Lennar Corporation · NYSE:LEN
Lennar — J.P. Morgan Homebuilding Conference 2017
22 slides from Lennar's conference presentation, May 18, 2017
Slide 1: Lennar Corporation J.P. Morgan Homebuilding Conference
Lennar Corporation J.P. Morgan Homebuilding Conference May 18, 2017
Slide 2: Disclaimer Statement
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, strategie
Slide 3: Macro Overview
Macro Overview LENNAR
Slide 4: Production deficit of homes, both for-sale and for-rent
Macro Overview: Production deficit of homes, both for-sale and for-rent • The market 2,500 Proj. Annual Housing Demand overcorrected and Household Formations: 1,200 - 1,300 has been under Obsolescence: 200 - 400 supplying Second Homes: 100 - 200 2,250 1,500 - 1,900 household demand in both the for-s
Slide 5: Inventories are tight and affordability remains strong
Macro Overview: Inventories are tight and affordability remains strong Months Supply of New Residential Sales: Inventory remains tight 13 53 Year Average Months Supply: 6.1 12 11 10 9 8 7 6 5 5.2 4 3 '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
Slide 6: Millennial population will be a driver of growth
Macro Overview: Millennial population will be a driver of growth • An astonishing 60% U.S. Population Age 35-44 (000's) of millennials in America now either 50,000 live with parents, siblings, other relatives or 48,000 roommates, an 115- year high(1) Key homebuying demographic begins 46,000 to decli
Slide 7: Strategic Overview
Strategic Overview LENNAR
Slide 8: Deep and consistent management team
Strategic Overview: Deep and consistent management team Stuart Miller Chief Executive Officer 33 yrs. Experience 33 yrs. with Lennar Rick Beckwitt Jon Jaffe Jeff Krasnoff Bruce Gross Emile Haddad President Chief Operating Officer CEO of Rialto Chief Financial Officer Chairman & CEO of FivePoint 32 y
Slide 9: Diversified in Nation's strongest housing markets
Strategic Overview: Diversified in Nation’s strongest housing markets Key Homebuilding Division 9
Slide 10: Summary: playbook of strategies that flex as the cycle adjusts
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 10
Slide 11: Moderate growth rate
Strategic Overview: Moderate growth rate Adjust growth rate throughout cycle based on land / strategic opportunities along with embedded risk from cycle duration Early cycle: — Aggressive growth Growth Rate Cash Flow — Divisions get to critical mass Mid cycle: Early cycle 15-20% + Negative — Mod
Slide 12: Soft pivot land strategy
Strategic Overview: Soft pivot land strategy Early cycle: Land Heavy — Purchase deeply discounted, long duration land Land Mid cycle: Lighter — Soft pivot to purchase shorter duration land Land Mature cycle: Light — Purchase options, adjust contract terms, and purchase short duration land for
Slide 13: Focus on operational efficiencies
Strategic Overview: Focus on operational efficiencies Support net margin with a lower growth rate by focusing on business efficiencies SG&A efficiencies Significant SG&A reduction 14.7% — Transition to digital marketing — Lower outside brokerage participation and 12.6% commission rate — Targeted m
Slide 14: Path to lower leverage
Strategic Overview: Path to lower leverage HB Debt / Capital 54.0% 50.2% 49.1% 47.1% 39.4% 2012 2013 2014 2015 2016 1) Stockholders’ Equity increasing: Homebuilding generating profits from increased volumes and strong operating leverage Ancillary businesses pivoting from investing to harvesting
Slide 15: Ancillary businesses transitioning from investing to harvesting phase
Strategic Overview: Ancillary businesses transitioning from investing to harvesting phase Stand-alone platforms with maximum flexibility allowing for the creation of significant shareholder value Financial Services is closely linked to Homebuilding, and Multifamily closely mirrors the core busin
Slide 16: Reversion to pure-play homebuilder
Strategic Overview: Reversion to pure-play as we move from investing to harvesting phase IPO Positioned for completed strategic on 5/10/17 opportunity Reversion to LEN maintains ~40% ownership pure-play Optionality with Multifamily Homebuilding & Financial Services Creating significant shareholder v
Slide 17: WCI Communities Acquisition
WCI Communities Acquisition
Slide 18: WCI Communities Acquisition: Overview
WCI Communities Acquisition: Overview On February 10, 2017, Lennar closed on the acquisition of WCI Communities, a premier lifestyle community developer and luxury homebuilder of single and multi-family homes throughout Florida Terms of the deal: — $643 million, or $23.50 per share in cash, and as
Slide 19: Strong Balance Sheet
Strong Balance Sheet LENNAR
Slide 20: Balanced debt maturity ladder
Strong Balance Sheet: Balanced debt maturity ladder At February 28, 2017* ($ in millions) Ratings: Moody’s: Ba1 S&P: BB Fitch: BB+ (1) Credit Facility $1,234 4.50%(3) 4.50% 4.125% 4.75% 4.50% 4.75% 4.75% 12.25% 4.75% 4.875% 4.125% $654 6.875%(2) 6.95% $600 $600 $650 $575 $500 $500 $500 $400 $400 $40
Slide 21: Conclusion
Conclusion LENNAR
Slide 22: Investable through the cycle
Focused on being a pure-play HB, generating positive cash flow and investable through the cycle Buy discounted land and grow aggressively Consider Soft pivot to strategic shorter cash duration deployment retail land Investable through the cycle Moderate Pay down growth, debt improve operational effi