing strategy focuses on continuous evaluation of demand patterns, inventory levels, and price discovery data, designed to set the price and incentives for each community to maintain the targeted sales pace.

Speaker #3: This maximizes sales efficiency and maintains our inventory at appropriate levels. As Stuart noted, we ended the quarter with an average of just under three unsold completed homes per community.

Stuart Miller: As Stuart noted, we ended the quarter with an average of just under three unsold completed homes per community. This process and the easing of pressure on our sales targets resulted in new order incentives decreasing by 70 basis points quarter over quarter. Next, I'll discuss our volume-oriented production first strategy to drive efficiencies resulting in reduced construction costs. In the quarter, we maintained a consistent start pace of 3.7 homes per community per month in line with our expectations. We continue to work throughout our supply chain using this consistent volume to lower costs quarter after quarter. We continued our focus on plan and SKU optimization along with a new national bidding software tool that streamlines management of thousands of SKUs in real time. This has enabled faster and more effective decision-making across the company, achieving further cost reductions.

As Stuart noted, we ended the quarter with an average of just under three unsold completed homes per community. This process and the easing of pressure on our sales targets resulted in new order incentives decreasing by 70 basis points quarter over quarter. Next, I'll discuss our volume-oriented production first strategy to drive efficiencies resulting in reduced construction costs. In the quarter, we maintained a consistent start pace of 3.7 homes per community per month in line with our expectations. We continue to work throughout our supply chain using this consistent volume to lower costs quarter after quarter. We continued our focus on plan and SKU optimization along with a new national bidding software tool that streamlines management of thousands of SKUs in real time. This has enabled faster and more effective decision-making across the company, achieving further cost reductions.

Speaker #3: This process and the easing of pressure on our sales targets resulted in new order incentives decreasing by 70 basis points quarter over quarter. Next, I'll discuss our volume-oriented, production-first strategy to drive efficiencies, resulting in reduced construction costs.

Speaker #3: In the quarter, we maintained a consistent start pace of 3.7 homes per community per month, in line with our expectations. We continue to work throughout our supply chain, using this consistent volume to lower costs quarter after quarter.

Speaker #3: We continued our focus on plan and SKU optimization, along with a new national bidding software tool that streamlines management of thousands of SKUs in real time.

Speaker #3: This has enabled faster and more effective decision-making across the company, achieving further cost reductions. Direct construction costs in the fourth quarter decreased by approximately 2% from Q3, and over 5% year over year.

Stuart Miller: Direct construction costs in the fourth quarter decreased by approximately 2% from Q3 and over 5% year-over-year. This downward trend will continue as we move into the first quarter of 2026. The average cycle time for single-family detached homes was 127 calendar days, matching our record low from Q3. This represents an 8% year-over-year reduction. With improved quality control and communications with our trade partners, we have reduced cycle times, minimized travel for trades, lowered warranty spend, and improved the customer experience. We saw tangible results with fewer work orders and a 45% year-over-year reduction in warranty spend. This was accomplished while maintaining consistent high-quality home deliveries for our customers, resulting in a highly regarded NPS score of 79 for 2025. Turning to land and our asset-light strategy.

Direct construction costs in the fourth quarter decreased by approximately 2% from Q3 and over 5% year-over-year. This downward trend will continue as we move into the first quarter of 2026. The average cycle time for single-family detached homes was 127 calendar days, matching our record low from Q3. This represents an 8% year-over-year reduction. With improved quality control and communications with our trade partners, we have reduced cycle times, minimized travel for trades, lowered warranty spend, and improved the customer experience. We saw tangible results with fewer work orders and a 45% year-over-year reduction in warranty spend. This was accomplished while maintaining consistent high-quality home deliveries for our customers, resulting in a highly regarded NPS score of 79 for 2025. Turning to land and our asset-light strategy.

Speaker #3: This downward trend will continue as we move into the first quarter of 2026. The average cycle time for single-family detached homes was 127 calendar days, matching our record low from Q3.

Speaker #3: This represents an 8% year-over-year reduction. With improved quality control and communications with our trade partners, we have reduced cycle times, minimized travel for trades, lowered warranty spend, and improved the customer experience.

Speaker #3: We saw tangible results with fewer work orders and a 45% year-over-year reduction in warranty spend. This was accomplished while maintaining consistent, high-quality home deliveries for our customers, resulting in a highly regarded MPS score of 79 for 2025.

Speaker #3: Turning to land and our asset-light strategy. In Q4, we continued to carefully structure land acquisitions for just-in-time land closings. Leveraging our land bank and land developer relationships, we minimized carry costs and delivered just-in-time finished home sites.

Stuart Miller: Q4, we continued to carefully structure land acquisitions for just-in-time land closing, leveraging land bank and land developer relationships to minimize carry costs and deliver just-in-time finished home sites. Our asset-light strategy delivered improved metrics. Supply of owned home sites decreased year-over-year to 0.1 years from 1.1 years, and controlled home sites increased to 98% from 82%. These operational improvements increased our inventory churn 38% from the prior year. In conclusion, our team is united and focused on executing strategies that drive improving customer acquisition results, reduce costs, and enhance operational efficiencies, all while improving the customer experience. These efforts are delivering measurable results and positioning us for future success. Now I'll turn it over to Diane. Thank you, Jon, and good morning, everyone. Stuart and Jon have provided a great deal of color regarding our home building operations.

Q4, we continued to carefully structure land acquisitions for just-in-time land closing, leveraging land bank and land developer relationships to minimize carry costs and deliver just-in-time finished home sites. Our asset-light strategy delivered improved metrics. Supply of owned home sites decreased year-over-year to 0.1 years from 1.1 years, and controlled home sites increased to 98% from 82%. These operational improvements increased our inventory churn 38% from the prior year. In conclusion, our team is united and focused on executing strategies that drive improving customer acquisition results, reduce costs, and enhance operational efficiencies, all while improving the customer experience. These efforts are delivering measurable results and positioning us for future success. Now I'll turn it over to Diane.

Speaker #3: Our asset-light strategy delivered improved metrics. Supply of owned home sites decreased year-over-year to 0.1 years from 1.1 years, and controlled home sites increased to 98% from 82%.

Speaker #3: These operational improvements increased our inventory churn 38% from the prior year. Conclusion: our team is united and focused on executing strategies that drive improving customer acquisition results, reduce costs, enhance operational efficiencies, all while improving the customer experience.

Speaker #3: These efforts are delivering measurable results and positioning us for future success. Now, I'll turn it over to Diane.

Diane Bessette: Thank you, Jon, and good morning, everyone. Stuart and Jon have provided a great deal of color regarding our home building operations. So therefore, I'm going to provide a quick summary of our financial services operations, summarize our balance sheet highlights, and then provide guidance for the first quarter of fiscal 2026. So starting with financial services. For the fourth quarter, our financial services team produced operating earnings of $133 million within our guidance range of $130 to 135 million. And for the year, generated $610 million. Once again, our financial services team contributed great profitability and, most important, worked in partnership with our home building teams to provide a great customer experience for each home buyer. So now let's turn to our balance sheet. This quarter, once again, we continued to generate cash by pricing homes to market conditions.

Speaker #1: Thank you, John, and good morning, everyone. Stuart and John have provided a great deal of color regarding our homebuilding operations, so therefore, I'm going to provide a quick summary of our financial services operations, summarize our balance sheet highlights, and then provide guidance for the first quarter of fiscal 2026.

Stuart Miller: So therefore, I'm going to provide a quick summary of our financial services operations, summarize our balance sheet highlights, and then provide guidance for the first quarter of fiscal 2026. So starting with financial services. For the fourth quarter, our financial services team produced operating earnings of $133 million within our guidance range of $130 to 135 million. And for the year, generated $610 million. Once again, our financial services team contributed great profitability and, most important, worked in partnership with our home building teams to provide a great customer experience for each home buyer. So now let's turn to our balance sheet. This quarter, once again, we continued to generate cash by pricing homes to market conditions. The result of these actions was that we ended the quarter with $3.4 billion of cash and total liquidity of $6.5 billion.

Speaker #1: So, starting with Financial Services, for the fourth quarter, our Financial Services team produced operating earnings of $133 million, within our guidance range of $130 million to $135 million.

Speaker #1: And for the year, generated $610 million. Once again, our Financial Services team contributed great profitability, and most important, worked in partnership with our Homebuilding teams to provide a great customer experience for each homebuyer.

Speaker #1: So now let's turn to our balance sheet. This quarter, once again, we continued to generate cash by pricing homes to market conditions. The result of these actions was that we ended the quarter with $3.4 billion of cash and total liquidity of $6.5 billion.

The result of these actions was that we ended the quarter with $3.4 billion of cash and total liquidity of $6.5 billion. Our year's supply of owned home sites was 0.1 years, and our home sites controlled percentage was 98%. We ended the quarter owning just under 10,000 home sites and controlling 496,000 home sites for a total count of 506,000 home sites. We believe this portfolio of home sites provides us with a strong competitive position to continue to grow market share and scale in a capital-efficient way. During the quarter, we started about 18,400 homes and ended the quarter with approximately 38,000 homes in inventory. This includes just under 5,000 completed unsold homes, which, as we've mentioned, is just under three per community. Our inventory churn increased to 2.2x, and our return on inventory was approximately 20%.

Speaker #1: Our year's supply of owned home sites was 0.1 years, and our home sites controlled percentage was 98%. We ended the quarter owning just under 10,000 home sites and controlling 496,000 home sites, for a total count of 506,000 home sites.

Stuart Miller: Our year's supply of owned home sites was 0.1 years, and our home sites controlled percentage was 98%. We ended the quarter owning just under 10,000 home sites and controlling 496,000 home sites for a total count of 506,000 home sites. We believe this portfolio of home sites provides us with a strong competitive position to continue to grow market share and scale in a capital-efficient way. During the quarter, we started about 18,400 homes and ended the quarter with approximately 38,000 homes in inventory. This includes just under 5,000 completed unsold homes, which, as we've mentioned, is just under three per community. Our inventory churn increased to 2.2x, and our return on inventory was approximately 20%. And then, as we turn to our debt position, we ended the quarter with $1.7 billion outstanding under our term loan facility and no outstanding borrowings under our revolving credit facility.

