Lennar Corp. - Ordinary Shares - Class A

Q2 results show margin recovery + improving incentives trend (but macro still choppy): Lennar delivered 20.5k homes (midpoint of guidance) and generated 21.7k new orders (near the high end). Gross margin improved to 15.6% and net margin rose to 6.4%. EPS was $1.31 excluding mark-to-market items (GAAP EPS noted as $1.24). A key signal: sales incentive rate on deliveries fell to 12.9% vs 14.1% in Q1 and 14.5% in Q4 2025—the first sustained easing after ~3 years of elevated incentives.

Guidance (Q3 2026) and full-year delivery reset (prudence on volume amid uncertainty): - Q3 new orders: 21k–22k homes - Q3 deliveries: 20.5k–21.5k homes - Q3 ASP: $375k–$380k - Q3 gross margin: ~16% with sequential margin improvement expected through the year - SG&A: 8.8%–9% - EPS guidance: ~$1.20–$1.40 - Financial services + losses (segments): FS earnings $95m–$100m; homebuilding/other segments expected losses totaling roughly $15m to $50m depending on segment (excluding potential mark-to-market impacts). - Annual deliveries adjusted to 82k–83k (down from prior outlook implied by “pressures on interest rates and continued macro uncertainty”).

Cash flow / balance sheet strength + asset-light land strategy reduces risk: Ended Q2 with $1.8B cash and $4.9B total liquidity. Inventory turn was 2.5x (from 1.8x a year ago) and cycle time reached 121 days (record low). Land model remains “mostly off balance sheet”: ~2% owned, 98% controlled via third parties, with 11k homesites owned and 484k controlled. Inventory fell to $10.9B from $11.4B YoY. This is positioned as improving return and cash generation as margins normalize.