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, 2019.
FY 2019’s Second Quarter Financial
Highlights (Compared to FY 2018’s Second Quarter):
- Net income and earnings per share were $129.3 million and $0.87
per share diluted, compared to net income of $111.8 million and
$0.72 per share diluted in FY 2018’s second quarter.
- Pre-tax income grew 15% to $176.2 million, compared to $152.7
million in FY 2018’s second quarter.
- Impairments were $19.4 million compared to $13.8 million.
- Home sales revenues were $1.71 billion, up 7%; home building
deliveries were 1,911, up 1%.
- Net signed contract value was $2.00 billion, down 16%; contract
units were 2,424, down 9%.
- Backlog value at second-quarter end was $5.66 billion, down
11%; units in backlog totaled 6,467, down 8%.
- Home sales gross margin was 19.7%; Adjusted Home Sales Gross
Margin, which excludes interest and inventory write-downs
(“Adjusted Home Sales Gross Margin”), was 23.5%.
- SG&A, as a percentage of home sales revenues, was
10.4%.
- Income from operations was 9.4% of total revenues.
- Other income and Income from unconsolidated entities was $15.7
million.
Third Quarter and FY 2019 Financial
Guidance:
- Third quarter deliveries of between 1,800 and 2,000 units with
an average price of between $855,000 and $880,000.
- FY 2019 deliveries of between 7,700 and 8,100 units with an
average price of between $855,000 and $880,000.
- Third quarter Adjusted Home Sales Gross Margin of approximately
22.5%.
- FY 2019 Adjusted Home Sales Gross Margin of approximately
23.0%.
- Third quarter SG&A, as a percentage of home sales revenues,
of approximately 10.7%.
- FY 2019 SG&A, as a percentage of home sales revenues, of
approximately 10.4%.
- Third quarter Other income, Income from unconsolidated
entities, and land sales gross profit of approximately $13
million.
- FY 2019 Other income, Income from unconsolidated entities, and
land sales gross profit of approximately $100 million.
- Third quarter and fourth quarter tax rate of approximately
27.5%.
Douglas C. Yearley, Jr., Toll Brothers’ chairman
and chief executive officer, stated: “We are pleased with this
quarter’s results, which exceeded our expectations for revenues,
margins, and profits. Revenues, net income and earnings per
share rose 7%, 16%, and 21%, respectively, compared to one year
ago.
“We are encouraged by the improvement in demand
as the quarter progressed. FY 2019’s April contracts
surpassed FY 2018’s April on both a gross and per-community
basis. Although the Spring selling season bloomed late, it
built momentum. We view this as a positive sign for the
overall health of the new home market.
“We continue to look for opportunities to grow
and leverage our industry-leading brand as we expand our geographic
footprint, product lines, and price points. Yesterday, we announced
our entry into metro Atlanta with the acquisition of Sharp
Residential. Atlanta was the largest U.S. housing market
where we did not operate, and Sharp was one of Atlanta’s largest
private home builders. This quarter we also opened our first
communities in Salt Lake City, Utah and Portland, Oregon, which are
markets we have entered organically and where we are already seeing
healthy buyer interest.
“According to recent reports, builder sentiment
in May rose to a 7-month high and single-family housing starts in
April were up 6.2% versus March. The industry is being buoyed
by low interest rates, a strong employment picture, and a
still-limited supply of new homes in many markets. With a
positive macroeconomic backdrop, record low unemployment, continued
wage growth, and solid consumer confidence, we are optimistic about
the opportunities ahead.”
Martin P. Connor, Toll Brothers’ chief financial
officer, stated: “In our second quarter, we delivered strong home
building revenues and profit margins. Our guidance for adjusted
home sales gross margin during the balance of the year reflects the
slower demand and rising incentives associated with the challenging
sales environment of the fall and winter as well as changes in
mix.
“We remain well positioned to take advantage of
strategic opportunities. We ended the quarter with
significant liquidity and conservative leverage. We had
$924.4 million in cash and cash equivalents and $1.12 billion
available under our $1.295 billion, 20-bank revolving credit
facility. Our debt-to-capital ratio was 42.5% and our net
debt-to-capital ratio was 34.6%. Last Thursday, S&P
Global Ratings upgraded their outlook on our credit rating from
stable to positive. We believe this upgrade reflects positively on
our strategy to balance growth with prudent financial
management.”