Speaker #1: We believe this portfolio of home sites provides us with a strong competitive position to continue to grow market share and scale in a capital-efficient way.

Speaker #1: During the quarter, we started about 18,400 homes and ended the quarter with approximately 38,000 homes in inventory. This includes just under 5,000 completed unsold homes, which, as we've mentioned, is just under three per community.

Speaker #1: Our inventory churn increased to 2.2 times, and our return on inventory was approximately 20%. And then, as we turn to our debt position, we ended the quarter with $1.7 billion outstanding under our term loan facility and no outstanding borrowings under our revolving credit facility.

And then, as we turn to our debt position, we ended the quarter with $1.7 billion outstanding under our term loan facility and no outstanding borrowings under our revolving credit facility. Our home building debt to total capital was 15.7%. We had no redemptions or repurchases of senior notes this quarter. Our next debt maturity of $400 million is in June 2026. As Stuart mentioned, we successfully completed the divestiture of our Millrose investment by exchanging Millrose shares for Lennar shares. The result was a non-cash repurchase of 8 million Lennar shares. Note that during the exchange period, we were subject to a tender offer rule, which includes an exchange offer that prohibited us from using cash to purchase our shares. However, during the year, we did use $1.7 billion of cash to repurchase 14 million Lennar shares.

Speaker #1: And our homebuilding debt to total capital was 15.7%. We had no redemptions or repurchases of senior notes this quarter. Our next debt maturity of $400 million is in June 2026.

Stuart Miller: Our home building debt to total capital was 15.7%. We had no redemptions or repurchases of senior notes this quarter. Our next debt maturity of $400 million is in June 2026. As Stuart mentioned, we successfully completed the divestiture of our Millrose investment by exchanging Millrose shares for Lennar shares. The result was a non-cash repurchase of 8 million Lennar shares. Note that during the exchange period, we were subject to a tender offer rule, which includes an exchange offer that prohibited us from using cash to purchase our shares. However, during the year, we did use $1.7 billion of cash to repurchase 14 million Lennar shares. Thus, in total for the year, we repurchased 22 million shares valued at $2.7 billion. Additionally, we paid total dividends this quarter of $170 million for a total of $521 million for the year.

Speaker #1: As Stuart mentioned, we successfully completed the divestiture related to our Millrose investment by exchanging Millrose shares for Lennar shares. The result was a non-cash repurchase of $8 million in Lennar shares.

Speaker #1: Note that during the exchange period, we were subject to a tender offer rule, which includes an exchange offer, that prohibited us from using cash to purchase our shares.

Speaker #1: However, during the year, we did use $1.7 billion of cash to repurchase 14 million Lennar shares. Thus, in total for the year, we repurchased 22 million shares valued at $2.7 billion.

Thus, in total for the year, we repurchased 22 million shares valued at $2.7 billion. Additionally, we paid total dividends this quarter of $170 million for a total of $521 million for the year. So, in the aggregate for fiscal 2025, we returned about $3.2 billion to our shareholders. Our stockholders' equity was just under $22 billion, and our book value per share was about $89. In summary, the strength of our balance sheet provides us with confidence and financial flexibility as we progress into fiscal 2026. So, with that brief overview, I'd like to turn to Q1 2026, and provide some guidance estimates. Some of these that we've noted, but to start at the top. Starting with new orders, we expect Q1 new orders to be in the range of 18,000 to 19,000 homes as we match production with sales pace.

Speaker #1: Additionally, we paid total dividends this quarter of $170 million, for a total of $521 million for the year. So, in the aggregate for fiscal 2025, we returned about $3.2 billion to our shareholders.

Stuart Miller: So, in the aggregate for fiscal 2025, we returned about $3.2 billion to our shareholders. Our stockholders' equity was just under $22 billion, and our book value per share was about $89. In summary, the strength of our balance sheet provides us with confidence and financial flexibility as we progress into fiscal 2026. So, with that brief overview, I'd like to turn to Q1 2026, and provide some guidance estimates. Some of these that we've noted, but to start at the top. Starting with new orders, we expect Q1 new orders to be in the range of 18,000 to 19,000 homes as we match production with sales pace. We anticipate our Q1 deliveries to be in the range of 17,000 to 18,000 homes with a continued focus on turning inventory into cash. Our Q1 average sales price on those deliveries should be between $365,000 to $375,000.

Speaker #1: Our stockholders' equity was just under $22 billion, and our book value per share was about $89. In summary, the strength of our balance sheet provides us with confidence and financial flexibility as we progress into fiscal 2026.

Speaker #1: So with that brief overview, I'd like to turn to Q1 2026 and provide some guidance estimates. Some of these we've noted, but to start at the top—starting with new orders—we expect Q1 new orders to be in the range of 18,000 to 19,000 homes as we match production with sales pace.

We anticipate our Q1 deliveries to be in the range of 17,000 to 18,000 homes with a continued focus on turning inventory into cash. Our Q1 average sales price on those deliveries should be between $365,000 to $375,000. Gross margins should be in the range of 15% to 16%. As a reminder, we expense rather than capitalize field expenses. So, the first quarter is historically the lightest. Since the first quarter is historically the lightest delivery quarter of the year and therefore light on revenues, we lose field leverage. Typically, Q4 gross margins to Q1 gross margins in the following year decrease 100 basis points to 150 basis points because of this loss of leverage. As it stands now, we believe Q1 gross margins will be the low point of the year. Our SG&A percentage should be around 9.5%, but all of these metrics, of course, are dependent on market conditions.

Speaker #1: We anticipate our Q1 deliveries to be in the range of 17,000 to 18,000 homes, with a continued focus on turning inventory into cash. Our Q1 average sales price on those deliveries should be between $365,000 to $375,000.

Speaker #1: Gross margins should be in the range of 15% to 16%. As a reminder, we expense rather than capitalize field expenses. So the first quarter is historically the lightest since the first quarter is historically the lightest delivery quarter of the year, and therefore light on revenues.

Stuart Miller: Gross margins should be in the range of 15% to 16%. As a reminder, we expense rather than capitalize field expenses. So, the first quarter is historically the lightest. Since the first quarter is historically the lightest delivery quarter of the year and therefore light on revenues, we lose field leverage. Typically, Q4 gross margins to Q1 gross margins in the following year decrease 100 basis points to 150 basis points because of this loss of leverage. As it stands now, we believe Q1 gross margins will be the low point of the year. Our SG&A percentage should be around 9.5%, but all of these metrics, of course, are dependent on market conditions. For the combined home building, joint venture, and land sales and other categories, we expect a loss of approximately $10 million. We anticipate our financial services earnings to be approximately $105 to 110 million.

Speaker #1: We lose field leverage. Typically, Q4 gross margins to Q1 gross margins in the following year decrease 100 basis points to 150 basis points because of this loss of leverage.

Speaker #1: As it stands now, we believe Q1 gross margins will be the low point of the year. Our SG&A percentage should be around 9.5%, but all of these metrics, of course, are dependent on market conditions.

Speaker #1: For the combined homebuilding, joint venture, and land sales and other categories, we expect a loss of approximately $10 million. We anticipate our financial services earnings to be approximately $105 to $110 million.

For the combined home building, joint venture, and land sales and other categories, we expect a loss of approximately $10 million. We anticipate our financial services earnings to be approximately $105 to 110 million. For our multifamily business, we expect earnings of about $20 million as we continue to strategically monetize assets to generate higher returns. Turning to Lennar Other, we expect a loss of about $20 million, excluding the impact of any potential mark-to-market adjustments to our technology investments. Our corporate G&A should be about 2.2% of total revenue, and our foundation contribution will be based on $1,000 per home delivery. We expect our Q1 tax rate to be approximately 25.25%, and the weighted average share count should be approximately 245 million shares.

Speaker #1: For our multifamily business, we expect earnings of about $20 million as we continue to strategically monetize assets to generate higher returns. Turning to Lennar Other, we expect a loss of about $20 million, excluding the impact of any potential mark-to-market adjustments to our technology investments.

Stuart Miller: For our multifamily business, we expect earnings of about $20 million as we continue to strategically monetize assets to generate higher returns. Turning to Lennar Other, we expect a loss of about $20 million, excluding the impact of any potential mark-to-market adjustments to our technology investments. Our corporate G&A should be about 2.2% of total revenue, and our foundation contribution will be based on $1,000 per home delivery. We expect our Q1 tax rate to be approximately 25.25%, and the weighted average share count should be approximately 245 million shares. On a combined basis, these estimates should produce an EPS range of approximately $0.80 to $1.10 per share for the first quarter. With that, let me turn it over to the operator. Thank you. We will now begin the question-and-answer session of today's conference call.

Speaker #1: Our corporate G&A should be about foundation contribution, which will be based on $2.20 of total revenue and on $1,000 per home delivery. We expect our Q1 tax rate to be approximately 25.25%, and the weighted average share count should be approximately 245 million shares.

On a combined basis, these estimates should produce an EPS range of approximately $0.80 to $1.10 per share for the first quarter. With that, let me turn it over to the operator.

Speaker #1: And so, on a combined basis, these estimates should produce an EPS range of approximately $0.80 to $1.10 per share for the first quarter. With that, let me turn it over to the

Speaker #1: operator. Thank you.

Operator: Thank you. We will now begin the question-and-answer session of today's conference call. We ask that you limit your questions to one question and one follow-up question until all questions have been answered. If you would like to ask a question, please unmute your phone, press star one, and record your name clearly when prompted. If you need to withdraw your question at any time, you may use star two. Again, that is star one to ask a question. Our first question comes from Alan Ratner from Zelman & Associates. Please go ahead.

Speaker #2: We will now begin the question and answer session of today's conference call. We ask that you limit your questions to one question and one follow-up question until all questions have been answered.

