Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation’s
leading builder of luxury homes, today announced results for its
second quarter ended April 30, 2018.
FY 2018’s Second Quarter Financial
Highlights (Compared to FY 2017’s Second Quarter):
- Net income was $111.8 million, or $0.72 per share diluted,
compared to net income of $124.6 million, or $0.73 per share
diluted, in FY 2017’s second quarter
- Pre-tax income was $152.7 million, compared to $199.2
million
- Impairments were $13.8 million compared to $4.3 million
- Income from unconsolidated entities was $2.6 million compared
to $45.9 million
- Other income was $15.8 million compared to $14.0 million
- Revenues were $1.60 billion, the highest second quarter ever -
up 17%; home building deliveries were 1,886 units - up 15%
- Net signed contract value was $2.38 billion, the highest
quarter ever - up 18%; contract units were 2,666 - up 6%
- Per-community net signed contracts were 9.04 per community - up
16% - the highest second quarter since FY 2005
- Backlog value at second-quarter end rose to $6.36 billion, the
highest second quarter ever - up 27%; units totaled 7,030 - up
17%
- Gross margin, as a percentage of revenues, was 18.8%
- Adjusted Gross Margin, which excludes interest and inventory
write-downs (“Adjusted Gross Margin”), was 22.5%
- SG&A, as a percentage of revenues, was 10.4%
- Income from operations was 8.4% of revenues
In Addition, the Company:
- Increased its dividend in April to $0.11 per share from $0.08
per share
- Repurchased approximately 1.8 million shares of its common
stock at an average price of $45.44 per share for a total purchase
price of approximately $81.5 million in its second quarter and
approximately 6.2 million shares at an average price of $46.86 per
share for a total purchase price of approximately $291.5 million
to-date in FY 2018
FY 2018 Financial Guidance (Subject to
the Forward-Looking Statement Below):
- Full FY 2018 deliveries of between 8,000 and 8,500 units with
an average price of between $830,000 and $860,000; third-quarter
deliveries of between 2,100 and 2,200 units with an average price
of between $830,000 and $850,000
- FY Adjusted Gross Margin of between 23.75% and 24.25% of
revenues; third-quarter Adjusted Gross Margin of 23.4%
- FY SG&A, as a percentage of FY revenues, of approximately
10.0%; third-quarter SG&A, as a percentage of third-quarter
revenues, of approximately 9.6%
- FY Other income and Income from unconsolidated entities of
between $130 million and $160 million, with approximately $20
million in the third quarter
- FY tax rate of between 23% and 25%; third-quarter tax rate of
approximately 27.5%
Douglas C. Yearley, Jr., Toll Brothers’ chief
executive officer, stated: “Our double-digit dollar growth in
revenues, contracts and backlog reflects the health of the luxury
new home market. We had another solid spring selling season.
The value of signed contracts, the highest quarter in our
history, rose 18% in dollars on a 6% increase in units. On a
same-store-basis, signed contracts of 9.04 per community were up
16% from last year and the highest for a second quarter since FY
2005. This was our eighth consecutive quarter of
year-over-year same-store contract growth. “Revenues rose 17%
this quarter with increases in every region. California revenues
rose 17% and was our largest region, producing 27% of total
revenues. The North was up 19%, the Mid-Atlantic was up 13%,
the South was up 23%, the West was up 15% and City Living was up
17%. California and the Western region, combined, produced nearly
50% of total revenues, reflecting the strategic diversification of
the Company’s operations over the past decade. With our $6.36
billion backlog, our highest second-quarter backlog ever, we
believe FY 2018 will be a year of significant revenue growth.
“We project third-quarter end community count to
be approximately 290, down from 312 at last year’s third-quarter
end, but up from 283 at FY 2018 second quarter-end. With 75
planned new community openings in the back half of FY 2018, we
project a FYE 2018 community count of approximately 315, compared
to 305 at FYE 2017.
“Based on this projected increase in community
count, our record second-quarter backlog, the quality of our brand
and land portfolio, the financial strength of the affluent home
buyer and the breadth of demographic segments we serve, we believe
FY 2019 will be another year of growth as well.”
Martin P. Connor, Toll Brothers’ chief financial
officer, stated: “We continue to focus on improving our Return on
Equity (ROE) and driving value for shareholders, while maintaining
our profit margins and balance sheet flexibility. In April,
we increased our dividend 38% from $0.08 per quarter to $0.11 per
quarter. We have also repurchased $291.5 million of stock
to-date in FY 2018.
“Our rental apartment business continues to
grow. We now control a pipeline of approximately 16,000 units
in projects completed, in construction, under development or in
approvals. We are expanding this operation beyond our metro
Boston to Washington, D.C. base and now have teams in San
Francisco, Los Angeles, Atlanta, Dallas and Phoenix.”
Robert I. Toll, executive chairman, stated:
“Jobs are plentiful, unemployment is low, wages are rising and
existing home price appreciation is providing the equity for
customers to buy new homes. Home ownership and household
formation rates are increasing, while supply remains
constrained. With our solid land positions and the capital to
expand, we are gaining market share and look forward to continued
growth.
“Just yesterday, we were included once again in
the Fortune 500. I am so proud of the tremendous effort of
the entire Toll Brothers team. This recognition reflects their
dedication to building our brand, and their focus on providing the
highest quality, value and service to our customers.”