Toll Brothers’ financial highlights for the FY
2019 second quarter and six months ended April 30, 2019
(unaudited):
- FY 2019’s second quarter net income
and earnings per share increased 16% and 21%, respectively, to
$129.3 million, or $0.87 per share diluted, compared to FY 2018’s
second quarter net income of $111.8 million, or $0.72 per share
diluted.
- FY 2019’s second quarter pre-tax
income was $176.2 million, compared to FY 2018’s second quarter
pre-tax income of $152.7 million. FY 2019’s second quarter results
included pre-tax inventory impairments totaling $19.4
million. FY 2018’s second quarter results included pre-tax
inventory impairments of $13.8 million
- FY 2019’s six-month net income was
$241.4 million, or $1.63 per share diluted, compared to FY 2018’s
six-month net income of $243.9 million, or $1.55 per share
diluted.
- FY 2019’s six-month pre-tax income
was $327.6 million, compared to FY 2018’s six-month pre-tax income
of $284.3 million.
- FY 2019’s six-month pre-tax income results included pre-tax
inventory write-downs totaling $27.0 million ($23.3 million
attributable to operating communities and $3.7 million attributable
to future communities). FY 2018’s six-month pre-tax income
results included inventory write-downs of $17.7 million ($17.1
million attributable to operating communities and $0.6 million
attributable to future communities).
- FY 2019’s second quarter home sales
revenues of $1.71 billion and 1,911 units rose 7% in dollars and 1%
in units, compared to FY 2018’s second quarter totals of $1.60
billion and 1,886 units.
- FY 2019’s six-month total revenues
of $3.03 billion and 3,441 units rose 9% in dollars and 4% in
units, compared to FY 2018’s six-month period totals of $2.77
billion and 3,309 units.
- The Company’s FY 2019 second
quarter net signed contracts of 2,424 units and $2.00 billion,
decreased by 9% in units and 16% in dollars, compared to FY 2018’s
second quarter net contracts of 2,666 units and $2.38 billion.
- The Company’s FY 2019 six-month net
signed contracts of $3.17 billion and 3,803 units decreased 22% in
dollars and 15% in units, compared to net signed contracts of $4.07
billion and 4,488 units in FY 2018’s six-month period.
- In FY 2019, second quarter-end
backlog of $5.66 billion and 6,467 units decreased 11% in dollars
and 8% in units, compared to FY 2018’s second quarter-end backlog
of $6.36 billion and 7,030 units. The average price of homes in
backlog was $875,500, compared to $904,800 at FY 2018’s second
quarter end.
- FY 2019’s second quarter home sales
gross margin was 19.7%, compared to 18.8% in FY 2018’s second
quarter. FY 2019’s second quarter Adjusted Home Sales Gross
Margin was 23.5%, compared to FY 2018’s second quarter Adjusted
Home Sales Gross Margin of 22.5%.
- FY 2019’s second quarter land sales
gross profit was $1.1 million. Due to the adoption of
Accounting Standards Update No. 2014-09 “Revenue from Contracts
with Customers”, land sales gross profit is presented separately.
In prior years, land sales gross profit was included in Other
income.
- Interest included in cost of sales
was 2.6% of revenue in FY 2019’s second quarter, compared to 2.8%
in FY 2018’s second quarter.
- SG&A, as a percentage of home
sales revenues, was 10.4% in FY 2019’s second quarter, compared to
10.4% in FY 2018’s second quarter.
- Income from operations of $160.5
million represented 9.4% of total revenues in FY 2019’s second
quarter, compared to $134.4 million and 8.4% of revenues in FY
2018’s second quarter.
- Income from operations of $284.9
million represented 9.3% of total revenues in FY 2019’s six-month
period, compared to $218.1 million and 7.9% of revenues in FY
2018’s six-month period.
- Other income and Income from
unconsolidated entities in FY 2019’s second quarter totaled $15.7
million, compared to $18.4 million in FY 2018’s second
quarter.
- Other income and Income from
unconsolidated entities in FY 2019’s six-month period totaled $42.7
million, compared to $66.2 million in FY 2018’s six-month
period.
- FY 2019’s second-quarter
cancellation rate (current quarter cancellations divided by current
quarter signed contracts) was 5.3%, compared to 5.6%, in FY 2018’s
second quarter. As a percentage of beginning quarter backlog,
FY 2019’s second quarter cancellation rate was 2.3%, compared to
2.5% in FY 2018’s second quarter.