Stuart Miller: We ask that you limit your questions to one question and one follow-up question until all questions have been answered. If you would like to ask a question, please unmute your phone, press star one, and record your name clearly when prompted. If you need to withdraw your question at any time, you may use star two. Again, that is star one to ask a question. Our first question comes from Alan Ratner from Zelman & Associates. Please go ahead. Hey, guys. Good morning. Thanks for all the details so far. So, I think gross margin is obviously on the top of everybody's minds, and you obviously walked through a lot of the moving pieces there. It's encouraging to hear that incentives actually tick lower in the quarter. And I know you also gave some encouraging data on your cost reductions.

Speaker #2: If you would like to ask a question, please unmute your phone, press star 1, and record your name clearly when prompted. If you need to withdraw your question at any time, you may use star 2.

Speaker #2: Again, that is star 1 to ask a question. Our first question comes from Alan Ratner from Zelman & Associates. Please go ahead.

Speaker #2: ahead. Hey, guys.

Alan Ratner: Hey, guys. Good morning. Thanks for all the details so far. So, I think gross margin is obviously on the top of everybody's minds, and you obviously walked through a lot of the moving pieces there. It's encouraging to hear that incentives actually tick lower in the quarter. And I know you also gave some encouraging data on your cost reductions.

Speaker #3: Good morning. Thanks for all the details so far.

Speaker #4: Good morning.

Speaker #3: So, I think gross margin is obviously on the top of everybody's mind, and you obviously walked through a lot of the moving pieces there.

Speaker #3: It's encouraging to hear that incentives actually tick lower in the quarter, and I know you also gave some encouraging data on your cost reduction.

Speaker #3: So can you just walk through exactly what's contributing to the continued pressure on margin? I know that there's the seasonality in Q1, but this quarter's results came in a bit below guidance, and I know in the past you've kind of talked about margins maybe stabilizing.

Stuart Miller: So, can you just walk through exactly what's contributing to the continued pressure on margin? I know there's the seasonality in Q1, but this quarter's results came in a bit below guidance. I know in the past you've kind of talked about margins maybe stabilizing. So, I'm just curious if you could walk through exactly what's contributing to the downside given the improvement or the reduction in incentives. And the follow-on to that, I guess more broadly, is if we don't see any material improvement in demand, given your growth expectations for 2026 at 3%, a little bit below kind of your target range you'd given previously, is that an environment where you think you can potentially dial back those incentives further? Thank you. Yeah, that's John. I'll begin. During the quarter, we faced some unexpected headwinds, particularly with the government shutdown.

So, can you just walk through exactly what's contributing to the continued pressure on margin? I know there's the seasonality in Q1, but this quarter's results came in a bit below guidance. I know in the past you've kind of talked about margins maybe stabilizing. So, I'm just curious if you could walk through exactly what's contributing to the downside given the improvement or the reduction in incentives. And the follow-on to that, I guess more broadly, is if we don't see any material improvement in demand, given your growth expectations for 2026 at 3%, a little bit below kind of your target range you'd given previously, is that an environment where you think you can potentially dial back those incentives further? Thank you.

Speaker #3: So I’m just curious if you could walk through exactly what’s contributing to the downside given the improvement, or the reduction, in incentives. And the follow-on to that, I guess more broadly, is if we don’t see any material improvement in demand—given your growth expectations for ’26 at 3%, which is a little bit below your previously given target range—is that an environment where you think you can potentially dial back those incentives further?

Speaker #3: Thank you.

Jon Jaffe: Yeah, that's John. I'll begin. During the quarter, we faced some unexpected headwinds, particularly with the government shutdown. That definitely had an impact on consumer confidence, which is primary to our customer. So, that definitely challenged our ability to, particularly in some markets, stabilize pricing. We saw some impact in terms of what we accomplished versus what we expected because of what was happening in real time in the marketplace. It's not consistent. It varies across the country. If you're asking which markets are strongest or weakest, it really ebbs and flows across our markets with just sort of an overall overhang of what's going on in the economy with the government and general customer confidence erosion.

Speaker #4: Yeah, that's John. I'll begin. During the quarter, we faced some unexpected headwinds, particularly with the government shutdown that definitely had an impact on consumer confidence, which is primary to our customer.

Stuart Miller: That definitely had an impact on consumer confidence, which is primary to our customer. So, that definitely challenged our ability to, particularly in some markets, stabilize pricing. We saw some impact in terms of what we accomplished versus what we expected because of what was happening in real time in the marketplace. It's not consistent. It varies across the country. If you're asking which markets are strongest or weakest, it really ebbs and flows across our markets with just sort of an overall overhang of what's going on in the economy with the government and general customer confidence erosion. I think as we started the quarter, the expectation was that with interest rates kind of moving down a little bit, even with consumer confidence somewhat negative, the thinking was from our divisions that the incentive structures would come down through the quarter.

Speaker #4: And so, that definitely challenged our ability to, particularly in some markets, stabilize pricing. So we saw some impact in terms of what we accomplished versus what we expected because of what was happening in real time in the marketplace.

Speaker #4: And it's not consistent; it varies across the country. If you're asking which markets are strongest or weakest, it really ebbs and flows across our markets, with just sort of an overall overhang of what's going on in the economy, with the government, and that general customer confidence erosion.

Speaker #5: I think as we started the quarter, the expectation was that with interest rates kind of moving down a little bit—even with consumer confidence somewhat negative—the thinking was, from our divisions, that the incentive structures would come down through the quarter.

Stuart Miller: I think as we started the quarter, the expectation was that with interest rates kind of moving down a little bit, even with consumer confidence somewhat negative, the thinking was from our divisions that the incentive structures would come down through the quarter.

Speaker #5: I think that it's our feeling that the government shutdown had a material effect on the consumer psychology coming through the quarter and reacting kind of real time.

Stuart Miller: I think that it's our feeling that the government shutdown had a material effect on the consumer psychology going through the quarter and reacting kind of real time. Now, does that come back? It is, as we look through our numbers as we go through next year, I think that there's a general view that incentives will be coming down. And then layer on top of that, it does seem that the federal government is very focused on coming up with programming that kind of activates affordability. What that's going to look like, I just don't know. But it does seem like there's a lot of activity around focusing on this very important part of the economy. So, we think that incentives will come down through the year. But as we went through this quarter, we definitely hit a headwind across the country.

I think that it's our feeling that the government shutdown had a material effect on the consumer psychology going through the quarter and reacting kind of real time. Now, does that come back? It is, as we look through our numbers as we go through next year, I think that there's a general view that incentives will be coming down. And then layer on top of that, it does seem that the federal government is very focused on coming up with programming that kind of activates affordability. What that's going to look like, I just don't know. But it does seem like there's a lot of activity around focusing on this very important part of the economy. So, we think that incentives will come down through the year. But as we went through this quarter, we definitely hit a headwind across the country.

Speaker #5: Now, does that come back? It is, as we look through our numbers, as we go through next year, I think that there's a general view that incentives will be coming down.

Speaker #5: And then, layer on top of that, it does seem that the federal government is very focused on coming up with programming that kind of activates affordability.

Speaker #5: What that's going to look like, I just don't know. But it does seem like there's a lot of activity around focusing on this very important part of the economy.

Speaker #5: So we think that incentives will come down through the year, but as we went through this quarter, we definitely hit a headwind across the country.

Speaker #5: It's pretty consistent—that really brought down our incentives expectation to be lower than what we actually ended up with.

Stuart Miller: It's pretty consistent that really brought our incentive expectation to be lower than what we actually ended up with. Got it. I appreciate the detail there. And then, Stuart, you obviously spoke a lot about the administration efforts and recognizing maybe there's nothing ready to bring public at this point. I'm just curious. Do you feel like this is something that will be announced in 2026 and something whatever the government does have in mind? Is there anything that can be implemented fairly quickly? And obviously, the midterms are coming up. Or is this something that is more of a multi-year view in your mind? Thank you. Look, I think the crystal ball around government activity is really complicated. But I can tell you that a number of home builders have gone in to see critical officials within the government. We have received a lot of attention.

It's pretty consistent that really brought our incentive expectation to be lower than what we actually ended up with.

Alan Ratner: Got it. I appreciate the detail there. And then, Stuart, you obviously spoke a lot about the administration efforts and recognizing maybe there's nothing ready to bring public at this point. I'm just curious. Do you feel like this is something that will be announced in 2026 and something whatever the government does have in mind? Is there anything that can be implemented fairly quickly? And obviously, the midterms are coming up. Or is this something that is more of a multi-year view in your mind? Thank you.

Speaker #3: Got it. I appreciate the detail there. And then, Stuart, you obviously spoke a lot about the administration efforts and recognizing maybe there's nothing ready to bring public at this point.

Speaker #3: I'm just curious, do you feel like this is something that will be announced in 2026 and something—whatever the government does have in mind?

Speaker #3: Is there anything that can be implemented fairly quickly? And obviously, the midterms are coming up. Or is this something that is more of a multi-year view in your mind?

Speaker #3: Thank

Speaker #3: you. Look, I think the

Stuart Miller: Look, I think the crystal ball around government activity is really complicated. But I can tell you that a number of home builders have gone in to see critical officials within the government. We have received a lot of attention.

Speaker #5: A crystal ball around government activity is really complicated. But I can tell you that a number of home builders have gone in to see critical officials within the government.

Speaker #5: It is—we have received a lot of attention; there's a lot of thought process going on. You've seen trial balloons put out around various types of programs.

Stuart Miller: There's a lot of thought process going on. You've seen trial balloons put out around various types of programs. What's interesting is that the government has been very tuned in to the industry to make sure that they're not walking into unintended consequences. So, whatever is done, that it be constructed properly is important. And to your question of do I think that something will come out in 2026? I'd be surprised if something isn't done. I think affordability is very much on the table. It's a political issue right now. And I think across the country, you're hearing the drumbeat of that being a primary focal point. And politically, it's important that someone pick up the mantle and do something to address it rather than just throw money at it. So, it'll be interesting, and we'll all have to sit back and wait and see what comes out.