Toll Brothers’ financial highlights for the FY
2018 second quarter and six months ended April 30, 2018
(unaudited):
- FY 2018’s second-quarter net income
was $111.8 million, or $0.72 per share diluted, compared to FY
2017’s second-quarter net income of $124.6 million, or $0.73 per
share diluted.
- FY 2018’s second-quarter pre-tax
income was $152.7 million, compared to FY 2017’s second-quarter
pre-tax income of $199.2 million. FY 2018’s second-quarter
results included pre-tax inventory write-downs totaling $13.8
million ($13.3 million attributable to operating communities and
$0.5 million attributable to future communities). FY 2017’s
second-quarter results included pre-tax inventory write-downs of
$4.3 million ($2.94 million attributable to operating communities
and $1.32 million attributable to future communities).
- FY 2018’s second-quarter Income
from unconsolidated entities was $2.6 million, compared to $45.9
million in FY 2017’s second quarter. FY 2017’s second-quarter
Income from unconsolidated entities included $22.6 million from the
sale of condominiums at the Company’s Pierhouse at Brooklyn Bridge
Park joint venture and $20.5 million from the sale of a portion of
the Company’s membership interest in The Morgan at Provost Square,
a joint ventured rental property joint venture in Jersey
City.
- FY 2018’s six-month net income was
$243.9 million, or $1.55 per share diluted, compared to FY 2017’s
six-month net income of $195.1 million, or $1.15 per share
diluted.
- FY 2018’s six-month pre-tax income
was $284.3 million, compared to FY 2017’s six-month pre-tax income
of $309.0 million.
- FY 2018’s six-month pre-tax income results included pre-tax
inventory write-downs totaling $17.7 million ($17.1 million
attributable to operating communities and $0.6 million attributable
to future communities). FY 2017’s six-month results included
pre-tax inventory write-downs of $8.9 million ($6.9 million
attributable to operating communities and $2.0 million attributable
to future communities).
- FY 2018’s second-quarter total
revenues of $1.60 billion, the highest second-quarter total in the
Company’s history, and 1,886 units increased 17% in dollars and 15%
in units, compared to FY 2017’s second-quarter total revenues of
$1.36 billion and 1,638 units. The average price of homes
delivered increased to $847,900, compared to $832,400 in FY 2017’s
second quarter.
- FY 2018’s six-month total revenues
of $2.77 billion and 3,309 units rose 21% in dollars and 17% in
units, compared to FY 2017’s six-month period totals of $2.28
billion and 2,828 units.
- The Company’s FY 2018
second-quarter net signed contracts of $2.38 billion, the highest
quarterly total in the Company’s history, and 2,666 units increased
18% in dollars and 6% in units, compared to FY 2017’s
second-quarter net signed contracts of $2.02 billion and 2,511
units. The average price of net signed contracts was
$893,900, compared to $804,200 in FY 2017’s second quarter, driven
by strong contract results in California.
- On a per-community basis, FY 2018’s
second-quarter net signed contracts were 9.04 units per community,
compared to second-quarter totals of 7.82 in FY 2017, 6.80 in FY
2016, 7.43 in FY 2015, and 7.14 in FY 2014. FY 2018’s
second-quarter results were the highest second quarter since FY
2005.
- The Company’s FY 2018 six-month net
signed contracts of $4.07 billion and 4,488 units increased 25% in
dollars and 11% in units, compared to net signed contracts of $3.26
billion and 4,033 units in FY 2017’s six-month period.
- In FY 2018, second-quarter-end
backlog of $6.36 billion, the highest second-quarter total in the
Company’s history, and 7,030 units increased 27% in dollars and 17%
in units, compared to FY 2017’s second-quarter-end backlog of $5.00
billion and 6,018 units. The average price of homes in
backlog was $904,800, compared to $831,000 at FY 2017’s
second-quarter end.
- FY 2018’s second-quarter gross margin, as a percentage of
revenues, was 18.8%, compared to 21.0% in FY 2017’s second
quarter. FY 2018’s second-quarter Adjusted Gross Margin was
22.5%, compared to 24.3% in FY 2017’s second quarter.
- Interest included in cost of sales
was 2.8% of revenue in FY 2018’s second quarter, compared to 3.0%
in FY 2017’s second quarter.
- SG&A, as a percentage of
revenues, was 10.4%, compared to 10.8% in FY 2017’s second
quarter.
- Income from operations of $134.4
million represented 8.4% of revenues in FY 2018’s second quarter,
compared to $138.2 million and 10.1% of revenues in FY 2017’s
second quarter.
- Income from operations of $218.1
million represented 7.9% of revenues in FY 2018’s six-month period,
compared to $190.0 million and 8.3% of revenues in FY 2017’s
six-month period.
- Other income and Income from
unconsolidated entities in FY 2018’s second quarter totaled $18.4
million, compared to $59.9 million in FY 2017’s second
quarter.
- Other income and Income from
unconsolidated entities in FY 2018’s six-month period totaled $66.2
million, compared to $119.0 million in FY 2017’s six-month
period.
- FY 2018’s second-quarter
cancellation rate (current-quarter cancellations divided by
current-quarter signed contracts) was 5.2%, compared to 3.5%, in FY
2017’s second quarter. As a percentage of beginning-quarter
backlog, FY 2018’s second-quarter cancellation rate was 2.4%,
compared to 1.7% in FY 2017’s second quarter.