- The Company ended its FY 2019
second quarter with $924.4 million in cash and cash equivalents,
compared to $801.7 million at FY 2019’s first-quarter end, and
$475.1 million at FY 2018’s second-quarter end. At FY 2019’s
second-quarter end, the Company also had $1.12 billion available
under its $1.295 billion, 20-bank revolving credit facility, which
matures in May 2021.
- During the second quarter of FY 2019, the Company repurchased
approximately 2,700 shares at an average price per share of $36.95,
for an aggregate purchase price of approximately $0.1
million.
- To-date in FY 2019, the Company has
repurchased approximately 788,000 shares of its common stock at an
average price of $32.04, for a total purchase price of
approximately $25.2 million.
- On April 26, 2019, the Company paid its quarterly dividend of
$0.11 per share to shareholders of record at the close of business
on April 12, 2019.
- Stockholders’ Equity at FY 2019’s second-quarter end was $4.94
billion, compared to $4.48 billion at FY 2018’s second-quarter
end. Book value per share for FY 2019’s second-quarter end
was $33.84 per share, compared to $29.50 at FY 2018’s
second-quarter end.
- The Company ended its FY 2019 second quarter with a
debt-to-capital ratio of 42.5%, compared to 42.7% at FY 2019’s
first-quarter end and 44.6% at FY 2018’s second-quarter end.
The Company ended FY 2019’s second quarter with a net
debt-to-capital ratio (1) of 34.6%, compared to 36.0% at FY 2019’s
first-quarter end, and 40.4% at FY 2018’s second-quarter end.
- The Company ended FY 2019’s second
quarter with approximately 54,500 lots owned and optioned, compared
to 54,000 one quarter earlier, and 51,000 one year earlier.
Approximately 33,500 of these lots were owned, of which
approximately 16,000 lots, including those in backlog, were
substantially improved.
- In the second quarter of FY 2019, the Company spent
approximately $218.2 million on land to purchase approximately
2,100 lots.
- The Company ended FY 2019’s second
quarter with 311 selling communities, compared to 317 at FY 2019’s
first-quarter end and 283 at FY 2018’s second-quarter end.
- Based on FY 2019’s
second-quarter-end backlog and the pace of activity at its
communities, the Company now estimates it will deliver between
7,700 and 8,100 homes in FY 2019. It believes the average
delivered price for FY 2019 will be between $855,000 and $880,000
per home. This translates to projected home sales revenues of
between $6.58 billion and $7.13 billion in FY 2019, compared to
$7.14 billion in FY 2018.
- The Company expects FY 2019 third
quarter deliveries of between 1,800 and 2,000 units with an average
price of between $855,000 and $880,000.
- The Company expects its third
quarter FY 2019 Adjusted Home Sales Gross Margin to be
approximately 22.5% of home sales revenues.
- The Company expects its FY 2019
Adjusted Home Sales Gross Margin to be approximately 23.0% of home
sales revenues.
- FY 2019 third quarter SG&A is
expected to be approximately 10.7% of third quarter home sales
revenues.
- FY 2019 SG&A is expected to be
approximately 10.4% of FY 2019 home sales revenues.
- The Company’s third quarter FY 2019
Other income, Income from unconsolidated entities, and land sales
gross profit is expected to total approximately $13 million.
- FY 2019 Other income, Income from
unconsolidated entities, and land sales gross profit is expected to
total approximately $100 million.
- The FY 2019 third quarter and FY
2019 fourth quarter effective tax rates are expected to be
approximately 27.5%.
- 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 Chairman & CEO Douglas C. Yearley,
Jr. at 11:00 a.m. (EDT) Wednesday, May 22, 2019, to discuss these
results and its outlook for the remainder of FY 2019. To access the
call, enter the Toll Brothers website, click on the Investor
Relations page, and select "Events & Presentations.”
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.
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, Idaho, Illinois, Maryland,
Massachusetts, Michigan, Nevada, New Jersey, New York, North
Carolina, Oregon, 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 2019, Toll Brothers was named World’s Most Admired Home
Building Company in Fortune magazine’s survey of the World’s Most
Admired Companies, the fifth 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 (investors.tollbrothers.com).