There's a lot of thought process going on. You've seen trial balloons put out around various types of programs. What's interesting is that the government has been very tuned in to the industry to make sure that they're not walking into unintended consequences. So, whatever is done, that it be constructed properly is important. And to your question of do I think that something will come out in 2026? I'd be surprised if something isn't done. I think affordability is very much on the table. It's a political issue right now. And I think across the country, you're hearing the drumbeat of that being a primary focal point. And politically, it's important that someone pick up the mantle and do something to address it rather than just throw money at it. So, it'll be interesting, and we'll all have to sit back and wait and see what comes out.

Speaker #5: What's interesting is that the government has been very tuned in to the industry to make sure that they're not walking into unintended consequences. So, whatever is done, that it be constructed properly is important. And to your question of, do I think that something will come out in 2026—I’d be surprised if something isn’t done.

Speaker #5: I think affordability is very much on the table. It's a political issue right now, and I think across the country you're hearing the drumbeat of that being a primary focal point.

Speaker #5: And politically, it's important that someone pick up the mantle and do something to address it, rather than just throw money at it. So, it'll be interesting.

Speaker #5: And we'll all have to sit back and wait and see what comes.

Speaker #5: out. Appreciate the thought.

Stuart Miller: Appreciate the thoughts. Thanks a lot. Next will go to John Lovallo from UBS. Please go ahead. Good morning, guys. Thanks for taking my questions as well. I guess the first one, Stuart, is given your strategy of maintaining volume and really focusing intently on cost and efficiency, I'm curious how you sort of envision the upside in your ability to recapture margin as the market improves, particularly considering all the hard work and the changes that have been made over the past few years. Yeah. Look, that's really at the heart of what we've been doing is if you buy into the notion that there is a supply shortage, and I think that's pretty well documented, we certainly believe that there is a significant supply shortage.

Alan Ratner: Appreciate the thoughts. Thanks a lot.

Speaker #3: Thanks a lot.

Speaker #1: Next, we'll go to John Lavalla from UBS. Please go ahead.

Stuart Miller: Next will go to John Lovallo from UBS. Please go ahead.

John Lovallo: Good morning, guys. Thanks for taking my questions as well. I guess the first one, Stuart, is given your strategy of maintaining volume and really focusing intently on cost and efficiency, I'm curious how you sort of envision the upside in your ability to recapture margin as the market improves, particularly considering all the hard work and the changes that have been made over the past few years.

Speaker #6: Good morning, guys. Thanks for taking my questions as well. I guess the first one, Stuart, is given your strategy of maintaining volume and really focusing intently on cost and efficiency, I'm curious how you sort of envision the upside in your ability to recapture margin as the market improves.

Speaker #6: I mean, particularly considering all the hard work and the changes that have been made over the past few years.

Stuart Miller: Yeah. Look, that's really at the heart of what we've been doing is if you buy into the notion that there is a supply shortage, and I think that's pretty well documented, we certainly believe that there is a significant supply shortage.

Speaker #5: Yeah. Look, that's really at the heart of what we've been doing, is if you buy into the notion that there is a supply shortage—and I think that's pretty well documented—we certainly believe that there is a significant supply shortage.

Speaker #5: If you believe that there is a pent-up demand—that is, not able to activate itself because of affordability—and we definitely believe that and see that in our traffic and in the field, then if we, as we maintain volume, over time, we're going to figure out and push our large enterprise to re-rationalize its cost structure.

Stuart Miller: If you believe that there is a pent-up demand that is not able to activate itself because of affordability, and we definitely believe that and see that in our traffic and in the field, then as we maintain volume over time, we're going to figure out and push our large enterprise to re-rationalize its cost structure. And that's what we're doing. We've detailed this in prior earnings calls. We're focused on using modern technologies. We're focused on building efficiencies in everything that we do. You see this in every element of our business, how we're re-rationalizing our overhead expense, our vertical construction costs, horizontal construction costs. And we think that embedded in our program at 82,500 homes growing to 85,000 homes, we are going to be an efficient structure as market conditions rethink themselves.

If you believe that there is a pent-up demand that is not able to activate itself because of affordability, and we definitely believe that and see that in our traffic and in the field, then as we maintain volume over time, we're going to figure out and push our large enterprise to re-rationalize its cost structure. And that's what we're doing. We've detailed this in prior earnings calls. We're focused on using modern technologies. We're focused on building efficiencies in everything that we do. You see this in every element of our business, how we're re-rationalizing our overhead expense, our vertical construction costs, horizontal construction costs. And we think that embedded in our program at 82,500 homes growing to 85,000 homes, we are going to be an efficient structure as market conditions rethink themselves.

Speaker #5: And that's what we're doing. We've detailed this in prior earnings calls. We're focused on using modern technologies. We're focused on building efficiencies in everything that we do.

Speaker #5: You see this in every element of our business—how we're re-rationalizing our overhead expense, our vertical construction costs, and horizontal construction costs. And we think that embedded in our program at 82,500 homes, growing to 85,000 homes, we are going to be an efficient structure as market conditions rethink themselves.

Speaker #5: So, at the end of the day, I lay out that there's a pretty clear path to margin improvement. There will be, at some point, a reconciliation of incentives that migrate from what is today our 14% down to a traditional kind of 4% to 6%.

Stuart Miller: So, at the end of the day, I lay out that there's a pretty clear path to margin improvement. There will be, at some point, a reconciliation of incentives that migrates from what is today our 14% down to a traditional kind of 4% to 6%. And that's a lot of margin improvement. And we think there's still a lot of efficiency that we're going to bring to our operations as we go forward. It's just a time game, and we're going to patiently keep pursuing the focus. The core reason that we're focused on building inventory is because the country has such a significant shortage. So, we're going to continue to be that machine that keeps pushing forward, recognizing the shortage and believing that there's going to be a moment where we're able to activate the buying public to purchase at prices with lower incentives.

So, at the end of the day, I lay out that there's a pretty clear path to margin improvement. There will be, at some point, a reconciliation of incentives that migrates from what is today our 14% down to a traditional kind of 4% to 6%. And that's a lot of margin improvement. And we think there's still a lot of efficiency that we're going to bring to our operations as we go forward. It's just a time game, and we're going to patiently keep pursuing the focus. The core reason that we're focused on building inventory is because the country has such a significant shortage. So, we're going to continue to be that machine that keeps pushing forward, recognizing the shortage and believing that there's going to be a moment where we're able to activate the buying public to purchase at prices with lower incentives.

Speaker #5: And that's a lot of margin improvement. And we think there's still a lot of efficiency that we're going to bring to our operations as we go forward.

Speaker #5: It's just a time game, and we're going to patiently keep pursuing the focus. The core reason that we're focused on building inventory is because the country has such a significant shortage.

Speaker #5: So we're going to continue to be that machine that keeps pushing forward, recognizing the shortage, and believing that there's going to be a moment where we're able to activate the buying public to purchase at prices with lower incentives.

Speaker #3: So I just have one thought, and that is, as you hear us talk about our operational efficiencies, we think about it as structural, not episodic.

Stuart Miller: I'll just add one thought, and that is, as you hear us talk about our operational efficiencies, we think about it as structural, not episodic. So, as the market does stabilize, does recover, we have really retooled ourselves to maintain these efficiencies that we've worked so hard on achieving. Yeah. And John's a good example of that. I mean, we have built efficiencies and effectiveness in our operating group, and as John retires, we're not going to replace him because we're going to lower the vertical nature of our hierarchy. We're going to take costs out, but we're using modern technologies and homegrown talent to be able to do that. And Fred retired a couple of months ago. Same thing there. We have a talent base that can fill that gap, and we don't have to build replacements.

Jon Jaffe: I'll just add one thought, and that is, as you hear us talk about our operational efficiencies, we think about it as structural, not episodic. So, as the market does stabilize, does recover, we have really retooled ourselves to maintain these efficiencies that we've worked so hard on achieving.

Speaker #3: So, as the market does stabilize, does recover, we have really retooled ourselves to maintain these efficiencies that we've worked so hard on.

Speaker #3: achieving. Yeah.

Stuart Miller: Yeah. And John's a good example of that. I mean, we have built efficiencies and effectiveness in our operating group, and as John retires, we're not going to replace him because we're going to lower the vertical nature of our hierarchy. We're going to take costs out, but we're using modern technologies and homegrown talent to be able to do that. And Fred retired a couple of months ago. Same thing there. We have a talent base that can fill that gap, and we don't have to build replacements.

Speaker #5: And John’s a good example of that. I mean, we have built efficiencies and effectiveness in our operating group. And as John retires, we’re not going to replace him, because we’re going to lower the vertical nature of our hierarchy.

Speaker #5: We're going to take costs out, but we're using modern technologies and homegrown talent to be able to do that. And Fred retired a couple of months ago.

Speaker #5: Same thing there. We have a talent base that can fill that gap, and we don't have to build replacements. But a lot of that has to do with the technologies that we've incorporated that enable us to transmit information more efficiently and effectively to a shallower operational.

Stuart Miller: But a lot of that has to do with the technologies that we've incorporated that enable us to transmit information more efficiently and effectively to a shallower operational structure. That's helpful, Collier. Thank you. And then embedded in the fiscal year 2026. Sorry about that. Go ahead. So, embedded in the fiscal year 2026 delivery outlook of 85,000, it's up about 3% year over year. How should we sort of think about community account growth versus absorption and your performance versus the market? Well, we're continuing to focus on community account growth. You've seen our community account grow year over year at a higher rate than we're going to continue to grow it. But if you look at our volume growth, if we look at last year to this year at 82,500-ish, it's about 3%. We're expecting about a 3% growth rate next year.

But a lot of that has to do with the technologies that we've incorporated that enable us to transmit information more efficiently and effectively to a shallower operational structure.

Speaker #5: structure.

John Lovallo: That's helpful, Collier. Thank you. And then embedded in the fiscal year 2026.

Speaker #6: That's helpful. That's helpful, Colin. Thank you.

Speaker #6: you. And then embedded in the fiscal year '26.