- The Company ended its FY 2018
second quarter with $475.1 million in cash, compared to $508.3
million in cash at 2018’s first-quarter end, and $691.3 million in
cash at FY 2017’s second-quarter end. At FY 2018’s
second-quarter end, the Company also had $1.15 billion available
under its $1.295 billion, 20-bank credit facility, which matures in
May 2021.
- During the second quarter of FY
2018, the Company repurchased approximately 1.8 million shares of
its common stock at an average price of $45.44, for a total
purchase price of approximately $81.5 million.
- To-date in FY 2018, the Company has
repurchased approximately 6.2 million shares of its common stock at
an average price of $46.86, for a total purchase price of
approximately $291.5 million.
- The Company’s Stockholders’ Equity at FY 2018’s second-quarter
end was $4.48 billion, compared to $4.45 billion at FY 2017’s
second-quarter end.
- The Company ended its FY 2018 second quarter with a
debt-to-capital ratio of 44.6%, compared to 44.2% at FY 2018’s
first-quarter end and 45.4% at FY 2017’s second-quarter end.
The Company ended FY 2018’s second quarter with a net
debt-to-capital ratio(1) of 40.4%, compared to 40.1% at FY 2018’s
first-quarter end, and 39.8% at FY 2017’s second-quarter end.
- The Company ended FY 2018’s second
quarter with approximately 51,000 lots owned and optioned, compared
to 49,500 one quarter earlier, and 46,600 one year earlier.
Approximately 32,000 of these 51,000 lots were owned, of which
approximately 17,000 lots, including those in backlog, were
substantially improved.
- In the second quarter of FY 2018,
the Company purchased 1,693 lots for $176.9 million.
- The Company ended FY 2018’s second
quarter with 283 selling communities, compared to 295 at FY 2018’s
first-quarter end and 316 at FY 2017’s second-quarter end.
- Based on FY 2018’s
second-quarter-end backlog and the pace of activity at its
communities, the Company now estimates it will deliver between
8,000 and 8,500 homes in FY 2018, compared to previous guidance of
7,800 and 8,600 units. It now believes the average delivered
price for FY 2018 will be between $830,000 and $860,000 per
home. This translates to projected revenues of between $6.64
billion and $7.31 billion in FY 2018, compared to $5.82 billion in
FY 2017.
- The Company now expects FY 2018
Other income and Income from unconsolidated entities of between
$130 million and $160 million.
- The Company reaffirms its previous
guidance for full FY 2018 Adjusted Gross Margin of between 23.75%
and 24.25%, SG&A, as a percentage of revenues, of approximately
10.0% and a FY 2018 tax rate of between 23% and 25%.
- The Company expects FY 2018
third-quarter deliveries of between 2,100 and 2,200 units with an
average price of between $830,000 and $850,000.
- The Company expects its
third-quarter FY 2018 Adjusted Gross Margin to be approximately
23.4% of revenues.
- FY 2018 third-quarter SG&A is
expected to be approximately 9.6% of third quarter revenues.
- The Company’s third-quarter FY 2018
Other income and Income from unconsolidated entities is expected to
be approximately $20 million.
- FY 2018’s third-quarter effective
tax rate is expected to be approximately 27.5%.
(1) See “Reconciliation of Non-GAAP Measures” below for more
information on the calculation of the Company’s net debt-to-capital
ratio.
Toll Brothers will be broadcasting live via the
Investor Relations section of its website, www.tollbrothers.com, a
conference call hosted by CEO Douglas C. Yearley, Jr. at 11:00 a.m.
(EDT) today, May 22, 2018, to discuss these results and its outlook
for FY 2018. To access the call, enter the Toll Brothers
website, click on the Investor Relations page, and select
"Conference Calls.” Participants are encouraged to log on at
least fifteen minutes prior to the start of the presentation to
register and download any necessary software.
The call can be heard live with an online replay
which will follow. MP3 format replays will be available after the
conference call via the "Conference Calls" section of the Investor
Relations portion of the Toll Brothers website.
Toll Brothers, Inc., A FORTUNE 500 Company, is
the nation's leading builder of luxury homes. The Company
began business over fifty years ago in 1967 and became a public
company in 1986. Its common stock is listed on the New York Stock
Exchange under the symbol “TOL.” The Company serves move-up,
empty-nester, active-adult, and second-home buyers, as well as
urban and suburban renters. It operates in 22 states:
Arizona, California, Colorado, Connecticut, Delaware, Florida,
Georgia (Toll Brothers Apartment Living), Idaho, Illinois,
Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey,
New York, North Carolina, Pennsylvania, Texas, Utah, Virginia, and
Washington, as well as in the District of Columbia.
Toll Brothers builds an array of luxury
residential single-family detached, attached home, master planned
resort-style golf, and urban low-, mid-, and high-rise communities,
principally on land it develops and improves. The Company
acquires and develops rental apartment and commercial properties
through Toll Brothers Apartment Living, Toll Brothers Campus
Living, and the affiliated Toll Brothers Realty Trust, and develops
urban low-, mid-, and high-rise for-sale condominiums through Toll
Brothers City Living. The Company operates its own
architectural, engineering, mortgage, title, land development and
land sale, golf course development and management, and landscape
subsidiaries. Toll Brothers also operates its own security
company, TBI Smart Home Solutions, which also provides homeowners
with home automation and technology options. The Company also
operates its own lumber distribution, house component assembly, and
manufacturing operations. Through its Gibraltar Real Estate
Capital joint venture, the Company provides builders and developers
with land banking, non-recourse debt and equity capital.
