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Transcript of Lennar Corporation /media/Files/L/Lennar...آ  live with parents, siblings, other relatives or...

  • Lennar Corporation J.P. Morgan Homebuilding Conference

    May 18, 2017

  • Disclaimer Statement

    This presentation includes "forward-looking statements," as that term is defined in the Private

    Securities Litigation Reform Act of 1995. These forward-looking statements include statements

    regarding our business, financial condition, results of operations, cash flows, strategies and

    prospects. You can identify forward-looking statements by the fact that these statements do not

    relate strictly to historical or current matters. Rather, forward-looking statements relate to

    anticipated or expected events, activities, trends or 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 cause our actual activities or results to differ

    materially from the activities and results anticipated in forward-looking statements. These

    factors include those described in our Securities and Exchange Commission filings, including

    those under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed

    with the Securities and Exchange Commission. We do not undertake any obligation to update

    forward-looking statements, except as required by federal securities laws.

    2

  • Macro Overview

  • 8 1 3

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    6 3 6

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    6 2 6

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    3 5 5 3

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    250

    500

    750

    1,000

    1,250

    1,500

    1,750

    2,000

    2,250

    2,500

    1 9 7 0

    1 9 7 1

    1 9 7 2

    1 9 7 3

    1 9 7 4

    1 9 7 5

    1 9 7 6

    1 9 7 7

    1 9 7 8

    1 9 7 9

    1 9 8 0

    1 9 8 1

    1 9 8 2

    1 9 8 3

    1 9 8 4

    1 9 8 5

    1 9 8 6

    1 9 8 7

    1 9 8 8

    1 9 8 9

    1 9 9 0

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    1 9 9 2

    1 9 9 3

    1 9 9 4

    1 9 9 5

    1 9 9 6

    1 9 9 7

    1 9 9 8

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    2 0 0 7

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    2 0 1 8 E

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    T o ta

    l H o u si n g S

    ta rt

    s (0

    0 0 's

    )

    Starts SF Starts MF Pent-up Demand

    Proj. Annual Housing Demand

    Household Formations: 1,200 - 1,300 Obsolescence: 200 - 400 Second Homes: 100 - 200

    1,500 - 1,900

    • The market

    overcorrected and

    has been under

    supplying

    household demand

    in both the for-sale

    as well as for-rent

    markets

    Source: Housing starts from US Census Bureau (April 2017) and analyst estimates (March 2017); Proj. household formations: Joint Center for Housing Studies of 1.2-1.3M (March 2014), Wells Fargo (January 2015), Freddie Mac (August 2014) Note: Excludes manufactured housing

    Annual Housing Demand

    Production

    Deficit

    Considered Normal Production

    Considered Housing Depression

    Macro Overview: Production deficit of homes, both for-sale and for-rent

    4

  • 158

    60

    80

    100

    120

    140

    160

    180

    200

    220

    '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17

    35 Year Average Affordability: 128

    5.2

    3

    4

    5

    6

    7

    8

    9

    10

    11

    12

    13

    '63 '65 '67 '69 '71 '73 '75 '77 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17

    53 Year Average Months Supply: 6.1

    5

    Macro Overview: Inventories are tight and affordability remains strong

    Source: National Association Realtors (NAR) Calculation: Median Family Income / Qualifying Income * 100 Qualifying Income: Is the amount you would need to earn per year to afford a median priced SF home; if a maximum of only 25% of income could be designated to your mortgage payment

    Months Supply of New Residential Sales: Inventory remains tight

    Affordability: Housing affordability remains above long-term averages

    Source: US Census Bureau

  • Macro Overview: Millennial population will be a driver of growth

    6

    U.S. Population Age 35-44 (000's)

    Source: US Census Bureau. Population data in the International Data Base for 2016-2030 are based on the 2014 National Projections (1) Per analysis of US Census data by Trulia

    • An astonishing 60%

    of millennials in

    America now either

    live with parents,

    siblings, other

    relatives or

    roommates, an 115-

    year high(1)

    36,000

    38,000

    40,000

    42,000

    44,000

    46,000

    48,000

    50,000

    '90 '92 '94 96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 '20 '22 '24 '26 '28 '30

    Key homebuying demographic begins

    to decline

    Key homebuying demographic is poised

    to return to growth after a 14-year decline

  • Strategic Overview

  • Stuart Miller Chief Executive Officer

    33 yrs. Experience 33 yrs. with Lennar

    Jon Jaffe Chief Operating Officer

    32 yrs. Experience 32 yrs. with Lennar

    Jeff Krasnoff CEO of Rialto

    38 yrs. Experience 29 yrs. with Lennar/LNR

    Rick Beckwitt President

    32 yrs. Experience 10 yrs. with Lennar

    Jay Mantz President

    Eric Feder Vice Chairman

    Brett Ersoff President, RMF

    John Herman COO & CIO, RMF

    Cheryl Baizan Chief Financial Officer

    Erik Higgins Chief Financial Officer

    Mike Alvarado VP & Chief Legal Officer

    Mike White VP & Treasurer

    Lynn Jochim Executive VP

    Greg McWilliams South Regional President

    Kofi Bonner North Regional President

    Emile Haddad Chairman & CEO of FivePoint

    33 yrs. Experience 28 yrs. with Lennar

    Todd Farrell President

    Ed Easley Regional President

    11 Division Presidents

    Rob Hutton Central Regional President

    7 Divisions

    Greg McGuff Pacific NW Regional President

    4 Divisions

    Jeff Roos Western Regional President

    8 Divisions

    Fred Rothman Eastern Regional President

    14 Divisions

    Bruce Gross Chief Financial Officer

    33 yrs. Experience 25 yrs. with Lennar

    Jimmy Timmons President, Mortgage

    Tom Fischer President, Title

    Cristina Pardo VP, Controller

    Diane Bessette VP & Treasurer

    David Collins Controller

    Carl Garraffo Chief HR Officer

    Kay Howard Chief Marketing Officer

    Laura Lete Chief Information Officer

    Mike Petrolino VP Taxation

    Mark Sustana General Counsel

    Financial Services FivePointRialtoMultifamilyHB Regional Presidents

    Corporate

    Strategic Overview: Deep and consistent management team

    8

  • Strategic Overview: Diversified in Nation’s strongest housing markets

    Homebuilding Division

    9

    Key

  • 10

    Strategic Overview: Summary

    Over many cycles, Lennar’s management team has crafted a playbook of

    strategies that flex as the cycle adjusts

     Moderate growth rate

     Soft pivot land strategy

     Focus on operational efficiencies

     Path to lower leverage

     Reversion to pure-play homebuilder

  • Adjust growth rate throughout cycle based on land / strategic opportunities alo