Jon Jaffe: Sorry about that. Go ahead.

Speaker #5: Sorry about that. Go ahead.

Speaker #6: So, embedded in the fiscal year '26 delivery outlook of 85,000—it's up about 3% year over year. How should we sort of think about community count growth versus absorption, and your performance versus the—

John Lovallo: So, embedded in the fiscal year 2026 delivery outlook of 85,000, it's up about 3% year over year. How should we sort of think about community account growth versus absorption and your performance versus the market?

Speaker #6: market? Well, we're

Stuart Miller: Well, we're continuing to focus on community account growth. You've seen our community account grow year over year at a higher rate than we're going to continue to grow it. But if you look at our volume growth, if we look at last year to this year at 82,500-ish, it's about 3%. We're expecting about a 3% growth rate next year. A lot of that will come from additional community count and strategic markets across the platform. I think that you're going to see a consistent model of execution if you look backwards, projected forward. That's very much the strategy. The strategy is, let's build the volume that the country and the consumers need. Let's make it affordable at this time where affordability is so strained, and let's find ways to make ourselves more efficient.

Speaker #5: Continuing to focus on community account growth. You've seen our community account grow year over year, at a higher rate than we're going to continue to grow it.

Speaker #5: But if you look at our volume growth, if we look at last year to this year, at 82,500-ish, it's about 3%. And we're expecting about a 3% growth rate next year.

Speaker #5: A lot of that will come from additional community account and strategic markets across the platform. And I think that you're going to see a consistent model of execution if you look backwards projected forward.

Stuart Miller: A lot of that will come from additional community count and strategic markets across the platform. I think that you're going to see a consistent model of execution if you look backwards, projected forward. That's very much the strategy. The strategy is, let's build the volume that the country and the consumers need. Let's make it affordable at this time where affordability is so strained, and let's find ways to make ourselves more efficient. Let's expect that something's going to come through the governmental ranks to support that affordability and enable the market to enter the housing market. The reduction in incentives is going to flow through to our margin. Got it. Thank you, guys. Next, we'll go to Stephen Kim from Evercore ISI. Please go ahead. Thanks very much, guys.

Speaker #5: And that's very much the strategy. The strategy is: let's build the volume that the country and the consumers need; let's make it affordable at this time, where affordability is so strained; and let's find ways to make ourselves more efficient. And let's expect that something is going to come through the governmental ranks to support that affordability and enable the market to enter the housing market.

Let's expect that something's going to come through the governmental ranks to support that affordability and enable the market to enter the housing market. The reduction in incentives is going to flow through to our margin.

Speaker #5: And the reduction in incentives is going to flow through to our

Speaker #5: margin. Got it.

John Lovallo: Got it. Thank you, guys.

Speaker #6: Thank you, guys.

Stuart Miller: Next, we'll go to Stephen Kim from Evercore ISI. Please go ahead. Thanks very much, guys.

Speaker #1: Next, we'll go to Stephen Kim from Evercore ISI. Please go ahead.

Speaker #1: ahead. Thanks very much, guys.

Speaker #7: Yeah, Stuart had taken the risk of paraphrasing what you're saying, because I know that it's obviously a bit complex. And I don't want to oversimplify, but am I hearing you right that you anticipate that the makings for government actions to improve the affordability in some way, shape, or form?

Stuart Miller: Yeah, Stuart had taken the risk of paraphrasing what you're saying because I know that it's obviously a bit complex. And I don't want to oversimplify, but am I hearing you right that you anticipate that there's the makings for government actions to improve the affordability in some way, shape, or form? And if we assume that, which I don't necessarily disagree, Lennar has, over the last year or so, really emphasized volume, while others in your peers have sort of ratcheted back volume.

Stephen Kim: Yeah, Stuart had taken the risk of paraphrasing what you're saying because I know that it's obviously a bit complex. And I don't want to oversimplify, but am I hearing you right that you anticipate that there's the makings for government actions to improve the affordability in some way, shape, or form? And if we assume that, which I don't necessarily disagree, Lennar has, over the last year or so, really emphasized volume, while others in your peers have sort of ratcheted back volume.

Speaker #7: And if we assume that—which I don't necessarily disagree with—Lennar has, over the last year or so, really emphasized volume, while others in your peer group have sort of ratcheted back volume.

Speaker #7: Are you saying that in 2026, your expectation is that you've got the volume, you've got the, therefore, the platform to be able to harness margin improvement from lower incentives without necessarily needing to increase your volume, and that you can do that even if others in a somewhat better environment do have to increase their volume, so that you might actually give up a little bit in terms of share, if you will, but your margin will more than make up for that?

Stuart Miller: Are you saying that in 2026, your expectation is that you've got the volume, you've got, therefore, the platform to be able to harness margin improvement from lower incentives without necessarily needing to increase your volume, and that you can do that even if others in a somewhat better environment do have to increase their volume so that you might actually give up a little bit in terms of share, if you will, but your margin will more than make up for that? Is that essentially what you're laying out for us in 2026? A, that is what we're laying out. That's what we've been laying out. The reality is we don't have to restart the machine. The machine is actually just running and running very efficiently. We don't have to run out and buy new community count. We're already doing that.

Are you saying that in 2026, your expectation is that you've got the volume, you've got, therefore, the platform to be able to harness margin improvement from lower incentives without necessarily needing to increase your volume, and that you can do that even if others in a somewhat better environment do have to increase their volume so that you might actually give up a little bit in terms of share, if you will, but your margin will more than make up for that? Is that essentially what you're laying out for us in 2026?

Speaker #7: Is that essentially what you're laying out for us in '26?

Stuart Miller: A, that is what we're laying out. That's what we've been laying out. The reality is we don't have to restart the machine. The machine is actually just running and running very efficiently. We don't have to run out and buy new community count. We're already doing that. We don't have to retool and increase the volumes. We just have to accept a lower incentive structure in order for margin to grow. And that's why I say in my comments that we're just levered to the upside in terms of margin growth.

Speaker #5: A, that is what we're laying out. That's what we've been laying out. And the reality is, we don't have to restart the machine. The machine is actually just running, and running very efficiently.

Speaker #5: We don't have to run out and buy new community accounts. We're already doing that. We don't have to retool and increase the volumes. We just have to accept a lower incentive structure in order for margin to grow.

Stuart Miller: We don't have to retool and increase the volumes. We just have to accept a lower incentive structure in order for margin to grow. And that's why I say in my comments that we're just levered to the upside in terms of margin growth. Yes. Okay. That's really helpful. Very interesting and important. I did also want to follow up on the machine. I think that when, obviously, you've been at the vanguard of developing technology and AI-driven tools so that you can more dynamically respond to market conditions. Obviously, that's been something that's been a big focus.

Speaker #5: And that's why I say in my comments that we're just levered to the upside in terms of margin growth.

Stephen Kim: Yes. Okay. That's really helpful. Very interesting and important. I did also want to follow up on the machine. I think that when, obviously, you've been at the vanguard of developing technology and AI-driven tools so that you can more dynamically respond to market conditions. Obviously, that's been something that's been a big focus.

Speaker #7: Yes. Okay. That’s really helpful. Very, very interesting and important. I did also want to follow up on the machine. I think that, obviously, you’ve been at the vanguard of developing technology and AI-driven tools so that you can more dynamically respond to market conditions.

Speaker #7: Obviously, that's been something that's been a big focus. If I listen to the way you talk about the elevation of Gym, David, and Greg into somewhat new roles, but not replacing John or Fred, is it right to think that these investments and developments of the, for lack of a better phrase, the Lenar machine have now reached a point where you can have those systems play a more direct role in managing the business, and that not replacing the CEO, co-CEO, and COO positions is a function of, or an indication of, just how far that machine has come in actually being able to have tangible effects on your business?

Stuart Miller: If I listen to the way you talk about the elevation of Jim, David, and Greg into somewhat new roles, but not replacing Jon or Fred, is it right to think that these investments and developments of the, for lack of a better phrase, Lennar machine, have now reached a point where you can have those systems play a more direct role in managing the business and that not replacing the co-CEO and COO positions is a function of or an indication of just how far that machine has come in actually being able to have tangible effects on your business? Is that the right way to think about it? I guess is essentially the question. Yeah.

If I listen to the way you talk about the elevation of Jim, David, and Greg into somewhat new roles, but not replacing Jon or Fred, is it right to think that these investments and developments of the, for lack of a better phrase, Lennar machine, have now reached a point where you can have those systems play a more direct role in managing the business and that not replacing the co-CEO and COO positions is a function of or an indication of just how far that machine has come in actually being able to have tangible effects on your business? Is that the right way to think about it? I guess is essentially the question.

Speaker #7: Is that the right way to think about it? I guess, essentially, the question.

Stuart Miller: Yeah. So I'm going to tread in an area that I promised our friend Rick Beckwitt that I wouldn't tread into, and that is technology, because I feel like you've all gotten worn out with our discussion about technology. But we are massively enthusiastic about our technology initiatives, in large part because of the things you've daylighted. I mean, if you listen to John's comment in the middle of the night, we're at a point where we can engage a customer on their terms at their time when it's convenient to them with digital technology that gives them an experience that is getting very close to an interpersonal experience. We're going to be able to be faster and better, higher quality in the way that we engage with our customers. And I think that we're making this progress.

Speaker #5: Yeah. So I'm going to tread in an area that I promised our friend Rick Beckwith that I wouldn't tread into, and that is technology, because I feel like you've all gotten worn out with our discussion about technology.

Stuart Miller: So I'm going to tread in an area that I promised our friend Rick Beckwitt that I wouldn't tread into, and that is technology, because I feel like you've all gotten worn out with our discussion about technology. But we are massively enthusiastic about our technology initiatives, in large part because of the things you've daylighted. I mean, if you listen to John's comment in the middle of the night, we're at a point where we can engage a customer on their terms at their time when it's convenient to them with digital technology that gives them an experience that is getting very close to an interpersonal experience. We're going to be able to be faster and better, higher quality in the way that we engage with our customers. And I think that we're making this progress.

