Lennar Corporation · NYSE:LEN
Lennar — Lennar Corp /New/ — UBS Building & Building Products 7th Annual CEO Conference (November 2009)
26 slides from Lennar's conference presentation, Nov 17, 2009
Slide 1: UBS Building & Building Products 7th Annual CEO Conference November 2009
UBS Building & Building Products 7 Annual CEO Conference November 2009 Exhibit 99.1 th
Slide 2: Disclaimer Statement
1 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. Yo
Slide 3: Business Overview
2 Business Overview
Slide 4: Housing Market Is Stabilizing
3 Business Overview Housing Market Is Stabilizing The housing market has continued its road back to recovery as more confident homebuyers have taken advantage of increased affordability. While high unemployment and foreclosures will continue to present challenges, consumer sentiment has significantl
Slide 5: Operating Focus
4 Business Overview Operating Focus Stabilize Balance Sheet Invest in New Strategic Opportunities Rebuild Profitability in Core Business . Ample liquidity – cash balance of $1.3B at Q3 2009 (excludes NOL carryback refund of approximately $275M, expected in Q1 2010) Extended debt maturities Joint ven
Slide 6: 5
5 Stabilize Balance Sheet
Slide 7: Strong Cash Flow Generation and Low Leverage
6 Stabilize Balance Sheet Strong Cash Flow Generation and Low Leverage 25% 30% 35% 40% 45% 50% 55% 60% 65% 70% 75% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 HB Debt / Total Capital Goal 35% - 45% Operating Cash Flow (Dol
Slide 8: Senior Notes Maturities
7 Stabilize Balance Sheet Senior Notes Maturities $280 $245 $350 $250 $500 $250 $400 As of August 31, 2009 6.50% Senior Notes 5.95% Senior Notes 5.50% Senior Notes 5.60% Senior Notes 5.13% Senior Notes 5.95% Senior Notes 12.25% Senior Notes (Dollars in Millions) Senior notes maturities extend over 8
Slide 9: Capital Market Transactions
8 Stabilize Balance Sheet Capital Market Transactions Issued $400 million of senior unsecured notes due in 2017. Repaid $373 million of senior notes and other debt (YTD Q3 2009). Raised $225 million of equity under the draw down program in Q2 & Q3 2009 to provide additional financial flexibility and
Slide 10: Aggressive Inventory Reduction
9 Stabilize Balance Sheet Aggressive Inventory Reduction $3.2 $5.4 $2.1 $1.5 (Dollars in Billions) $8.6* $3.6* Peak 2006 Q3 2009 *Excludes consolidated inventory not owned Inventory 58% Land, Land Under Development and Option Deposits Construction in Progress and Finished Homesites
Slide 11: Aggressive Inventory Management
10 Stabilize Balance Sheet Aggressive Inventory Management Homesites Owned and Controlled 345,000 109,000 Peak 2006 Q3 2009 68% 109,000 20,000 11,000 78,000 Q3 2009 -68% 345,000 Total -81% 105,000 Controlled-JVs -92% 134,000 Optioned -26% 106,000 Owned Change Peak 2006
Slide 12: Significant Reduction in Joint Ventures
11 Stabilize Balance Sheet Significant Reduction in Joint Ventures Peak 2006 Q4 2007 Q4 2008 Q3 2009 Number of Joint Ventures Joint Venture Detail JVs with recourse debt JVs with non-recourse debt JVs without debt JV total 73%
Slide 13: Significant Reduction in JV Recourse Debt Exposure
12 Stabilize Balance Sheet Significant Reduction in JV Recourse Debt Exposure $1,764 $380 Peak 2006 Q3 2009 Maximum JV Recourse Debt Exposure (Dollars in Millions) 78% JVs with Recourse Debt At 8/31/09 Assets $1.6B Equity $0.6B
Slide 14: Joint Venture Reduction Strategy Near Completion
13 Stabilize Balance Sheet Joint Venture Reduction Strategy Near Completion Number of JVs Lennar’s Investment in JVs JV Debt Long-Term Strategic/ Performing JVs (no reason to dissolve) JVs Projected to be Dissolved (by 11/30/10) Q3 2009 JV Totals $651 $380 50% 50% 77% 23% 61% 39% 100% 100% 100% (Dol
Slide 15: Rebuild Profitability in Core Business
14 Rebuild Profitability in Core Business
Slide 16: Division Operating Focus
15 Rebuild Profitability in Core Business Division Operating Focus . . . . Operating strategy for each homebuilding division: Carefully manage asset base Reposition product to target first-time and value-focused homebuyers Reduce construction costs by re-bidding and re-tooling product Eliminate S,G&
Slide 17: Focus on Increasing Operating Margins
16 Rebuild Profitability in Core Business Focus on Increasing Operating Margins 3% -5% 0% 0% 13% 13% 15% 17% 12% 12% 9% 2% 2% -1% 0% -3% -1% 1% 2% -10% -5% 0% 5% 10% 15% 20% 25% 30% Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09
Slide 18: Focus on Rebuilding Gross Margins
17 Rebuild Profitability in Core Business Focus on Rebuilding Gross Margins 17% 14% 14% 16% 25% 25% 26% 27% 25% 24% 20% 14% 16% 14% 14% 12% 17% 16% 18% 0% 5% 10% 15% 20% 25% 30% Q1 '05 Q2 '05 Q3 '05 Q4 '05 Q1 '06 Q2 '06 Q3 '06 Q4 '06 Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2
Slide 19: Focus on Rebuilding Gross Margins
18 . Rebuild Profitability in Core Business Focus on Rebuilding Gross Margins Recovering housing market coupled with normalized lower level of completed unsold inventory and lower cancellation rates provide more stable pricing environment. Q3 2009 sales incentives are at the lowest level since Q3 20
Slide 20: Focus on S,G&A Reduction
19 Rebuild Profitability in Core Business Focus on S,G&A Reduction S,G&A Expenses Associate Headcount $484 $101 Peak 2006 Q3 2009 3,917 14,045 Peak 2006 Q3 2009 (Dollars in Millions) 79% 72% Number of homebuilding divisions has been reduced from 124 to 29. Each division’s S,G&A has been right-sized
Slide 21: Invest in New Strategic Opportunities
20 Invest in New Strategic Opportunities
Slide 22: Moving from Defense to Offense: Finished Homesites
21 Invest in New Strategic Opportunities “Moving from Defense to Offense” Finished Homesites Examples of recent purchases of well-located homesites that are immediately ready for production, expected to generate significantly above average gross margins, with minimal incremental overhead: Baltimore,
Slide 23: Moving from Defense to Offense: Newhall Land Development
22 Invest in New Strategic Opportunities “Moving from Defense to Offense” Newhall Land Development Re-emerged as a long-term strategic JV with Lennar as a 15% equity owner, in one of the nation’s most constrained, best positioned locations for homebuilding JV is structured for success: No bank debt
Slide 24: Moving from Defense to Offense: Rialto Capital Management
23 Invest in New Strategic Opportunities “Moving from Defense to Offense” Rialto Capital Management Distressed Investment Opportunities Management team led by Jeff Krasnoff (former CEO of LNR Property Corporation) with 30 years of “down-cycle” skills. Part of the team selected by US Treasury as one
Slide 25: Conclusion
24 Conclusion
Slide 26: Lennar's Strategy Through the Downturn
25 Conclusion Lennar’s Strategy Through the Downturn Stabilize Balance Sheet Invest in New Strategic Opportunities Rebuild Profitability in Core Business . . . . . . Reduced construction costs per square foot from peak by over 25% Reduced number of floor plans from peak by 63% Reduced avg. floor pla