Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation’s
leading builder of luxury homes, today announced results for its
third quarter ended July 31, 2019.
FY 2019’s Third Quarter Financial
Highlights (Compared to FY 2018’s Third Quarter):
- Net income and earnings per share were $146.3 million and $1.00
per share diluted, compared to net income of $193.3 million and
$1.26 per share diluted in FY 2018’s third quarter.
- Pre-tax income was $186.9 million, compared to $253.1 million
in FY 2018’s third quarter.
- Impairments were $4.7 million, compared to $11.1 million in FY
2018’s third quarter.
- Home sales revenues were $1.76 billion, down 8%; home building
deliveries were 1,994, down 11%.
- Net signed contract value was $1.87 billion, down 8%; contract
units were 2,241, down 3%.
- Backlog value at third-quarter end was $5.84 billion, down 10%;
units in backlog totaled 6,839, down 4%.
- Home sales gross margin was 20.2%; Adjusted Home Sales Gross
Margin, which excludes interest and inventory write-downs
(“Adjusted Home Sales Gross Margin”), was 23.1%.
- SG&A, as a percentage of home sales revenues, was
10.6%.
- Income from operations was 9.7% of total revenues.
- Other income, Income from unconsolidated entities, and Land
sales gross profit was $18.4 million.
- The Company repurchased approximately 3.98 million shares of
its common stock during the quarter at an average price of $35.74
per share for an aggregate purchase price of approximately $142.2
million.
FY 2019 Financial Guidance:
- FY 2019 deliveries of between 7,800 and 8,100 units with an
average price of between $860,000 and $880,000.
- FY 2019 Adjusted Home Sales Gross Margin of approximately
23.0%.
- FY 2019 SG&A, as a percentage of home sales revenues, of
approximately 10.4%.
- FY 2019 Other income, Income from unconsolidated entities, and
Land sales gross profit of approximately $105 million.
- FY 2019 tax rate of approximately 25.6%.
Douglas C. Yearley, Jr., Toll Brothers’ chairman
and chief executive officer, stated: “In our third quarter, we had
strong revenues, gross margin, and earnings. While our third
quarter contracts were down modestly, we are off to a good start in
our fourth quarter. Low mortgage rates, a limited supply of new and
existing homes, and a strong employment picture are providing
tailwinds.
“We are focused on measured growth through
geographic, product and price point diversification, and
capital-efficient land acquisitions. We continue to expand the
buyer segments that we serve with homes now ranging in price from
$275,000 to over $3 million. Our balance sheet remains strong and
our book value continues to grow. With ample liquidity, moderate
leverage, and limited near-term debt maturities, we have the
flexibility to execute on our balanced capital allocation
strategy.”
Toll Brothers’ financial highlights for
the three months ended July 31, 2019 (unaudited):
- FY 2019’s third quarter net income
was $146.3 million, or $1.00 per share diluted, compared to FY
2018’s third quarter net income of $193.3 million, or $1.26 per
share diluted.
- FY 2019’s third quarter pre-tax
income was $186.9 million, compared to FY 2018’s third quarter
pre-tax income of $253.1 million.
- FY 2019’s third quarter results
included pre-tax inventory impairments totaling $4.7 million,
compared to FY 2018’s third quarter pre-tax inventory
impairments of $11.1 million.
- FY 2019’s third quarter home sales
revenues were $1.76 billion and 1,994 units, compared to FY 2018’s
third quarter totals of $1.91 billion and 2,246 units.
- FY 2019 third quarter net signed
contracts were $1.87 billion and 2,241 units, compared to FY 2018’s
third quarter totals of $2.03 billion and 2,316 units.
- FY 2019’s third quarter net signed
contracts on a per-community basis were 7.07 units, compared to
third quarter net signed contracts on a per-community basis of 8.10
units in FY 2018, 6.89 units in FY 2017, 5.85 in FY 2016 and 5.50
in FY 2015.