Speaker #5: But we are massively enthusiastic about our technology initiatives, in large part because of the things you've daylighted. I mean, if you listen to John's comment in the middle of the night, we're at a point where we can engage a customer on their terms, at their time, when it's convenient to them, with digital technology that gives them an experience that is getting very close to an interpersonal experience.

Speaker #5: We're going to be able to be faster, better, and higher quality in the way that we engage with our customers. And I think that we're making this progress.

Speaker #5: It's not fast because we don't have the engineering teams that some of these high-tech technology companies have, but we're building them. And we're going to get better, faster, and stronger because of the technologies that we incorporate.

Stuart Miller: It's not fast because we don't have the engineering teams that some of these high-tech technology companies have, but we're building them. And we're going to get better, faster, and stronger because of the technologies that we incorporate. And it's not just in the machine that is marketing and sales machine. It's in our overall customer experience all the way through to warranty. It is in our land acquisition component. It is in our financial reporting component. It is in our financial services group. Every part of our company has its own unique strategy relative to modern technologies to not just modernize and be a better interface with our customers, but to be a better interface internally to breed efficiencies and effectiveness that we've not seen before.

It's not fast because we don't have the engineering teams that some of these high-tech technology companies have, but we're building them. And we're going to get better, faster, and stronger because of the technologies that we incorporate. And it's not just in the machine that is marketing and sales machine. It's in our overall customer experience all the way through to warranty. It is in our land acquisition component. It is in our financial reporting component. It is in our financial services group. Every part of our company has its own unique strategy relative to modern technologies to not just modernize and be a better interface with our customers, but to be a better interface internally to breed efficiencies and effectiveness that we've not seen before.

Speaker #5: And it's not just in the machine—that is, the marketing and sales machine. It's in our overall customer experience, all the way through to warranty.

Speaker #5: It is in our land acquisition component. It is in our financial reporting component. It is in our Financial Services group. Every part of our company has its own unique strategy relative to modern technologies.

Speaker #5: And not just modernized and be a better interface with our customers, but to be a better interface internally, to breed efficiencies and effectiveness that we've not seen before.

Speaker #5: And I think that you're going to see, over the next year, two years, you're going to see a lot of those advancements really reveal themselves.

Stuart Miller: I think that you're going to see over the next year, two years, you're going to see a lot of those advancements really reveal themselves. Wonderful. Well, we'll be watching. Appreciate that color. Okay. Good. Next, we'll go to Mike Rehaut from JPMorgan Chase. Please go ahead. Thanks. Good morning, everyone. Thanks for taking my questions. Hi, Mike. Hi, Stuart. How are you? So first, I wanted to kind of dive in a little bit towards your approach. Last quarter, your approach to the market, and I know you kind of stressed, even on this call, prioritizing supply and making sure that you have the product out there when things turn. Last quarter, you maybe dialed back slightly around that approach and said you wanted to ease back on your delivery expectations to help establish a floor on margin.

I think that you're going to see over the next year, two years, you're going to see a lot of those advancements really reveal themselves.

Stephen Kim: Wonderful. Well, we'll be watching. Appreciate that color.

Speaker #7: Wonderful. Well, we'll be watching. Appreciate that.

Speaker #7: color. Okay.

Stuart Miller: Okay. Good.

Speaker #5: Good. Next,

Operator: Next, we'll go to Mike Rehaut from JPMorgan Chase. Please go ahead.

Speaker #1: We'll go to Mike Rehut from JPMorgan Chase. Please go ahead.

Speaker #1: ahead. Thanks, Sarah.

Mike Rehaut: Thanks. Good morning, everyone. Thanks for taking my questions.

Speaker #8: Good morning, everyone.

Speaker #8: Thanks for taking my questions. Hi,

Stuart Miller: Hi, Mike.

Speaker #5: Mike.

Speaker #7: Hi, Stuart. How are you? So, first, I wanted to kind of dive in a little bit towards your approach. Last quarter, your approach to the market—and I know you kind of stressed even on this call—prioritizing supply and making sure that you have the product out there.

Mike Rehaut: Hi, Stuart. How are you? So first, I wanted to kind of dive in a little bit towards your approach. Last quarter, your approach to the market, and I know you kind of stressed, even on this call, prioritizing supply and making sure that you have the product out there when things turn. Last quarter, you maybe dialed back slightly around that approach and said you wanted to ease back on your delivery expectations to help establish a floor on margin.

Speaker #7: When things turned last quarter, you maybe dialed back slightly around that approach and said you wanted to ease back on your delivery expectations to help establish a floor on margin.

Speaker #7: And I don't know if this is exactly the right way to interpret today's results or fourth quarter results, but your margin did come in a little less than expected, despite maybe some of those efforts.

Stuart Miller: I don't know if this is exactly the right way to interpret today's results or fourth-quarter results, but your margin did come in a little less than expected despite maybe some of those efforts. There's been a lot of focus on prioritizing supply today. Where are you in that journey of perhaps trying to establish that floor on margin? It seems like even without, if you kind of exclude the seasonality, maybe you're still looking at a slight further erosion in gross margin in Q1 versus Q4. Just trying to triangulate, how committed are you to just pushing through that supply versus if demand remains weak, maybe you would even further continue to ease back on some of your delivery aspirations? Mike, I think we're pretty committed to the volume and maintaining the volume.

I don't know if this is exactly the right way to interpret today's results or fourth-quarter results, but your margin did come in a little less than expected despite maybe some of those efforts. There's been a lot of focus on prioritizing supply today. Where are you in that journey of perhaps trying to establish that floor on margin? It seems like even without, if you kind of exclude the seasonality, maybe you're still looking at a slight further erosion in gross margin in Q1 versus Q4. Just trying to triangulate, how committed are you to just pushing through that supply versus if demand remains weak, maybe you would even further continue to ease back on some of your delivery aspirations?

Speaker #7: There's been a lot of focus on prioritizing supply today. So, where are you in that journey of perhaps trying to establish that floor on margin? And it seems like, even if you kind of exclude the seasonality, maybe you're still looking at a slight further erosion in gross margin in Q1 versus Q4.

Speaker #7: So just trying to triangulate how committed you are to just pushing through that supply versus, if demand remains weak, maybe you would even further continue to ease back on some of your deliveries.

Speaker #7: aspirations. Mike, I think

Stuart Miller: Mike, I think we're pretty committed to the volume and maintaining the volume. I think your assessment is correct that we had an expectation of finding a little bit more of a floor. But I've said consistently in every one of our earnings calls that the numbers and expectations that we're giving to you are dependent on market conditions. Market conditions are fluid, and they evolve day by day. Interest rates have been going up a little bit, down a little bit, down farther a little bit, and then back. It's not just the interest rates.

Speaker #5: We're pretty committed to the volume and maintaining the volume. And I think your assessment is correct, that we had an expectation of finding a little bit more of a floor.

Stuart Miller: I think your assessment is correct that we had an expectation of finding a little bit more of a floor. But I've said consistently in every one of our earnings calls that the numbers and expectations that we're giving to you are dependent on market conditions. Market conditions are fluid, and they evolve day by day. Interest rates have been going up a little bit, down a little bit, down farther a little bit, and then back. It's not just the interest rates. It is the inflation impact from the spike of inflation that we had a few years ago that is still rippling through the consumer's wallet. It's built up in debt. It's general consumer confidence. I don't want to overstate it because it seems like I'm blaming a hurricane or blaming a weather condition, but the government shutdown was relevant.

Speaker #5: But I've said consistently in every one of our earnings calls that the numbers and expectations that we're giving to you are dependent on market conditions.

Speaker #5: And market conditions are fluid, and they evolve day by day. Interest rates have been going up a little bit, down a little bit, down farther a little bit, and then back.

Speaker #5: It's not just the interest rates; it is the inflation impact. From the spike of inflation that we had a few years ago, that is still rippling through the consumer's wallet.

It is the inflation impact from the spike of inflation that we had a few years ago that is still rippling through the consumer's wallet. It's built up in debt. It's general consumer confidence. I don't want to overstate it because it seems like I'm blaming a hurricane or blaming a weather condition, but the government shutdown was relevant.

Speaker #5: It's built up in debt. It's general consumer confidence. I don't want to overstate it, because it seems like I'm blaming the hurricane or blaming a weather condition.

Speaker #5: But the government shutdown was relevant. There were a lot of people that were affected there. And so that comes about in the middle of a quarter where we made an expectation that lower interest rates would help bring consumer confidence up a little bit.

Stuart Miller: There were a lot of people that were affected there. So that comes about in the middle of a quarter where we made an expectation that lower interest rates would help bring consumer confidence up a little bit. Well, there was an offset to that. Hopefully, the government and its shutdown will then step up and find kind of a counterbalance and say, "Okay, we're going to do something to activate consumer confidence and affordability." We're ebbing and flowing relative to a dynamic marketplace with an understanding that behind us, there is a supply shortage. There is a demand for the housing. There is a need for affordability, and government action is going to matter here.

There were a lot of people that were affected there. So that comes about in the middle of a quarter where we made an expectation that lower interest rates would help bring consumer confidence up a little bit. Well, there was an offset to that. Hopefully, the government and its shutdown will then step up and find kind of a counterbalance and say, "Okay, we're going to do something to activate consumer confidence and affordability." We're ebbing and flowing relative to a dynamic marketplace with an understanding that behind us, there is a supply shortage. There is a demand for the housing. There is a need for affordability, and government action is going to matter here.

Speaker #5: Well, there was an offset to that. Hopefully, the government and its shutdown will then step up and find kind of a counterbalance and say, "Okay, we're going to do something to activate consumer confidence and affordability." So we're ebbing and flowing relative to a dynamic marketplace, with an understanding that behind us, there is a supply shortage.

Speaker #5: There is a demand for housing. There is a need for affordability. And government action is going to matter here. So we'll see what happens.

