Shareholder letters: Lennar, Mettler Toledo
Lennar Corp (LEN)
Lennar is the largest home building company in the US.
The latest letter from Lennar is quite interesting given what’s going on in housing market at the moment:
Operating results in 2020 look quite good:
And here is long thesis from management:
While stocks of home builders have had a great run over the past 12 months, I guess there might be still an opportunity given how low are housing inventory levels at the moment.
Mettler Toledo (MTD)
METTLER TOLEDO (NYSE:MTD) is a leading global supplier of precision instruments and services. We have strong leadership positions in all of our businesses and believe we hold global number-one market positions in most of them. We are recognized as an innovation leader and our solutions are critical in key R&D, quality control, and manufacturing processes for customers in a wide range of industries including life sciences, food, and chemicals. Our sales and service network is one of the most extensive in the industry. Our products are sold in more than 140 countries and we have a direct presence in approximately 40 countries. With proven growth strategies and a focus on execution, we have achieved a long-term track record of strong financial performance.
Overall, the letter is not particularly exciting, but they have some good charts showing how unsexy 5% revenue CAGR along with margin expansion and buybacks can get you to 15% EPS CAGR over 22 years. Stock price tracked business performance going from $100 in late 2009 to $1,116 today.
Here is the most interesting part of the letter where CEO Olivier Filliol talks about his departure from a CEO position (he was a CEO since 2008):
The strength of our organization and how well we are positioned for the future contributed to my decision to step down as CEO in 2021. As I look back over the last decade-plus, it is striking how much progress we have made in so many areas. Our continuous improvement programs of Spinnaker sales and marketing and SternDrive productivity are well ingrained throughout our organization and will continue to evolve and be important ingredients of our success. Blue Ocean is now in place worldwide and has given us the ability to quickly access data, communicate seamlessly internally, and make good decisions faster. It has been a major change management endeavor, with the full paybacks still to come [Spinnaker, SternDrive and Blue Ocean are multi-year programs designed to improve business performance - Outliers].
Emerging markets, an important growth driver, are 35% of sales today, compared with 25% in 2007. Similarly, our faster-growing Laboratory business is now 54% of our sales, up from 44%. Finally, service and consumables are now 33% of sales, compared with 28%. Redirecting resources and investments to higher-growth businesses has always been at the heart of our initiatives, and these businesses will continue to fuel growth in the future.
https://mt.gcs-web.com/static-files/30d58d3b-95f3-4d57-95b9-20bc382dec1b