- FY 2019 third-quarter-end backlog
was $5.84 billion and 6,839 units, compared to FY 2018’s
third-quarter-end backlog of $6.48 billion and 7,100 units. The
average price of homes in backlog was $854,500, compared to
$912,600 at FY 2018’s third-quarter-end.
- FY 2019’s third quarter home sales
gross margin was 20.2%, compared to FY 2018’s third quarter home
sales gross margin of 21.1%.
- FY 2019’s third quarter Adjusted
Home Sales Gross Margin was 23.1%, compared to FY 2018’s third
quarter Adjusted Home Sales Gross Margin of 24.3%.
- FY 2019’s third quarter Interest
included in cost of sales was 2.7% of revenue, compared to 2.6 % in
FY 2018’s third quarter.
- FY 2019’s third quarter SG&A,
as a percentage of home sales revenues, was 10.6%, compared to 9.1
% in FY 2018’s third quarter.
- FY 2019’s third quarter Income from
operations of $171.0 million represented 9.7% of total revenues,
compared to FY 2018’s third quarter Income from operations of
$229.7 million and 12.0% of total revenues.
- FY 2019’s third quarter Other
income, Income from unconsolidated entities, and Land sales gross
profit totaled $18.4 million, compared to FY 2018’s third quarter
total of $23.4 million.
- FY 2019’s third quarter
cancellation rate (current quarter cancellations divided by current
quarter signed contracts) was 6.5%, compared to FY 2018’s third
quarter cancellation rate of 5.4%.
- FY 2019’s third quarter
cancellation rate as a percentage of beginning-quarter backlog was
2.4%, compared to FY 2018’s third quarter cancellation rate as a
percentage of beginning-quarter backlog of 1.9%.
Toll Brothers’ financial highlights for
the nine months ended July 31, 2019 (unaudited):
- FY 2019’s nine-month period net
income was $387.7 million, or $2.63 per share diluted, compared to
FY 2018’s nine-month period net income of $437.2 million, or $2.81
per share diluted.
- FY 2019’s nine-month period pre-tax
income was $514.5 million, compared to FY 2018’s nine-month period
pre-tax income of $537.4 million.
- FY 2019’s nine-month period results included pre-tax inventory
impairments totaling $31.6 million, compared to FY 2018’s
nine-month period pre-tax inventory impairments of $28.7
million.
- FY 2019’s nine-month period home
sales revenues were $4.79 billion and 5,435 units, compared to FY
2018’s nine-month period totals of $4.69 billion and 5,555
units.
- FY 2019 nine-month period net
signed contracts were $5.04 billion and 6,044 units, compared to FY
2018’s nine-month period totals of $6.11 billion and 6,804
units.
- FY 2019’s nine-month period Income
from operations of $455.9 million represented 9.4% of total
revenues, compared to FY 2018’s nine-month period Income from
operations of $447.8 million and 9.6% of total revenues.
- FY 2019’s nine-month period Other
income, Income from unconsolidated entities, and Land sales gross
profit totaled $71.9 million, compared to FY 2018’s nine-month
period total of $89.7 million.
Additional Financial
Information:
- The Company ended its FY 2019 third
quarter with $836.3 million in cash and cash equivalents, compared
to $924.4 million at FY 2019’s second-quarter end, and $522.2
million at FY 2018’s third-quarter end. At FY 2019’s third-quarter
end, the Company also had $1.10 billion available under its $1.295
billion, 20-bank revolving credit facility, which matures in May
2021.
- During the third quarter of FY 2019, the Company repurchased
approximately 3.98 million shares at an average price per share of
$35.74, for an aggregate purchase price of approximately $142.2
million.
- To date in FY 2019, the Company has
repurchased approximately 5.0 million shares of its common stock at
an average price of $35.13, for a total purchase price of
approximately $175.4 million.
- On July 26, 2019, the Company paid
its quarterly dividend of $0.11 per share to shareholders of record
at the close of business on July 12, 2019.
