Lennar Corp Q4 2025 Earnings Call Summary

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

Question: Alan Ratner - Zelman & Associates - Analyst : 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 reduction. So can you just walk through exactly what's contributing to the continued pressure on margin? I know there's 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. 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%, 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.

Question: Alan Ratner - Zelman & Associates - Analyst : 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 you know obviously the midterms are coming up or is this something that is more of a multiyear view in your mind? Thank you.

Question: John Lovallo - UBS AG - Analyst : Good morning, guys, thanks for taking my questions as well. I guess the first one, Stuart, is given your strategy of maintaining volume, and you're 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? I mean, particularly considering all the hard work and the changes that have been made over the past few years.

Question: John Lovallo - UBS AG - Analyst : That's helpful color. Thank you. And then, embedded in the fiscal year '26.

Question: John Lovallo - UBS AG - Analyst : 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 market?

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : Thanks. Good morning, everyone. Thanks for taking my questions. 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 that 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, and it -- 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. You know 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 you know it seems like even without if you kind of exclude the seasonality, maybe you're still looking at a slight further erosion in in gross margin in 1Q versus 4Q. So just trying to triangulate. You know 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.

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : Right. 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 than 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 the first quarter be the low point of the year.

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Thank you, everyone. Thanks for fitting me in. 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 turned over the next several quarters given the environment that we are in? Can you hit that 3 times number in this kind of condition? And just generally speaking, how does the core products fit into that strategy?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yeah, okay, thank you for the color. And then maybe building on Mike's question on uses of cash. As you do you 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? And what are you watching to determine what the appropriate levels are there in terms of the cash?