In 2018, Toll Brothers was named World’s Most
Admired Home Building Company in Fortune magazine’s survey of the
World’s Most Admired Companies, the fourth year in a row it has
been so honored. Toll Brothers was named 2014 Builder of the
Year by Builder magazine, and is honored to have been awarded
Builder of the Year in 2012 by Professional Builder magazine,
making it the first two-time recipient. Toll Brothers proudly
supports the communities in which it builds; among other
philanthropic pursuits, the Company sponsors the Toll Brothers
Metropolitan Opera International Radio Network, bringing opera to
neighborhoods throughout the world. For more information,
visit www.tollbrothers.com.
Toll Brothers discloses information about its
business and financial performance and other matters, and provides
links to its securities filings, notices of investor events, and
earnings and other news releases, on the Investor Relations section
of its website website (tollbrothers.com/investor-relations).
Forward-Looking
StatementsInformation presented herein for the second
quarter ended April 30, 2018 is subject to finalization of the
Company's regulatory filings, related financial and accounting
reporting procedures and external auditor procedures.
This release contains or may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. One can
identify these statements by the fact that they do not relate to
matters of a strictly historical or factual nature and generally
discuss or relate to future events. These statements contain
words such as “anticipate,” “estimate,” “expect,” “project,”
“intend,” “plan,” “believe,” “may,” “can,” “could,” “might,”
“should” and other words or phrases of similar meaning. Such
statements may include, but are not limited to, anticipated
operating results; home deliveries; financial resources and
condition; changes in revenues; changes in profitability; changes
in margins; changes in accounting treatment; cost of revenues;
selling, general and administrative expenses; interest expense;
inventory write-downs; home warranty and construction defect
claims; unrecognized tax benefits; anticipated tax refunds; sales
paces and prices; effects of home buyer cancellations; growth and
expansion; joint ventures in which we are involved; anticipated
results from our investments in unconsolidated entities; the
ability to acquire land and pursue real estate opportunities; the
ability to gain approvals and open new communities; the ability to
sell homes and properties; the ability to deliver homes from
backlog; the ability to secure materials and subcontractors; the
ability to produce the liquidity and capital necessary to expand
and take advantage of opportunities; and legal proceedings,
investigations and claims.
Any or all of the forward-looking statements
included in this release are not guarantees of future performance
and may turn out to be inaccurate. Consequently, actual results may
differ materially from those that might be anticipated from our
forward-looking statements. Therefore, we caution you not to
place undue reliance on our forward-looking statements.
The factors that could cause actual results to
differ from those expressed or implied by our forward-looking
statements include, among others: demand fluctuations in the
housing industry; adverse changes in economic conditions in markets
where we conduct our operations and where prospective purchasers of
our homes live; increases in cancellations of existing agreements
of sale; the competitive environment in which we operate; changes
in interest rates or our credit ratings; the availability of
capital; uncertainties in the capital and securities markets; the
ability of customers to obtain financing for the purchase of homes;
the availability and cost of land for future growth; the ability of
the participants in various joint ventures to honor their
commitments; effects of governmental legislation and regulation;
effects of increased taxes or governmental fees; weather
conditions; the availability and cost of labor and building and
construction materials; the cost of raw materials; the outcome of
various product liability claims, litigation and warranty claims;
the effect of the loss of key management personnel; changes in tax
laws and their interpretation; construction delays; and the
seasonal nature of our business. For a more detailed
discussion of these factors, see the risk factors in the
information under the captions “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in our most recent annual report on Form 10-K filed
with the SEC.
From time to time, forward-looking statements
also are included in our periodic reports on Forms 10-K, 10-Q and
8-K, in press releases, in presentations, on our website and in
other materials released to the public.
Any or all of the forward-looking statements
included in our reports or public statements made by us are not
guarantees of future performance and may turn out to be inaccurate.
This can occur as a result of incorrect assumptions or as a
consequence of known or unknown risks and uncertainties. Many
factors mentioned in our reports or public statements made by us,
such as market conditions, government regulation, and the
competitive environment, will be important in determining our
future performance. Consequently, actual results may differ
materially from those that might be anticipated from our
forward-looking statements.
This discussion is provided as permitted by the
Private Securities Litigation Reform Act of 1995, and all of our
forward-looking statements are expressly qualified in their
entirety by the cautionary statements contained or referenced in
this section.
Forward-looking statements speak only as of the
date they are made. We undertake no obligation to publicly
update any forward-looking statements, whether as a result of new
information, future events or otherwise.