- FY 2019’s third-quarter-end
Stockholders’ Equity was $4.94 billion, compared to FY 2018’s
third-quarter-end Stockholders’ Equity of $4.53
billion.
- FY 2019’s third-quarter-end book
value per share was $34.72, compared to FY 2018’s third-quarter-end
book value per share of $30.55.
- The Company ended its FY 2019 third
quarter with a debt-to-capital ratio of 43.2%, compared to 42.5% at
FY 2019’s second-quarter-end and 44.5% at FY 2018’s
third-quarter-end. The Company ended FY 2019’s third quarter with a
net debt-to-capital ratio (1) of 35.9%, compared to 34.6% at FY
2019’s second-quarter-end, and 40.1% at FY 2018’s
third-quarter-end.
- The Company ended FY 2019’s third
quarter with approximately 57,400 lots owned and optioned, compared
to 54,500 one quarter earlier, and 53,600 one year earlier.
Approximately 34,600 of these lots were owned, of which
approximately 16,400 lots, including those in backlog, were
substantially improved.
- In the third quarter of FY 2019, the Company spent
approximately $287.3 million on land to purchase approximately
3,400 lots.
- The Company ended FY 2019’s third
quarter with 322 selling communities, compared to 311 at FY 2019’s
second-quarter-end and 301 at FY 2018’s third-quarter-end.
FY 2019 Financial Guidance:
- The Company expects FY 2019
deliveries of between 7,800 and 8,100 units with an average price
of between $860,000 and $880,000.
- The Company expects FY 2019
Adjusted Home Sales Gross Margin to be approximately 23.0% of home
sales revenues.
- FY 2019 SG&A is expected to be
approximately 10.4% of FY 2019 home sales revenues.
- FY 2019 Other income, Income from
unconsolidated entities, and Land sales gross profit is expected to
total approximately $105 million.
- The FY 2019 effective tax rate is
expected to be approximately 25.6%.(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 Chairman & CEO Douglas C. Yearley,
Jr. at 11:00 a.m. (EDT) Wednesday, August 21, 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 has won numerous other awards, including
Builder of the Year from both Professional Builder magazine and
Builder magazine, the first two-time recipient from Builder
magazine. 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 third
quarter ended July 31, 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 periodic reports filed on Forms 10-K and 10-Q 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)
|
|
|
|
|
July 31, 2019 |
|
October 31, 2018 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
836,258 |
|
|
$ |
1,182,195 |
|
Inventory |
7,995,076 |
|
|
7,598,219 |
|
Property, construction and
office equipment, net |
288,742 |
|
|
193,281 |
|
Receivables, prepaid expenses
and other assets |
720,178 |
|
|
550,778 |
|
Mortgage loans held for
sale |
169,251 |
|
|
170,731 |
|
Customer deposits held in
escrow |
88,043 |
|
|
117,573 |
|
Investments in unconsolidated
entities |
354,569 |
|
|
431,813 |
|
|
$ |
10,452,117 |
|
|
$ |
10,244,590 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Liabilities: |
|
|
|
Loans payable |
$ |
1,089,137 |
|
|
$ |
686,801 |
|
Senior notes |
2,512,877 |
|
|
2,861,375 |
|
Mortgage company loan facility |
150,000 |
|
|
150,000 |
|
Customer deposits |
429,665 |
|
|
410,864 |
|
Accounts payable |
344,665 |
|
|
362,098 |
|
Accrued expenses |
895,940 |
|
|
973,581 |
|
Income taxes payable |
45,376 |
|
|
30,959 |
|
Total liabilities |
5,467,660 |
|
|
5,475,678 |
|
|
|
|
|
Equity: |
|