Forward-Looking
StatementsInformation presented herein for the second
quarter ended April 30, 2019 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, information related
to market conditions, demand for our homes, 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 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.
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.
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 30,2019 |
|
October 31,2018 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
924,448 |
|
|
$ |
1,182,195 |
|
Inventory |
7,790,840 |
|
|
7,598,219 |
|
Property, construction and
office equipment, net |
289,186 |
|
|
193,281 |
|
Receivables, prepaid expenses
and other assets |
659,768 |
|
|
550,778 |
|
Mortgage loans held for
sale |
124,940 |
|
|
170,731 |
|
Customer deposits held in
escrow |
97,462 |
|
|
117,573 |
|
Investments in unconsolidated
entities |
390,085 |
|
|
431,813 |
|
|
$ |
10,276,729 |
|
|
$ |
10,244,590 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Liabilities: |
|
|
|
Loans payable |
$ |
1,027,408 |
|
|
$ |
686,801 |
|
Senior notes |
2,512,404 |
|
|
2,861,375 |
|
Mortgage company loan facility |
110,012 |
|
|
150,000 |
|
Customer deposits |
419,479 |
|
|
410,864 |
|
Accounts payable |
318,346 |
|
|
362,098 |
|
Accrued expenses |
890,668 |
|
|
973,581 |
|
Income taxes payable |
12,172 |
|
|
30,959 |
|
Total liabilities |
5,290,489 |
|
|
5,475,678 |
|
|
|
|
|
Equity: |
|
|
|
Stockholders’ Equity |
|
|
|
Common stock |
1,779 |
|
|
1,779 |
|
Additional paid-in capital |
721,311 |
|
|
727,053 |
|
Retained earnings |
5,352,424 |
|
|
5,161,551 |
|
Treasury stock, at cost |
(1,135,166 |
) |
|
(1,130,878 |
) |
Accumulated other comprehensive income |
806 |
|
|
694 |
|
Total stockholders' equity |
4,941,154 |
|
|
4,760,199 |
|
Noncontrolling interest |
45,086 |
|
|
8,713 |
|
Total equity |
4,986,240 |
|
|
4,768,912 |
|
|
$ |
10,276,729 |
|
|
$ |
10,244,590 |
|
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, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
$ |
% |
|
$ |
% |
|
$ |
% |
|
$ |
% |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Home sales |
$ |
3,031,365 |
|
|
|
$ |
2,774,667 |
|
|
|
$ |
1,712,057 |
|
|
|
$ |
1,599,199 |
|
|
Land sales (1) |
47,910 |
|
|
|
|
|
|
4,037 |
|
|
|
|
|
|
3,079,275 |
|
|
|
2,774,667 |
|
|
|
1,716,094 |
|
|
|
1,599,199 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
Home sales |
2,416,592 |
|
79.7 |
% |
|
2,232,637 |
|
80.5 |
% |
|
1,374,347 |
|
80.3 |
% |
|
1,298,157 |
|
81.2 |
% |
Land sales (1) |
37,174 |
|
77.6 |
% |
|
|
|
|
2,921 |
|
72.4 |
% |
|
|
|
|
2,453,766 |
|
|
|
2,232,637 |
|
|
|
1,377,268 |
|
|
|
1,298,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin - home sales |
614,773 |
|
20.3 |
% |
|
542,030 |
|
19.5 |
% |
|
337,710 |
|
19.7 |
% |
|
301,042 |
|
18.8 |
% |
Gross margin - land sales
(1) |
10,736 |
|
22.4 |
% |
|
|
|
|
1,116 |
|
27.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
$ |
340,609 |
|
11.2 |
% |
|
$ |
323,919 |
|
11.7 |
% |
|
$ |
178,371 |
|
10.4 |
% |
|
$ |
166,652 |
|
10.4 |
% |
Income from operations |
284,900 |
|
9.3 |
% |
|
218,111 |
|
7.9 |
% |
|
160,455 |
|
9.4 |
% |
|
134,390 |