TOLL BROTHERS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE
SHEETS(Amounts in thousands)
|
April 30, 2018 |
|
October 31, 2017 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash
equivalents |
$ |
475,113 |
|
|
$ |
712,829 |
|
Restricted cash and
investments |
1,161 |
|
|
2,482 |
|
Inventory |
7,871,569 |
|
|
7,281,453 |
|
Property, construction
and office equipment, net |
185,676 |
|
|
189,547 |
|
Receivables, prepaid
expenses and other assets |
599,755 |
|
|
542,217 |
|
Mortgage loans held for
sale |
111,811 |
|
|
132,922 |
|
Customer deposits held
in escrow |
135,072 |
|
|
102,017 |
|
Investments in
unconsolidated entities |
466,591 |
|
|
481,758 |
|
Deferred tax assets,
net of valuation allowances |
6,807 |
|
|
|
|
$ |
9,853,555 |
|
|
$ |
9,445,225 |
|
|
|
|
|
LIABILITIES AND
EQUITY |
|
|
|
Liabilities: |
|
|
|
Loans
payable |
$ |
649,299 |
|
|
$ |
637,416 |
|
Senior
notes |
2,860,290 |
|
|
2,462,463 |
|
Mortgage
company loan facility |
103,550 |
|
|
120,145 |
|
Customer
deposits |
469,586 |
|
|
396,026 |
|
Accounts
payable |
324,605 |
|
|
275,223 |
|
Accrued
expenses |
946,243 |
|
|
959,353 |
|
Income
taxes payable |
13,386 |
|
|
57,509 |
|
Total
liabilities |
5,366,959 |
|
|
4,908,135 |
|
|
|
|
|
Equity: |
|
|
|
Stockholders’ Equity |
|
|
|
Common
stock |
1,779 |
|
|
1,779 |
|
Additional paid-in capital |
715,949 |
|
|
720,115 |
|
Retained
earnings |
4,690,272 |
|
|
4,474,064 |
|
Treasury
stock, at cost |
(925,317 |
) |
|
(662,854 |
) |
Accumulated other comprehensive loss |
(1,980 |
) |
|
(1,910 |
) |
Total
stockholders' equity |
4,480,703 |
|
|
4,531,194 |
|
Noncontrolling interest |
5,893 |
|
|
5,896 |
|
Total
equity |
4,486,596 |
|
|
4,537,090 |
|
|
$ |
9,853,555 |
|
|
$ |
9,445,225 |
|
|
|
|
|
|
|
|
|
TOLL BROTHERS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands, except per share
data and percentages)(Unaudited)
|
Six Months Ended April 30, |
|
Three Months Ended April 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
$ |
% |
|
$ |
% |
|
$ |
% |
|
$ |
% |
Revenues |
$ |
2,774,667 |
|
|
|
$ |
2,284,242 |
|
|
|
$ |
1,599,199 |
|
|
|
$ |
1,363,512 |
|
|
Cost of revenues |
2,232,637 |
|
80.5 |
% |
|
1,810,443 |
|
79.3 |
% |
|
1,298,157 |
|
81.2 |
% |
|
1,077,441 |
|
79.0 |
% |
Gross margin |
542,030 |
|
19.5 |
% |
|
473,799 |
|
20.7 |
% |
|
301,042 |
|
18.8 |
% |
|
286,071 |
|
21.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
323,919 |
|
11.7 |
% |
|
283,847 |
|
12.4 |
% |
|
166,652 |
|
10.4 |
% |
|
146,752 |
|
10.8 |
% |
Income from
operations |
218,111 |
|
7.9 |
% |
|
189,952 |
|
8.3 |
% |
|
134,390 |
|
8.4 |
% |
|
139,319 |
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Other: |
|
|
|
|
|
|
|
|
|
|
|
Income
from unconsolidated entities |
41,444 |
|
|
|
92,349 |
|
|
|
2,564 |
|
|
|
45,904 |
|
|
Other
income - net |
24,791 |
|
|
|
26,689 |
|
|
|
15,794 |
|
|
|
13,986 |
|
|
Income before income
taxes |
284,346 |
|
|
|
308,990 |
|
|
|
152,748 |
|
|
|
199,209 |
|
|
Income tax
provision |
40,429 |
|
|
|
113,936 |
|
|
|
40,938 |
|
|
|
74,571 |
|
|
Net income |
$ |
243,917 |
|
|
|
$ |
195,054 |
|
|
|
$ |
111,810 |
|
|
|
$ |
124,638 |
|
|
Per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings |
$ |
1.58 |
|
|
|
$ |
1.20 |
|
|
|
$ |
0.73 |
|
|
|
$ |
0.76 |
|
|
Diluted
earnings |
$ |
1.55 |
|
|
|
$ |
1.15 |
|
|
|
$ |
0.72 |
|
|
|
$ |
0.73 |
|
|
Cash
dividend declared |
$ |
0.19 |
|
|
|
$ |
0.08 |
|
|
|
$ |
0.11 |
|
|
|
$ |
0.08 |
|
|
Weighted-average number
of shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
154,306 |
|
|
|
163,040 |
|
|
|
152,731 |
|
|
|
163,492 |
|
|
Diluted |
157,013 |
|
|
|
170,910 |
|
|
|
155,129 |
|
|
|
171,403 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
14.2 |
% |
|
|
36.9 |
% |
|
|
26.8 |
% |
|
|
37.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLL BROTHERS, INC. AND
SUBSIDIARIESSUPPLEMENTAL
DATA(Amounts in
thousands)(unaudited)
|
Six Months Ended April 30, |
|