|
|
Stockholders’ Equity |
|
|
|
Common stock |
1,779 |
|
|
1,779 |
|
Additional paid-in capital |
724,411 |
|
|
727,053 |
|
Retained earnings |
5,482,955 |
|
|
5,161,551 |
|
Treasury stock, at cost |
(1,270,922 |
) |
|
(1,130,878 |
) |
Accumulated other comprehensive income |
862 |
|
|
694 |
|
Total stockholders' equity |
4,939,085 |
|
|
4,760,199 |
|
Noncontrolling interest |
45,372 |
|
|
8,713 |
|
Total equity |
4,984,457 |
|
|
4,768,912 |
|
|
$ |
10,452,117 |
|
|
$ |
10,244,590 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOLL BROTHERS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands, except per share
data and percentages)(Unaudited)
|
|
|
|
|
Nine Months Ended July 31, |
|
Three Months Ended July 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
$ |
% |
|
$ |
% |
|
$ |
% |
|
$ |
% |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Home sales |
$ |
4,788,335 |
|
|
|
$ |
4,688,020 |
|
|
|
$ |
1,756,970 |
|
|
|
$ |
1,913,353 |
|
|
Land sales (1) |
56,631 |
|
|
|
|
|
|
8,721 |
|
|
|
|
|
|
4,844,966 |
|
|
|
4,688,020 |
|
|
|
1,765,691 |
|
|
|
1,913,353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
Home sales |
3,818,347 |
|
79.7 |
% |
|
3,742,256 |
|
79.8 |
% |
|
1,401,755 |
|
79.8 |
% |
|
1,509,619 |
|
78.9 |
% |
Land sales (1) |
43,406 |
|
76.6 |
% |
|
|
|
|
6,232 |
|
71.5 |
% |
|
|
|
|
3,861,753 |
|
|
|
3,742,256 |
|
|
|
1,407,987 |
|
|
|
1,509,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin - home sales |
969,988 |
|
20.3 |
% |
|
945,764 |
|
20.2 |
% |
|
355,215 |
|
20.2 |
% |
|
403,734 |
|
21.1 |
% |
Gross margin - land sales
(1) |
13,225 |
|
23.4 |
% |
|
|
|
|
2,489 |
|
28.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
$ |
527,318 |
|
11.0 |
% |
|
$ |
497,990 |
|
10.6 |
% |
|
$ |
186,709 |
|
10.6 |
% |
|
$ |
174,071 |
|
9.1 |
% |
Income from operations |
455,895 |
|
9.4 |
% |
|
447,774 |
|
9.6 |
% |
|
170,995 |
|
9.7 |
% |
|
229,663 |
|
12.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Other: |
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated entities |
17,759 |
|
|
|
53,913 |
|
|
|
7,200 |
|
|
|
12,469 |
|
|
Other income - net |
40,867 |
|
|
|
35,756 |
|
|
|
8,721 |
|
|
|
10,965 |
|
|
Income before income
taxes |
514,521 |
|
|
|
537,443 |
|
|
|
186,916 |
|
|
|
253,097 |
|
|
Income tax provision |
126,829 |
|
|
|
100,268 |
|
|
|
40,598 |
|
|
|
59,839 |
|
|
Net income |
$ |
387,692 |
|
|
|
$ |
437,175 |
|
|
|
$ |
146,318 |
|
|
|
$ |
193,258 |
|
|
Per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings |
$ |
2.65 |
|
|
|
$ |
2.85 |
|
|
|
$ |
1.01 |
|
|
|
$ |
1.28 |
|
|
Diluted earnings |
$ |
2.63 |
|
|
|
$ |
2.81 |
|
|
|
$ |
1.00 |
|
|
|
$ |
1.26 |
|
|
Cash dividend declared |
$ |
0.33 |
|
|
|
$ |
0.30 |
|
|
|
$ |
0.11 |
|
|
|
$ |
0.11 |
|
|
Weighted-average number of
shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
146,041 |
|
|
|
153,290 |
|
|
|
144,750 |
|
|
|
151,257 |
|
|
Diluted |
147,479 |
|
|
|
155,733 |
|
|
|
146,275 |
|
|
|
153,173 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
24.6 |
% |
|
|
18.7 |
% |
|
|
21.7 |
% |
|
|
23.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 nine months ended July 31, 2018, we recognized land
sales revenues and land sales cost of revenues of $52.3 million and
$48.1 million, respectively. During the three months ended July 31,
2018, we recognized land sales revenues and land sales cost of
revenues of $10.9 million and $10.1 million, respectively.
