Lennar Corp Q3 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Alan Ratner - Zelman Partners, LLC - Analyst : Hey. Good morning. Thanks for all the detail, as always. Appreciate it. Stuart, obviously, I think a lot of people want to dig into the pivot here on strategy a little bit and understand whether this is a little bit more short term in nature or just a change in the way maybe you're thinking about the longer term. I guess from an incentive standpoint, I'm just curious, have you already started to dial back some of the incentives? And if so, what has the response been in terms of order pace or margin or any color you can give there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2025 / 3:00PM, LEN.N - Q3 2025 Lennar Corp Earnings Call

Question: Alan Ratner - Zelman Partners, LLC - Analyst : Got it. That's helpful color. The second question relates to the land strategy in relation to this. This isn't my view, but it's one I hear from investors that, given the spin to Millrose and given the fact that now you're 100% off balance sheet with option contracts that are tied to some certain takedown schedule, I know there's been some concern that maybe you don't have the flexibility to meaningfully change the start pace or the takedown pace. So I'm curious -- I know this is a fairly modest pullback in start activity, so it probably doesn't affect things too much. But is there any adjustment that's also going on on the land side to account for this slower start pace, meaning have you adjusted the takedown schedules or paused in any cases? Or on the flip side, would land begin to then accumulate on the balance sheet potentially if you don't reaccelerate those starts in '26?

Question: Alan Ratner - Zelman Partners, LLC - Analyst : Appreciate it. Thanks very much. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2025 / 3:00PM, LEN.N - Q3 2025 Lennar Corp Earnings Call

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : All right. Thanks. Good morning, everyone. Thanks for taking my questions. I certainly don't want to beat a dead horse here, but I just wanted to try and put maybe perhaps a finer point on this kind of shorter-term adjustment in approach, given the challenging market. And I'm wondering, on kind of a bottom-line basis, if you guys just felt like you didn't want to go below 17.5% margin and the cost was too high to drive that volume where you hoped it was where you wanted it three months ago. Or is there also, in your view, sort of an elasticity of demand issue where part of the problem here is that even if you were to drop margins or raise incentives to keep that, you really wouldn't ultimately even be successful in what you needed from a volume perspective? And so with that maybe demand becoming more inelastic, just a lack of demand in the marketplace, it just didn't make sense to drop that gross margin below where you're looking in the back half of this year currently. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2025 / 3:00PM, LEN.N - Q3 2025 Lennar Corp Earnings Call

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : Appreciate that, and I understand it's probably a bottoms-up analysis to really fully answer that question, I suppose. But I think ultimately, though, this idea around elasticity is really important. And maybe just as a second question, follow-up question, we did see rates come down, mortgage rates, that is, maybe 20, 30 basis points in August. And so far in September, another 20 or 30 basis points. I'm curious, amid that type of -- but kind of gradually seeping into the market, I'm curious if you could comment on -- if you did see any impact on demand trends across your markets, perhaps which ones, if that's the case. And all else equal, would this potentially reduce pressure on gross margins or incentives? Or are you just at a point right now where, given what you've done during the quarter, you expect the incentives that you've laid out to effectively remain in place throughout the fourth quarter?

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : Great. Thank you. Appreciate it.

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Thank you. Good morning, everyone. My first question is on the inventory turns. Can you talk through how some of these company-specific efforts are continuing to come through, even as you moderate or just the strategy? And how we should think about the upside to those inventory turns in this kind of an environment and, long term, the ability to get to 3 times as you do think about the setup on the ground?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yeah, okay. That's very helpful color. And then maybe taking that one step further, as we do think about the inventory turns and these efforts coming through, can you talk about the cash generation of the business and how you're thinking about the uses of that cash, especially in this sort of an environment that we're in, and any updates on the M&A environment, those kinds of strategic efforts?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yeah, okay. Thank you all for the color, and good luck with the quarter. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2025 / 3:00PM, LEN.N - Q3 2025 Lennar Corp Earnings Call

Question: Matthew Bouley - Barclays Services Corp - Analyst : Good morning, everyone. Thank you for taking the questions. One on incentives, I guess sort of another philosophical question. But I mean, I guess going forward, depending on where the rate environment goes, do you anticipate maintaining some level of these buy-downs as kind of a competitive advantage structurally versus the resale market? Or if we do get to 6% or lower, is there some level where you really do foresee a more material pullback on those incentives? Thank you.

Question: Matthew Bouley - Barclays Services Corp - Analyst : Okay, fair enough. Thank you for the thoughts there, Stuart. Secondly, I guess sort of following on John's question, I think what he was alluding to around orders and deliveries into the next quarter, I'm just curious if you can update us on the cancellation environment a little bit, and I guess whatever the trend was, kind of what you're reading into what you're seeing in cancellations today. Thank you.

Question: Matthew Bouley - Barclays Services Corp - Analyst : Okay. Thanks, Jon. Good luck, guys. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2025 / 3:00PM, LEN.N - Q3 2025 Lennar Corp Earnings Call

Question: Jade Rahmani - Keefe Bruyette & Woods Inc - Analyst :

Question: Jade Rahmani - Keefe Bruyette & Woods Inc - Analyst : And so in terms of the gross margin outlook, looking beyond the fourth quarter, should we still expect the remaining 75% once you're at a steady cadence with Millrose to come through that interest cost on gross margin?

Question: Jade Rahmani - Keefe Bruyette & Woods Inc - Analyst : Okay. Thanks for that. I was trying to understand as the 25% grows toward 100%, shouldn't that -- I think the market's assuming that would be a negative, an incremental headwind because that $560 million of annual interest costs is not yet fully reflected in gross margin?

Question: Jade Rahmani - Keefe Bruyette & Woods Inc - Analyst : Thanks very much.