|
8.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Other: |
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated entities |
10,559 |
|
|
|
41,444 |
|
|
|
4,419 |
|
|
|
2,564 |
|
|
Other income - net |
32,146 |
|
|
|
24,791 |
|
|
|
11,285 |
|
|
|
15,794 |
|
|
Income before income
taxes |
327,605 |
|
|
|
284,346 |
|
|
|
176,159 |
|
|
|
152,748 |
|
|
Income tax provision |
86,231 |
|
|
|
40,429 |
|
|
|
46,835 |
|
|
|
40,938 |
|
|
Net income |
$ |
241,374 |
|
|
|
$ |
243,917 |
|
|
|
$ |
129,324 |
|
|
|
$ |
111,810 |
|
|
Per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings |
$ |
1.65 |
|
|
|
$ |
1.58 |
|
|
|
$ |
0.88 |
|
|
|
$ |
0.73 |
|
|
Diluted earnings |
$ |
1.63 |
|
|
|
$ |
1.55 |
|
|
|
$ |
0.87 |
|
|
|
$ |
0.72 |
|
|
Cash dividend declared |
$ |
0.22 |
|
|
|
$ |
0.19 |
|
|
|
$ |
0.11 |
|
|
|
$ |
0.11 |
|
|
Weighted-average number of
shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
146,687 |
|
|
|
154,306 |
|
|
|
146,622 |
|
|
|
152,731 |
|
|
Diluted |
148,081 |
|
|
|
157,013 |
|
|
|
148,129 |
|
|
|
155,129 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
26.3 |
% |
|
|
14.2 |
% |
|
|
26.6 |
% |
|
|
26.8 |
% |
|
(1) On November 1, 2018, we adopted
Accounting Standard Update No. 2014-09, “Revenue from Contracts
with Customers” (“ASU 2014-09”). Upon adoption, land sale
activity is presented as part of income from operations where
previously it was included in "Other income - net." Prior
periods are not restated. During the six months ended April
30, 2018, we recognized land sales revenues and land sales cost of
revenues of $41.4 million and $38.1 million, respectively.
During the three months ended April 30, 2018, we recognized land
sales revenues and land sales cost of revenues of $34.4 million and
$31.8 million, respectively.
TOLL BROTHERS, INC. AND
SUBSIDIARIESSUPPLEMENTAL
DATA(Amounts in
thousands)(unaudited)
|
Six Months Ended April 30, |
|
Three Months Ended April 30, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Impairment charges
recognized: |
|
|
|
|
|
|
|
Cost of home sales - land owned/controlled for future
communities |
$ |
3,676 |
|
|
$ |
624 |
|
|
$ |
1,899 |
|
|
$ |
507 |
|
Cost of home sales - operating communities |
23,280 |
|
|
17,061 |
|
|
17,495 |
|
|
13,325 |
|
|
$ |
26,956 |
|
|
$ |
17,685 |
|
|
$ |
19,394 |
|
|
$ |
13,832 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
$ |
33,314 |
|
|
$ |
12,520 |
|
|
$ |
17,645 |
|
|
$ |
6,349 |
|
Interest incurred |
$ |
87,862 |
|
|
$ |
81,269 |
|
|
$ |
43,440 |
|
|
$ |
42,582 |
|
Interest expense: |
|
|
|
|
|
|
|
Charged to home sales cost of sales |
$ |
79,227 |
|
|
$ |
78,912 |
|
|
$ |
44,786 |
|
|
$ |
45,027 |
|
Charged to land sales cost of sales |
635 |
|
|
|
|
283 |
|
|
|
Charged to other income - net |
|
|
1,001 |
|
|
|
|
285 |
|
|
$ |
79,862 |
|
|
$ |
79,913 |
|
|
$ |
45,069 |
|
|
$ |
45,312 |
|
|
|
|
|
|
|
|
|
Home sites controlled: |
April 30,2019 |
|
April 30,2018 |
|
|
|
|
Owned |
33,497 |
|
|
31,991 |
|
|
|
|
|
Optioned |
21,096 |
|
|
19,001 |
|
|
|
|
|
|
54,593 |
|
|
50,992 |
|
|
|
|
|
Inventory at April 30, 2019 and October 31, 2018
consisted of the following (amounts in thousands):
|
April 30,2019 |
|