Three Months Ended April 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Impairment charges
recognized: |
|
|
|
|
|
|
|
Cost of
sales - land owned/controlled for future communities |
$ |
624 |
|
|
$ |
1,982 |
|
|
$ |
507 |
|
|
$ |
1,321 |
|
Cost of
sales - operating communities |
17,061 |
|
|
6,935 |
|
|
13,325 |
|
|
2,935 |
|
|
$ |
17,685 |
|
|
$ |
8,917 |
|
|
$ |
13,832 |
|
|
$ |
4,256 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
$ |
12,520 |
|
|
$ |
12,123 |
|
|
$ |
6,349 |
|
|
$ |
6,089 |
|
Interest incurred |
$ |
81,269 |
|
|
$ |
85,310 |
|
|
$ |
42,582 |
|
|
$ |
43,536 |
|
Interest expense: |
|
|
|
|
|
|
|
Charged
to cost of sales |
$ |
78,912 |
|
|
$ |
68,486 |
|
|
$ |
45,027 |
|
|
$ |
40,558 |
|
Charged
to other income - net |
1,001 |
|
|
1,995 |
|
|
285 |
|
|
1,953 |
|
|
$ |
79,913 |
|
|
$ |
70,481 |
|
|
$ |
45,312 |
|
|
$ |
42,511 |
|
|
|
|
|
|
|
|
|
Home sites
controlled: |
|
|
|
|
|
|
|
Owned |
31,991 |
|
|
32,561 |
|
|
|
|
|
|
|
Optioned |
19,001 |
|
|
14,031 |
|
|
|
|
|
|
|
|
50,992 |
|
|
46,592 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory at April 30, 2018 and October 31, 2017
consisted of the following (amounts in thousands):
|
April 30, 2018 |
|
October 31, 2017 |
Land and land
development costs |
$ |
1,948,108 |
|
|
$ |
1,861,820 |
|
Construction in
progress |
5,087,716 |
|
|
4,720,926 |
|
Sample homes |
557,229 |
|
|
506,557 |
|
Land deposits and costs
of future development |
252,997 |
|
|
167,445 |
|
Other |
25,519 |
|
|
24,705 |
|
|
$ |
7,871,569 |
|
|
$ |
7,281,453 |
|
|
|
|
|
|
|
|
|
Toll Brothers operates in two segments:
Traditional Home Building and Urban Infill ("City Living").
Within Traditional Home Building, Toll operates in five geographic
segments:
|
|
|
|
|
North: |
|
|
|
Connecticut, Illinois,
Massachusetts, Michigan, Minnesota, New Jersey and New York |
Mid-Atlantic: |
|
|
|
Delaware, Maryland,
Pennsylvania and Virginia |
South:
|
|
|
|
Florida, North Carolina
and Texas |
West:
|
|
|
|
Arizona, Colorado,
Idaho, Nevada, and Washington |
California: |
|
|
|
California |
|
|
|
|
|
|
|
|
Three Months Ended April 30, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
HOME BUILDING
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
338 |
|
|
277 |
|
|
$ |
226.2 |
|
|
$ |
189.3 |
|
|
$ |
669,300 |
|
|
$ |
683,600 |
|
Mid-Atlantic |
398 |
|
|
367 |
|
|
254.9 |
|
|
226.5 |
|
|
640,500 |
|
|
617,100 |
|
South |
319 |
|
|
274 |
|
|
240.7 |
|
|
195.1 |
|
|
754,600 |
|
|
712,100 |
|
West |
532 |
|
|
441 |
|
|
349.4 |
|
|
302.7 |
|
|
656,700 |
|
|
686,400 |
|
California |
270 |
|
|
248 |
|
|
438.4 |
|
|
373.3 |
|
|
1,623,500 |
|
|
1,505,300 |
|
Traditional Home Building |
1,857 |
|
|
1,607 |
|
|
1,509.6 |
|
|
1,286.9 |
|
|
812,900 |
|
|
800,800 |
|
City Living |
29 |
|
|
31 |
|
|
89.6 |
|
|
76.6 |
|
|
3,090,800 |
|
|
2,469,700 |
|
Total
consolidated |
1,886 |
|
|
1,638 |
|
|
$ |
1,599.2 |
|
|
$ |
1,363.5 |
|
|
$ |
847,900 |
|
|
$ |
832,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
363 |
|
|
408 |
|
|
$ |
252.5 |
|
|
$ |
264.2 |
|
|
$ |
695,600 |
|
|
$ |
647,400 |
|
Mid-Atlantic |
548 |
|
|
563 |
|
|
347.8 |
|
|
346.9 |
|
|
634,600 |
|
|
616,200 |
|
South |
466 |
|
|
406 |
|
|
339.5 |
|
|
294.1 |
|
|
728,400 |
|
|
724,500 |
|
West |
660 |
|
|
703 |
|
|
445.1 |
|
|
438.2 |
|
|
674,400 |
|
|
623,400 |
|
California |
564 |
|
|
388 |
|
|
901.2 |
|
|
594.1 |
|
|
1,597,900 |
|
|
1,531,200 |
|
Traditional Home Building |
2,601 |
|
|
2,468 |
|
|
2,286.1 |
|
|
1,937.5 |
|
|
878,900 |
|
|
785,100 |
|
City Living |
65 |
|
|
43 |
|
|
97.1 |
|
|
81.8 |
|
|
1,494,300 |
|
|
1,901,000 |
|
Total
consolidated |
2,666 |
|
|
2,511 |
|
|
$ |
2,383.2 |
|
|
$ |
2,019.3 |
|
|
$ |
893,900 |
|
|
$ |
804,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
BACKLOG |
|
|
|
|
|
|
|
|
|
|
|
North |
1,304 |
|
|
1,175 |
|
|
$ |
905.6 |
|
|
$ |
793.7 |
|
|
$ |
694,500 |
|
|
$ |
675,500 |
|
Mid-Atlantic |
1,285 |
|
|
1,265 |
|
|
839.7 |
|
|
782.9 |
|
|
653,400 |
|
|
618,900 |
|
South |