Stuart Miller: So we'll see what happens, but we are focused on the volume because it's with the volume that we're able to build the efficiencies that are going to build us into a company for the future. And like I would just add, to state the obvious, we don't control the economy and its impact on our consumer, but we've been very laser-focused on becoming a manufacturer of homes. And with that, we can really leverage volume technologies to be the most efficient manufacturer that one can be. That's what we remain laser-focused on. All right. No, I appreciate that. I guess, secondly, you highlighted in your prepared remarks, obviously, the ongoing focus of returning cash to shareholders, either through a combination of repurchase and dividends. On the repurchase side, I think you finished up the year around 2.7.

So we'll see what happens, but we are focused on the volume because it's with the volume that we're able to build the efficiencies that are going to build us into a company for the future.

Speaker #5: But we are focused on the volume, because it's with the volume that we're able to build the efficiencies that are going to build us into a company for the future.

Jon Jaffe: And like I would just add, to state the obvious, we don't control the economy and its impact on our consumer, but we've been very laser-focused on becoming a manufacturer of homes. And with that, we can really leverage volume technologies to be the most efficient manufacturer that one can be. That's what we remain laser-focused on.

Speaker #7: And, Mike, I would just add, safety—obvious. We don't control the economy and its impact on our consumer. But we've been very laser-focused on becoming a manufacturer of homes.

Speaker #7: And with that, we can really leverage volume and technologies to be the most efficient manufacturer that one can be. That's what we remain laser-focused on.

Speaker #7: on. Okay.

Mike Rehaut: All right. No, I appreciate that. I guess, secondly, you highlighted in your prepared remarks, obviously, the ongoing focus of returning cash to shareholders, either through a combination of repurchase and dividends. On the repurchase side, I think you finished up the year around 2.7. How should we think about 2026 now that your balance sheet is significantly repositioned and the much more aggressive move via Millrose to Asset-Light? Just trying to get any sort of boundaries on kind of numerically; should it be similar to 25 at this point? Should we be modeling something maybe a little higher than that?

Speaker #8: No, I appreciate that. I guess, secondly, you highlighted in your prepared remarks, obviously, the ongoing focus of returning cash to shareholders, either through a combination of repurchase and dividends.

Speaker #8: On the repurchase side, I think you finished up the year around $2.7 billion. How should we think about 2026, now that your balance sheet is significantly repositioned and the much more aggressive moves via Millrose to asset-light?

Stuart Miller: How should we think about 2026 now that your balance sheet is significantly repositioned and the much more aggressive move via Millrose to Asset-Light? Just trying to get any sort of boundaries on kind of numerically; should it be similar to 25 at this point? Should we be modeling something maybe a little higher than that? Just your thoughts, given the fact that you've already kind of outlined a closings number and you're hoping that the gross margin number will, in Q1, be the low point of the year. Yeah. So I'm pretty enthusiastic about looking and seeing what happens in 2026. If you think about the transition that we've made as a company to an asset-lighter model, if you think about the dynamic of all the changes that we've made as we have maintained volume, it's pretty extensive.

Speaker #8: Just trying to get any sort of boundaries on, kind of numerically, should it be similar to '25 at this point? Should we be modeling something maybe a little higher than that?

Stuart Miller: Just your thoughts, given the fact that you've already kind of outlined a closings number and you're hoping that the gross margin number will, in Q1, be the low point of the year. Yeah. So I'm pretty enthusiastic about looking and seeing what happens in 2026. If you think about the transition that we've made as a company to an asset-lighter model, if you think about the dynamic of all the changes that we've made as we have maintained volume, it's pretty extensive.

Speaker #8: Just your thoughts, given the fact that you've already kind of outlined a closings number and you're hoping that the gross margin number will, in the first quarter, be the low point of the—

Speaker #8: year.

Speaker #5: Yeah.

Speaker #5: So, I'm pretty enthusiastic about looking and seeing what happens in 2026. If you think about the transition that we've made as a company to an asset-lighter model, if you think about the dynamic of all the changes that we've made as we have maintained volume, it's pretty extensive.

Speaker #5: And when I said in my comments that it is noteworthy that we have now completed the Millrose transaction, this has been a few years in the making.

Stuart Miller: And when I said in my comments that it is noteworthy that we have now completed the Millrose transaction, this has been a few years in the making. It's now behind us. And a number of other things are behind us, whether it's essential housing and the land banking program that we started with them. It extended to Millrose, and we have a number of other land banks. Less than 5% of our land is on book today. That migration took time, energy, money, focus, and that's behind it. We are now focused on a much more pure manufacturing model with a lot less energy spent on other things that are the transitional things that got us to where we are. I'm enthusiastic to see how our operations evolve over this next year. We have very high expectations, and we're pretty enthusiastic about it.

And when I said in my comments that it is noteworthy that we have now completed the Millrose transaction, this has been a few years in the making. It's now behind us. And a number of other things are behind us, whether it's essential housing and the land banking program that we started with them. It extended to Millrose, and we have a number of other land banks. Less than 5% of our land is on book today. That migration took time, energy, money, focus, and that's behind it. We are now focused on a much more pure manufacturing model with a lot less energy spent on other things that are the transitional things that got us to where we are. I'm enthusiastic to see how our operations evolve over this next year. We have very high expectations, and we're pretty enthusiastic about it.

Speaker #5: It's now behind us. And a number of other things are behind us, whether it's essential housing and the land banking program that we started with them.

Speaker #5: It extended to Millrose, and we have a number of other land banks. Less than 5% of our land is on book today. That migration took time, energy, money, focus.

Speaker #5: And that's behind it. We are now focused on a much more pure manufacturing model, with a lot less energy spent on other things that are the transitional things that got us to where we are.

Speaker #5: I'm enthusiastic to see how our operations evolve over this next year. We have very high expectations, and we're pretty enthusiastic about it. Of course, everything is going to happen in the context of what's happening to the economy, what's happening to consumer confidence, and what's happening to affordability.

Stuart Miller: Of course, everything is going to happen in the context of what's happening to the economy, what's happening to consumer confidence, and what's happening to affordability. The government's going to play a role in that. I can't predict what's going to happen there. And so there's variability. But for us, as we think about the way that we run our business, it is an everyday hands-on approach to how do we be the best manufacturing model that we can be. And ingrained in some of the transitions and evolutions we've gone through, there are still wonderful efficiencies to be reached from the focus and attention on the details that surround those programs. I laid out Greg McGuff's new role. He's starting off with our land banking programs. We've put these things together pretty quickly. There's a lot of efficiency and execution that we can bring to that.

Of course, everything is going to happen in the context of what's happening to the economy, what's happening to consumer confidence, and what's happening to affordability. The government's going to play a role in that. I can't predict what's going to happen there. And so there's variability. But for us, as we think about the way that we run our business, it is an everyday hands-on approach to how do we be the best manufacturing model that we can be. And ingrained in some of the transitions and evolutions we've gone through, there are still wonderful efficiencies to be reached from the focus and attention on the details that surround those programs. I laid out Greg McGuff's new role. He's starting off with our land banking programs. We've put these things together pretty quickly. There's a lot of efficiency and execution that we can bring to that.

Speaker #5: The government's going to play a role in that. I can't predict what's going to happen there, and so there's variability. But for us, as we think about the way that we run our business, it is an everyday, hands-on approach to: how do we be the best manufacturing model that we can be.

Speaker #5: And ingrained in some of the transitions and evolutions we've gone through, there are still wonderful efficiencies to be reaped from the focus and attention on the details that surround those programs.

Speaker #5: I laid out Greg McGuff's new role. He's starting off with our land banking programs. We put these things together pretty quickly. There's a lot of efficiency and execution that we can bring to that.

Speaker #5: These are the kinds of things that 2026 is going to engender, and we'll see how it plays out. But it's all going to be modified, amplified, or changed by the macroeconomy that we end up playing.

Stuart Miller: These are the kinds of things that 2026 is going to engender, and we'll see how it plays out. But it's all going to be modified, amplified, or changed by the macroeconomy that we end up playing into. Oh, boy. Thank you. I guess that was. Next, we'll go to Susan Maklari from Goldman Sachs. Can you hear me? All right. Why don't we take this as the last one? Okay. Our last question comes from Susan Maklari from Goldman Sachs. Please go ahead. Hey, thank you, everyone. Thanks for fitting me in. Good morning. My first question. Good morning. Or good afternoon now, I guess. My first question is thinking about the efficiencies that we've talked a lot about. How do you think of where you can get inventory turns over the next several quarters, given the environment that we are in?

These are the kinds of things that 2026 is going to engender, and we'll see how it plays out. But it's all going to be modified, amplified, or changed by the macroeconomy that we end up playing into.

Speaker #5: Into. Thank you. Oh boy, I guess that

Mike Rehaut: Oh, boy. Thank you. I guess that was.

Speaker #5: was. Next, we'll go to Susan.

Operator: Next, we'll go to Susan Maklari from Goldman Sachs. Can you hear me?

Speaker #9: McClain from Goldman Sachs.

Speaker #9: Can you hear me? All right.

Stuart Miller: All right. Why don't we take this as the last one?

Speaker #5: Why don't we take this as the last one?

Speaker #9: Okay. Our last question comes from Susan McClair from Goldman Sachs. Please go ahead.

Operator: Okay. Our last question comes from Susan Maklari from Goldman Sachs. Please go ahead.

Speaker #10: Hey, thank you, Good

Susan Maklari: Hey, thank you, everyone. Thanks for fitting me in.

Speaker #10: Everyone, thanks for fitting me in.

Stuart Miller: Good morning.

Speaker #10: My first question—good morning. Or good afternoon now, I guess. My first question is thinking about the efficiencies that we've talked a lot about.

Susan Maklari: My first question. Good morning. Or good afternoon now, I guess. My first question is thinking about the efficiencies that we've talked a lot about. How do you think of where you can get inventory turns over the next several quarters, given the environment that we are in? Can you hit that three-times number in this kind of condition? And just generally speaking, how does the core product fit into that strategy?

Speaker #10: How do you think about where you can get inventory turns over the next several quarters, given the environment that we are in? Can you hit that three-times number in this kind of condition?