October 31,2018 |
Land and land development
costs |
$ |
2,201,475 |
|
|
$ |
1,917,354 |
|
Construction in progress |
4,900,353 |
|
|
4,917,917 |
|
Sample homes |
421,271 |
|
|
493,037 |
|
Land deposits and costs of
future development |
267,741 |
|
|
245,114 |
|
Other |
|
|
24,797 |
|
|
$ |
7,790,840 |
|
|
$ |
7,598,219 |
|
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, New Jersey and New
YorkMid-Atlantic:
Delaware, Maryland, Pennsylvania and
VirginiaSouth:
Florida, North Carolina and
TexasWest:
Arizona, Colorado, Idaho, Nevada,
Oregon, Utah and
WashingtonCalifornia:
California
|
Three Months Ended April 30, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
316 |
|
|
338 |
|
|
$ |
221.9 |
|
|
$ |
226.2 |
|
|
$ |
702,200 |
|
|
$ |
669,300 |
|
Mid-Atlantic |
387 |
|
|
398 |
|
|
255.7 |
|
|
254.9 |
|
|
660,700 |
|
|
640,500 |
|
South |
380 |
|
|
319 |
|
|
284.4 |
|
|
240.7 |
|
|
748,300 |
|
|
754,600 |
|
West |
488 |
|
|
532 |
|
|
364.9 |
|
|
349.4 |
|
|
747,700 |
|
|
656,700 |
|
California |
268 |
|
|
270 |
|
|
500.5 |
|
|
438.4 |
|
|
1,867,700 |
|
|
1,623,500 |
|
Traditional Home Building |
1,839 |
|
|
1,857 |
|
|
1,627.4 |
|
|
1,509.6 |
|
|
884,900 |
|
|
812,900 |
|
City Living |
72 |
|
|
29 |
|
|
84.1 |
|
|
89.6 |
|
|
1,167,700 |
|
|
3,090,800 |
|
Corporate and other |
|
|
|
|
0.6 |
|
|
|
|
|
|
|
Total home sales |
1,911 |
|
|
1,886 |
|
|
1,712.1 |
|
|
1,599.2 |
|
|
$ |
895,900 |
|
|
$ |
847,900 |
|
Land sales |
|
|
|
|
4.0 |
|
|
|
|
|
|
|
Total consolidated |
|
|
|
|
$ |
1,716.1 |
|
|
$ |
1,599.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
407 |
|
|
363 |
|
|
$ |
285.5 |
|
|
$ |
252.5 |
|
|
$ |
701,400 |
|
|
$ |
695,600 |
|
Mid-Atlantic |
530 |
|
|
548 |
|
|
346.5 |
|
|
347.8 |
|
|
653,700 |
|
|
634,600 |
|
South |
498 |
|
|
466 |
|
|
348.1 |
|
|
339.5 |
|
|
698,900 |
|
|
728,400 |
|
West |
643 |
|
|
660 |
|
|
454.4 |
|
|
445.1 |
|
|
706,800 |
|
|
674,400 |
|
California |
305 |
|
|
564 |
|
|
505.7 |
|
|
901.2 |
|
|
1,657,900 |
|
|
1,597,900 |
|
Traditional Home Building |
2,383 |
|
|
2,601 |
|
|
1,940.2 |
|
|
2,286.1 |
|
|
814,200 |
|
|
878,900 |
|
City Living |
41 |
|
|
65 |
|
|
63.1 |
|
|
97.1 |
|
|
1,538,900 |
|
|
1,494,300 |
|
Total consolidated |
2,424 |
|
|
2,666 |
|
|
$ |
2,003.3 |
|
|
$ |
2,383.2 |
|
|
$ |
826,400 |
|
|
$ |
893,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
BACKLOG |
|
|
|
|
|
|
|
|
|
|
|
North |
1,193 |
|
|
1,304 |
|
|
$ |
834.8 |
|
|
$ |
905.6 |
|
|
$ |
699,700 |
|
|
$ |
694,500 |
|
Mid-Atlantic |
1,327 |
|
|
1,285 |
|
|
865.5 |
|
|
839.7 |
|
|
652,200 |
|
|
653,400 |
|
South |
1,271 |
|
|
1,284 |
|
|
955.5 |
|
|
982.2 |
|
|
751,800 |
|
|
765,000 |
|
West |
1,472 |
|
|
1,602 |
|
|
1,088.3 |
|
|
1,143.6 |
|
|
739,300 |
|
|
713,800 |
|
California |
1,110 |
|
|
1,384 |
|
|
1,789.9 |
|
|
2,316.8 |
|
|
1,612,600 |
|
|
1,674,000 |
|
Traditional Home Building |
6,373 |
|
|
6,859 |
|
|
5,534.0 |
|
|
6,187.9 |
|
|
868,400 |
|
|
902,200 |
|
City Living |
94 |
|
|
171 |
|
|
127.7 |
|
|
172.5 |
|
|
1,358,400 |
|
|
1,009,000 |
|
Total consolidated |
6,467 |
|
|
7,030 |
|
|
$ |
5,661.7 |
|
|
$ |
6,360.4 |
|
|
$ |
875,500 |
|
|
$ |
904,800 |
|
|
Six Months Ended April 30, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