1,284 |
|
|
1,168 |
|
|
982.2 |
|
|
897.2 |
|
|
765,000 |
|
|
768,200 |
|
West |
1,602 |
|
|
1,427 |
|
|
1,143.6 |
|
|
975.9 |
|
|
713,800 |
|
|
683,900 |
|
California |
1,384 |
|
|
744 |
|
|
2,316.8 |
|
|
1,203.9 |
|
|
1,674,000 |
|
|
1,618,100 |
|
Traditional Home Building |
6,859 |
|
|
5,779 |
|
|
6,187.9 |
|
|
4,653.6 |
|
|
902,200 |
|
|
805,300 |
|
City Living |
171 |
|
|
239 |
|
|
172.5 |
|
|
347.3 |
|
|
1,009,000 |
|
|
1,453,000 |
|
Total
consolidated |
7,030 |
|
|
6,018 |
|
|
$ |
6,360.4 |
|
|
$ |
5,000.9 |
|
|
$ |
904,800 |
|
|
$ |
831,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended April 30, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
HOME BUILDING
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
547 |
|
|
486 |
|
|
$ |
360.5 |
|
|
$ |
335.0 |
|
|
$ |
659,000 |
|
|
$ |
689,300 |
|
Mid-Atlantic |
730 |
|
|
664 |
|
|
461.9 |
|
|
410.5 |
|
|
632,700 |
|
|
618,200 |
|
South |
540 |
|
|
464 |
|
|
412.2 |
|
|
337.3 |
|
|
763,300 |
|
|
726,900 |
|
West |
944 |
|
|
776 |
|
|
607.4 |
|
|
513.8 |
|
|
643,400 |
|
|
662,100 |
|
California |
455 |
|
|
403 |
|
|
725.5 |
|
|
593.1 |
|
|
1,594,500 |
|
|
1,471,700 |
|
Traditional Home Building |
3,216 |
|
|
2,793 |
|
|
2,567.5 |
|
|
2,189.7 |
|
|
798,400 |
|
|
784,000 |
|
City Living |
93 |
|
|
35 |
|
|
207.2 |
|
|
94.5 |
|
|
2,228,000 |
|
|
2,700,000 |
|
Total
consolidated |
3,309 |
|
|
2,828 |
|
|
$ |
2,774.7 |
|
|
$ |
2,284.2 |
|
|
$ |
838,500 |
|
|
$ |
807,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
634 |
|
|
684 |
|
|
$ |
450.0 |
|
|
$ |
435.9 |
|
|
$ |
709,800 |
|
|
$ |
637,300 |
|
Mid-Atlantic |
872 |
|
|
943 |
|
|
559.9 |
|
|
583.5 |
|
|
642,100 |
|
|
618,800 |
|
South |
769 |
|
|
672 |
|
|
578.5 |
|
|
498.1 |
|
|
752,300 |
|
|
741,200 |
|
West |
1,149 |
|
|
1,055 |
|
|
779.0 |
|
|
684.4 |
|
|
678,000 |
|
|
648,700 |
|
California |
952 |
|
|
614 |
|
|
1,547.2 |
|
|
929.3 |
|
|
1,625,200 |
|
|
1,513,500 |
|
Traditional Home Building |
4,376 |
|
|
3,968 |
|
|
3,914.6 |
|
|
3,131.2 |
|
|
894,600 |
|
|
789,100 |
|
City Living |
112 |
|
|
65 |
|
|
159.0 |
|
|
131.1 |
|
|
1,419,600 |
|
|
2,016,900 |
|
Total
consolidated |
4,488 |
|
|
4,033 |
|
|
$ |
4,073.6 |
|
|
$ |
3,262.3 |
|
|
$ |
907,700 |
|
|
$ |
808,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated entities:
Information related to revenues and contracts of
entities in which we have an interest for the three-month and
six-month periods ended April 30, 2018 and 2017, and for
backlog at April 30, 2018 and 2017 is as follows:
|
|
|
|
|
|
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Three months ended
April 30, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
26 |
|
|
56 |
|
|
$ |
35.4 |
|
|
$ |
153.2 |
|
|
$ |
1,360,000 |
|
|
$ |
2,736,100 |
|
Contracts |
44 |
|
|
41 |
|
|
$ |
69.6 |
|
|
$ |
36.5 |
|
|
$ |
1,583,000 |
|
|
$ |
889,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended April
30, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
54 |
|
|
143 |
|
|
$ |
67.9 |
|
|
$ |
370.6 |
|
|
$ |
1,257,700 |
|
|
$ |
2,591,700 |
|
Contracts |
118 |
|
|
69 |
|
|
$ |
191.8 |
|
|
$ |
79.9 |
|
|
$ |
1,625,100 |
|
|
$ |
1,158,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog at April
30, |
180 |
|
|
110 |
|
|
$ |
291.3 |
|
|
$ |
180.8 |
|
|
$ |
1,618,300 |
|
|
$ |
1,643,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP
MEASURES
This press release contains, and Company
management’s discussion of the results presented in this press
release may include, information about the Company’s Adjusted Gross
Margin and the Company’s net debt-to-capital ratio.
These two measures are non-GAAP financial
measures which are not calculated in accordance with generally
accepted accounting principles (“GAAP”). These non-GAAP financial
measures should not be considered a substitute for, or superior to,
the comparable GAAP financial measures, and may be different from
non-GAAP measures used by other companies in the homebuilding
business.
