Lennar Corporation (NYSE:LEN) Q3 2020 Earnings Conference Call - Final Transcript

Sep 15, 2020 • 11:00 am ET


Lennar Corporation (NYSE:LEN) Q3 2020 Earnings Conference Call - Final Transcript


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Q & A

Thank you. [Operator Instructions] And our first question is in queue is from Ivy Zelman at Zelman Associates. Your line is open.

Ivy Zelman

Thank you, and congratulations, guys on a great quarter. Stuart, although you mentioned and sort of highlighted the fact that you could have grown at a stronger rate, while we see other builders posting numbers like MDC today over 70% growth. I think the market is, looking and frowning on your results from an order perspective, because you're losing market share, which of course, we don't see that -- over a longer term basis, you'll continue to gain share. But maybe talk about the benefit of measured growth, you mentioned cash flow returns, cost and really the -- and the rest, maybe, I'm not trying to grow faster and walk us through in more detail, may be providing some metrics on the risks and benefits, and more specifics?

Stuart Miller

We highlighted some of this in our -- in our comments. You know, there are a number of benefits, as we see it, we noted that, as we watched real time, lumber prices spiral upward. And this is across the country, across the industry. We recognize the risk associated with getting way out ahead in cost, as production ramps up. We all know that the labor market has been constrained, it's possible that with unemployment levels, will find new entrants to our market over time. We'll have to wait and see. We know that there is exposure on the cost side of the equation, we have chosen not to get into the race to see how many sales we can have, but instead to carefully focus on the homes that we have an inventory, that we have under production and really limit sales going forward. So the price appreciation can cover cost increases as we go forward. And of course, the focus on current inventory, just helps ramp-up inventory turn, which helps focus on returns on capital, return on equity. Jon, Rick, do you want to weigh in on that?

Jon Jaffe

Sure. As Stuart mentioned, lumber that increased almost 100% from the beginning of our quarter to the end of our quarter. And so, -- very measured with taking advantage of an increasing sales price environment to match that. We need that -- as we patiently pace our sales, we will benefit from that price appreciation, really help offset that increase. And as you look at the supply chain, it is not just labor, but from the manufacturers, it's probably -- went up there is constraints. And so again to be very measured in terms of being able to communicate to our trade vendors exactly what our production capacity is instead of quickly trying to wrap it up, which is not really feasible to do, we think it's a much more measured and appropriate approach.

Rick Beckwitt

Yeah, ivy. The only thing I'd add to that is, as Stuart, John and I have really looked at the limited inventory that's available on the market.