553 |
|
|
547 |
|
|
$ |
391.4 |
|
|
$ |
360.5 |
|
|
$ |
707,800 |
|
|
$ |
659,000 |
|
Mid-Atlantic |
692 |
|
|
730 |
|
|
461.4 |
|
|
461.9 |
|
|
666,800 |
|
|
632,700 |
|
South |
661 |
|
|
540 |
|
|
492.5 |
|
|
412.2 |
|
|
745,100 |
|
|
763,300 |
|
West |
922 |
|
|
944 |
|
|
665.3 |
|
|
607.4 |
|
|
721,600 |
|
|
643,400 |
|
California |
477 |
|
|
455 |
|
|
870.6 |
|
|
725.5 |
|
|
1,825,200 |
|
|
1,594,500 |
|
Traditional Home Building |
3,305 |
|
|
3,216 |
|
|
2,881.2 |
|
|
2,567.5 |
|
|
871,800 |
|
|
798,400 |
|
City Living |
136 |
|
|
93 |
|
|
152.7 |
|
|
207.2 |
|
|
1,122,800 |
|
|
2,228,000 |
|
Corporate and other |
|
|
|
|
(2.5 |
) |
|
|
|
|
|
|
Total home sales |
3,441 |
|
|
3,309 |
|
|
3,031.4 |
|
|
2,774.7 |
|
|
$ |
881,000 |
|
|
$ |
838,500 |
|
Land sales |
|
|
|
|
47.9 |
|
|
|
|
|
|
|
Total consolidated |
|
|
|
|
$ |
3,079.3 |
|
|
$ |
2,774.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
648 |
|
|
634 |
|
|
$ |
457.0 |
|
|
$ |
450.0 |
|
|
$ |
705,200 |
|
|
$ |
709,800 |
|
Mid-Atlantic |
877 |
|
|
872 |
|
|
567.5 |
|
|
559.9 |
|
|
647,100 |
|
|
642,100 |
|
South |
766 |
|
|
769 |
|
|
543.5 |
|
|
578.5 |
|
|
709,500 |
|
|
752,300 |
|
West |
994 |
|
|
1,149 |
|
|
721.3 |
|
|
779.0 |
|
|
725,700 |
|
|
678,000 |
|
California |
454 |
|
|
952 |
|
|
774.6 |
|
|
1,547.2 |
|
|
1,706,200 |
|
|
1,625,200 |
|
Traditional Home Building |
3,739 |
|
|
4,376 |
|
|
3,063.9 |
|
|
3,914.6 |
|
|
819,400 |
|
|
894,600 |
|
City Living |
64 |
|
|
112 |
|
|
102.7 |
|
|
159.0 |
|
|
1,604,700 |
|
|
1,419,600 |
|
Total consolidated |
3,803 |
|
|
4,488 |
|
|
$ |
3,166.6 |
|
|
$ |
4,073.6 |
|
|
$ |
832,700 |
|
|
$ |
907,700 |
|
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, 2019 and 2018, and for
backlog at April 30, 2019 and 2018 is as follows:
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Three months ended April
30, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
55 |
|
|
26 |
|
|
$ |
94.6 |
|
|
$ |
35.4 |
|
|
$ |
1,719,200 |
|
|
$ |
1,360,000 |
|
Contracts |
13 |
|
|
44 |
|
|
$ |
44.1 |
|
|
$ |
69.6 |
|
|
$ |
3,391,300 |
|
|
$ |
1,583,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended April
30, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
72 |
|
|
54 |
|
|
$ |
121.8 |
|
|
$ |
67.9 |
|
|
$ |
1,692,100 |
|
|
$ |
1,257,700 |
|
Contracts |
16 |
|
|
118 |
|
|
$ |
56.1 |
|
|
$ |
191.8 |
|
|
$ |
3,509,100 |
|
|
$ |
1,625,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog at April 30, |
116 |
|
|
180 |
|
|
$ |
255.6 |
|
|
$ |
291.3 |
|
|
$ |
2,203,700 |
|
|
$ |
1,618,300 |
|
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 Homes
Sales 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 Home Sales Gross MarginThe following
table reconciles the Company’s homes sales gross margin as a
percentage of homes sale revenues (calculated in accordance with
GAAP) to the Company’s Adjusted Homes Sales Gross Margin (a
non-GAAP financial measure). Adjusted Homes Sales Gross
Margin is calculated as (i) homes sales gross margin plus interest
recognized in homes sales cost of revenues plus inventory
write-downs recognized in home sales cost of revenues divided by
(ii) homes sale revenues.