The Company’s management considers these
non-GAAP financial measures as we make operating and strategic
decisions and evaluate our performance, including against other
homebuilders that may use similar non-GAAP financial measures. The
Company’s management believes these non-GAAP financial measures are
useful to investors in understanding our operations and leverage
and may be helpful in comparing the Company to other homebuilders
to the extent they provide similar information.
Adjusted Gross MarginThe following table
reconciles the Company’s gross margin as a percentage of revenues
(calculated in accordance with GAAP) to the Company’s Adjusted
Gross Margin (a non-GAAP financial measure). Adjusted Gross
Margin is calculated as (i) gross margin plus interest recognized
in cost of sales plus inventory write-downs divided by (ii)
revenues.
Adjusted Gross Margin
Reconciliation(Amounts in thousands, except
percentages)
|
|
Three Months Ended April 30, |
|
|
2018 |
|
2017 |
Revenues |
$ |
1,599,199 |
|
|
$ |
1,363,512 |
|
Cost of
revenues |
1,298,157 |
|
|
1,077,441 |
|
Gross
margin |
301,042 |
|
|
286,071 |
|
Add: |
Interest recognized in
cost of sales |
45,027 |
|
|
40,558 |
|
|
Inventory
write-downs |
13,832 |
|
|
4,256 |
|
Adjusted
gross margin |
$ |
359,901 |
|
|
$ |
330,885 |
|
|
|
|
|
|
Gross
margin as a percentage of revenues |
18.8 |
% |
|
21.0 |
% |
|
|
|
|
|
Adjusted
Gross Margin |
22.5 |
% |
|
24.3 |
% |
|
|
|
|
|
The Company’s management believes Adjusted Gross Margin is a
useful financial measure to investors because it allows them to
evaluate the performance of our homebuilding operations without the
often varying effects of capitalized interest costs and inventory
impairments. The use of Adjusted Gross Margin also assists the
Company’s management in assessing the profitability of our
homebuilding operations and making strategic decisions regarding
community location and product mix.
Forward-looking Adjusted Gross MarginThe Company has not
provided projected third quarter and full year fiscal 2018 gross
margin or a GAAP reconciliation for forward-looking Adjusted Gross
Margin because such measure cannot be provided without unreasonable
efforts on a forward-looking basis, since inventory write-downs are
based on future activity and observation and therefore cannot be
projected for the third quarter or the full fiscal year. The
variability of these charges may have a potentially unpredictable,
and potentially significant, impact on our third quarter and full
year fiscal 2018 gross margin.
Net Debt-to-Capital RatioThe following table
reconciles the Company’s ratio of debt to capital (calculated in
accordance with GAAP) to the Company’s net debt-to-capital ratio (a
non-GAAP financial measure). The net debt-to-capital ratio is
calculated as (i) total debt minus mortgage warehouse loans minus
cash and cash equivalents divided by (ii) total debt minus mortgage
warehouse loans minus cash and cash equivalents plus stockholders’
equity.
Net Debt-to-Capital Ratio
Reconciliation(Amounts in thousands, except
percentages)
|
|
April 30, 2018 |
|
April 30, 2017 |
|
January 31, 2018 |
Loans
payable |
$ |
649,299 |
|
|
$ |
637,931 |
|
|
$ |
631,791 |
|
Senior
notes |
2,860,290 |
|
|
2,993,882 |
|
|
2,859,689 |
|
Mortgage
company loan facility |
103,550 |
|
|
61,129 |
|
|
38,344 |
|
Total
debt |
3,613,139 |
|
|
3,692,942 |
|
|
3,529,824 |
|
Total
stockholders' equity |
4,480,703 |
|
|
4,448,088 |
|
|
4,458,994 |
|
Total
capital |
$ |
8,093,842 |
|
|
$ |
8,141,030 |
|
|
$ |
7,988,818 |
|
Ratio of
debt-to-capital |
44.6 |
% |
|
45.4 |
% |
|
44.2 |
% |
|
|
|
|
|
|
|
Total
debt |
$ |
3,613,139 |
|
|
$ |
3,692,942 |
|
|
$ |
3,529,824 |
|
Less: |
Mortgage company loan
facility |
(103,550 |
) |
|
(61,129 |
) |
|
(38,344 |
) |
|
Cash and cash
equivalents |
(475,113 |
) |
|
(691,266 |
) |
|
(508,277 |
) |
Total net
debt |
3,034,476 |
|
|
2,940,547 |
|
|
2,983,203 |
|
Total
stockholders' equity |
4,480,703 |
|
|
4,448,088 |
|
|
4,458,994 |
|
Total net
capital |
$ |
7,515,179 |
|
|
$ |
7,388,635 |
|
|
$ |
7,442,197 |
|
Net
debt-to-capital ratio |
40.4 |
% |
|
39.8 |
% |
|
40.1 |
% |
|
|
|
|
|
|
|
|
|
The Company’s management uses the net
debt-to-capital ratio as an indicator of its overall leverage and
believes it is a useful financial measure to investors in
understanding the leverage employed in the Company’s
operations.
CONTACT: Frederick N. Cooper (215)
938-8312fcooper@tollbrothers.com
A photo accompanying this announcement is available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/2c7f9d28-a914-4fb8-b4d6-7ff339635f19
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