Stuart Miller: Can you hit that three-times number in this kind of condition? And just generally speaking, how does the core product fit into that strategy? So it's a great question because there's a part of me that almost pinches myself when I see our inventory turn at 2.2. There was a time where we didn't think we'd be able to get there. But the interesting thing is, given the way that we've reconfigured the company, we think that there's a lot of improvement that can come on top of where we are. And a lot of it derives from, number one, cycle time. We are improving our cycle time, and all of this derives back to our core product.

Speaker #10: And just generally speaking, how does the core product fit into that strategy?

Stuart Miller: So it's a great question because there's a part of me that almost pinches myself when I see our inventory turn at 2.2. There was a time where we didn't think we'd be able to get there. But the interesting thing is, given the way that we've reconfigured the company, we think that there's a lot of improvement that can come on top of where we are. And a lot of it derives from, number one, cycle time. We are improving our cycle time, and all of this derives back to our core product.

Speaker #5: So it's a great question, because there's a part of me that almost pinches myself when I see our inventory turn at 2.2. There was a time where we didn't think we'd be able to get there.

Speaker #5: But the interesting thing is, given the way that we've reconfigured the company, we think that there's a lot of improvement that can come on top of where we are.

Speaker #5: And a lot of it derives from, number one, cycle time. We are improving our cycle time, and all of this derives back to our core product.

Speaker #5: Our core product offerings are getting more and more efficient, more and more effective, in terms of the way that not only how do we how does the cost structure come in, but more importantly, how do we build and how efficiently do we build product that is very familiar out in the field?

Stuart Miller: Our core product offerings are getting more and more efficient, more and more effective in terms of the way that not only how does the cost structure come in, but more importantly, how do we build and how efficiently do we build product that is very familiar out in the field? And so our focus on core has accelerated, and we're still fairly early stages in that regard. And I don't want to go through it, but I will tell you that a lot of the ways that we're getting to greater adoption and engagement with our core product is technology-based. It's the technology of how we're looking at land and how we're adapting to an environment where each piece of land is looked at through the lens of core product.

Our core product offerings are getting more and more efficient, more and more effective in terms of the way that not only how does the cost structure come in, but more importantly, how do we build and how efficiently do we build product that is very familiar out in the field? And so our focus on core has accelerated, and we're still fairly early stages in that regard. And I don't want to go through it, but I will tell you that a lot of the ways that we're getting to greater adoption and engagement with our core product is technology-based. It's the technology of how we're looking at land and how we're adapting to an environment where each piece of land is looked at through the lens of core product.

Speaker #5: And so, our focus on core has accelerated, and we're still in fairly early stages in that regard. I don't want to go through it, but I will tell you that a lot of the ways that we're getting to greater adoption and engagement with our core product are technology-based.

Speaker #5: It's the technology of how we're looking at land, and how we're adapting to an environment where each piece of land is looked at through the lens of core product.

Speaker #5: And with a diffuse environment, getting that to happen in 50 different divisions, technology is a big part of the assistance. So all of this ties together; we think there's a lot of upside in bringing our inventory turn from where we are to where we think it can be.

Stuart Miller: With a diffuse environment, getting that to happen in 50 different divisions, technology is a big part of the assistance. So all of this ties together. We think there's a lot of upside in bringing our inventory turn from where we are to where we think it can be. And a lot of it does surround our core product. Yeah. Okay. Thank you for that color. Then maybe building on Mike's question on uses of cash, as you do think about all the efficiencies that are coming through and that you will realize, how does that play into the cash that you think you need to hold on the balance sheet for the business? Does it change that at all? What are you watching to determine what the appropriate levels are there in terms of the cash?

With a diffuse environment, getting that to happen in 50 different divisions, technology is a big part of the assistance. So all of this ties together. We think there's a lot of upside in bringing our inventory turn from where we are to where we think it can be. And a lot of it does surround our core product.

Speaker #5: And a lot of it does surround our core product.

Susan Maklari: Yeah. Okay. Thank you for that color. Then maybe building on Mike's question on uses of cash, as you do think about all the efficiencies that are coming through and that you will realize, how does that play into the cash that you think you need to hold on the balance sheet for the business? Does it change that at all? What are you watching to determine what the appropriate levels are there in terms of the cash?

Speaker #10: Yeah, okay. Thank you for that color. And then, maybe building on Mike's question on uses of cash— as you do think about all the efficiencies that are coming through and that you will realize, how does that play into the cash that you think you need to hold on the balance sheet for the business?

Speaker #10: Does it change that at all? And what are you watching to determine what the appropriate levels are there in terms of the—

Speaker #5: Well, we think that our model becomes ever more cash flow efficient. And we know that over time, we're going to be using cash to buy back stock and to return to shareholders.

Stuart Miller: Well, we think that our model becomes ever more cash-flow efficient. We know that over time, we're going to be using cash to buy back stock and to return to shareholders. That's going to be a more programmatic part of our business. One of the things that we've all, I don't know how to say this, but that we've all heard from the government is the government certainly wants to see that we, as home builders and as the machine for supplying the homes that are needed in the country, that we're focused on our growth model and focused on how we bring affordability to market. We're going to knit all of this together as we go forward. We're going to see how things evolve. I'm not going to speak to use of cash right now, but that's going to be an evolving picture as we go forward.

Speaker #5: And that's going to be a more programmatic part of our business. One of the things that we've all—I don't know how to say this—but that we've all heard from the government is, the government certainly wants to see that we as home builders, and as the machine for supplying the homes that are needed in the country, that we're focused on our growth model and focused on how we bring affordability to market.

Speaker #5: So we're going to knit all of this together as we go forward. We're going to see how things evolve. So I'm not going to speak to use of cash right now, but that's going to be an evolving picture as we go forward.

Speaker #5: And the bottom line of what I'd say is, as you get to an inventory turn that is higher, as we're producing more volume, and as our margin starts to come back, our cash flow is going to be very, very strong.

Stuart Miller: The bottom line of what I'd say is, as you get to an inventory turn that is higher, as we're producing more volume, and as our margin starts to come back, our cash flow is going to be very, very solid. Susan, I would just add, relative to your question on how much do we hold on the balance sheet. It really depends on market conditions, right? You see us have a little bit more cash on our balance sheet when there's uncertainty and less cash when that uncertainty adds into a more positive direction. Additionally, we look at what are our upcoming maturities. So I would say, generally, as conditions stabilize and uncertainty becomes less of a focus, you'll see us holding less on our balance sheet at each quarter end.

The bottom line of what I'd say is, as you get to an inventory turn that is higher, as we're producing more volume, and as our margin starts to come back, our cash flow is going to be very, very solid. Susan, I would just add, relative to your question on how much do we hold on the balance sheet. It really depends on market conditions, right? You see us have a little bit more cash on our balance sheet when there's uncertainty and less cash when that uncertainty adds into a more positive direction. Additionally, we look at what are our upcoming maturities. So I would say, generally, as conditions stabilize and uncertainty becomes less of a focus, you'll see us holding less on our balance sheet at each quarter end.

Speaker #5: Solid. So, this was another just add.

Speaker #11: Relative to your question on how much we hold on the balance sheet, it really depends on market conditions, right? You see us have a little bit more cash on our balance sheet when there's uncertainty, and less cash when that uncertainty moves in a more positive direction.

Speaker #11: Additionally, we look at what are our upcoming maturities. So I would say, generally, as conditions stabilize and uncertainty becomes less of a focus, you'll see us holding less on our balance sheet at each quarter end.

Speaker #11: Hard to determine amounts and don't want to give a goal of a specific amount. But it really does depend on market conditions and other things.

Stuart Miller: Hard to determine amounts and don't want to give a goal of a specific amount, but it really does depend on market conditions and other things because we have a lot of readily available liquidity. It's just what type of market conditions are we in? All right. All right. Well, thank you all for the—Get there. Congratulations. What's that? Nope. Congratulations, Jon. You made it through your last earnings call. Congratulations. I want to say to everybody, thanks for joining us today. We're really pretty enthusiastic about our business and our business model. We're proud to be supplying homes to a difficult market, but we think that we are, as I said, levered to the upside in terms of margin improvement, and we'll see where the market takes us. Thanks, and we'll see you at the end of Q1. That concludes Lennar's Q4 earnings conference call.

Diane Bessette: Hard to determine amounts and don't want to give a goal of a specific amount, but it really does depend on market conditions and other things because we have a lot of readily available liquidity. It's just what type of market conditions are we in?

Speaker #11: Because we have a lot of readily available liquidity. It's just, what type of market conditions are we in?

Susan Maklari: All right. All right. Well, thank you all for the—

Speaker #4: Sure. Yeah.

Speaker #4: Okay. Well, thank you all for the— Get.

Stuart Miller: Get there. Congratulations. What's that? Nope. Congratulations, Jon. You made it through your last earnings call. Congratulations. I want to say to everybody, thanks for joining us today. We're really pretty enthusiastic about our business and our business model. We're proud to be supplying homes to a difficult market, but we think that we are, as I said, levered to the upside in terms of margin improvement, and we'll see where the market takes us. Thanks, and we'll see you at the end of Q1.

Speaker #5: There. Congratulations. What's that? Nope. Congratulations, John. You made it through your last earnings call. Congratulations. And I want to say to everybody, thanks for joining us today.

Speaker #5: We're really pretty enthusiastic about our business and our business model. We're proud to be supplying homes to a difficult market, but we think that we are, as I said, levered to the upside in terms of margin improvement.

Speaker #5: And we'll see where the market takes us. Thanks, and we'll see you at the end of the first quarter.

Operator: That concludes Lennar's Q4 earnings conference call. Thank you all for participating. You may disconnect your line, and please enjoy the rest of your day.

Speaker #1: That concludes LENNAR's fourth quarter earnings conference call. Thank you all for participating. You may disconnect your line, and please enjoy the rest of your day.

Stuart Miller: Thank you all for participating. You may disconnect your line, and please enjoy the rest of your day.

Q4 2025 Lennar Corp Earnings Call

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