Adjusted Home Sales Gross Margin
Reconciliation(Amounts in thousands, except
percentages)
|
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues - homes
sales |
$ |
1,712,057 |
|
|
$ |
1,599,199 |
|
|
$ |
3,031,365 |
|
|
$ |
2,774,667 |
|
Cost of revenues -
home sales |
1,374,347 |
|
|
1,298,157 |
|
|
2,416,592 |
|
|
2,232,637 |
|
Home sales gross
margin |
337,710 |
|
|
301,042 |
|
|
614,773 |
|
|
542,030 |
|
Add: |
Interest recognized in cost of
revenues - home sales |
44,786 |
|
|
45,027 |
|
|
79,227 |
|
|
78,912 |
|
|
Inventory write-downs |
19,394 |
|
|
13,832 |
|
|
26,950 |
|
|
17,685 |
|
Adjusted homes
sales gross margin |
$ |
401,890 |
|
|
$ |
359,901 |
|
|
$ |
720,956 |
|
|
$ |
638,627 |
|
|
|
|
|
|
|
|
|
|
Homes sales gross
margin as a percentage of home sale revenues |
19.7 |
% |
|
18.8 |
% |
|
20.3 |
% |
|
19.5 |
% |
|
|
|
|
|
|
|
|
|
Adjusted Home
Sales Gross Margin as a percentage of home sale revenues |
23.5 |
% |
|
22.5 |
% |
|
23.8 |
% |
|
23.0 |
% |
|
|
|
|
|
|
|
|
|
The Company’s management believes Adjusted Home
Sales 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 Home Sales 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 Homes Sales Gross
MarginThe Company has not provided projected third quarter and full
year fiscal 2019 homes sales gross margin or a GAAP reconciliation
for forward-looking Adjusted Homes Sales 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 2019
homes sales 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 30,2019 |
|
April 30,2018 |
|
January 31,2019 |
Loans payable |
$ |
1,027,408 |
|
|
$ |
649,299 |
|
|
$ |
1,000,467 |
|
Senior notes |
2,512,404 |
|
|
2,860,290 |
|
|
2,511,932 |
|
Mortgage company
loan facility |
110,012 |
|
|
103,550 |
|
|
74,135 |
|
Total debt |
3,649,824 |
|
|
3,613,139 |
|
|
3,586,534 |
|
Total
stockholders' equity |
4,941,154 |
|
|
4,480,703 |
|
|
4,819,562 |
|
Total capital |
$ |
8,590,978 |
|
|
$ |
8,093,842 |
|
|
$ |
8,406,096 |
|
Ratio of
debt-to-capital |
42.5 |
% |
|
44.6 |
% |
|
42.7 |
% |
|
|
|
|
|
|
|
Total debt |
$ |
3,649,824 |
|
|
$ |
3,613,139 |
|
|
$ |
3,586,534 |
|
Less: |
Mortgage company loan
facility |
(110,012 |
) |
|
(103,550 |
) |
|
(74,135 |
) |
|
Cash and cash equivalents |
(924,448 |
) |
|
(475,113 |
) |
|
(801,734 |
) |
Total net
debt |
2,615,364 |
|
|
3,034,476 |
|
|
2,710,665 |
|
Total
stockholders' equity |
4,941,154 |
|
|
4,480,703 |
|
|
4,819,562 |
|
Total net
capital |
$ |
7,556,518 |
|
|
$ |
7,515,179 |
|
|
$ |
7,530,227 |
|
Net
debt-to-capital ratio |
34.6 |
% |
|
40.4 |
% |
|
36.0 |
% |
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) 938-8312 |
|
fcooper@tollbrothers.com |
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