TOLL BROTHERS, INC. AND
SUBSIDIARIESSUPPLEMENTAL
DATA(Amounts in
thousands)(unaudited)
|
|
|
|
|
Nine Months Ended July 31, |
|
Three Months Ended July 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Impairment charges
recognized: |
|
|
|
|
|
|
|
Cost of home sales - land owned/controlled for future
communities |
$ |
7,256 |
|
$ |
2,620 |
|
$ |
3,579 |
|
$ |
1,996 |
|
Cost of home sales - operating communities |
24,380 |
|
26,126 |
|
1,100 |
|
9,065 |
|
|
$ |
31,636 |
|
$ |
28,746 |
|
$ |
4,679 |
|
$ |
11,061 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
$ |
51,423 |
|
$ |
18,724 |
|
$ |
18,109 |
|
$ |
6,204 |
|
Interest incurred |
$ |
131,830 |
|
$ |
123,028 |
|
$ |
43,968 |
|
$ |
41,759 |
|
Interest expense: |
|
|
|
|
|
|
|
Charged to home sales cost of sales |
$ |
125,862 |
|
$ |
128,915 |
|
$ |
46,635 |
|
$ |
50,003 |
|
Charged to land sales cost of sales |
945 |
|
|
|
310 |
|
|
Charged to other income - net |
|
|
2,259 |
|
|
|
1,258 |
|
|
$ |
126,807 |
|
$ |
131,174 |
|
$ |
46,945 |
|
$ |
51,261 |
|
|
|
|
|
|
|
|
|
Home sites controlled: |
July 31, 2019 |
|
July 31, 2018 |
|
|
|
|
Owned |
34,577 |
|
33,884 |
|
|
|
|
Optioned |
22,857 |
|
19,720 |
|
|
|
|
|
57,434 |
|
53,604 |
|
|
|
|
|
|
|
|
|
|
|
|
Inventory at July 31, 2019 and October 31, 2018
consisted of the following (amounts in thousands):
|
July 31, 2019 |
|
October 31, 2018 |
Land and land development costs |
$ |
2,280,158 |
|
|
$ |
1,917,354 |
|
Construction in progress |
5,030,973 |
|
|
4,917,917 |
|
Sample homes |
415,185 |
|
|
493,037 |
|
Land deposits and costs of
future development |
268,760 |
|
|
245,114 |
|
Other |
|
|
24,797 |
|
|
$ |
7,995,076 |
|
|
$ |
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
York |
Mid-Atlantic: |
Delaware, Maryland, Pennsylvania
and Virginia |
South: |
Florida, Georgia, North Carolina
and Texas |
West: |
Arizona, Colorado, Idaho, Nevada,
Oregon, Utah and Washington |
California: |
California |
|
Three Months Ended July 31, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
299 |
|
403 |
|
$ |
210.9 |
|
$ |
266.2 |
|
$ |
705,400 |
|
$ |
660,600 |
Mid-Atlantic |
449 |
|
487 |
|
287.7 |
|
304.1 |
|
640,700 |
|
624,400 |
South |
440 |
|
402 |
|
318.5 |
|
299.3 |
|
723,900 |
|
744,400 |
West |
490 |
|
558 |
|
353.9 |
|
382.5 |
|
722,200 |
|
685,400 |
California |
276 |
|
367 |
|
512.3 |
|
610.7 |
|
1,856,200 |
|
1,664,100 |
Traditional Home Building |
1,954 |
|
2,217 |
|
1,683.3 |
|
1,862.8 |
|
861,500 |
|
840,200 |
City Living |
40 |
|
29 |
|
71.9 |
|
50.6 |
|
1,797,300 |
|
1,745,400 |
Corporate and other |
|
|
|
|
1.8 |
|
|
|
|
|
|
Total home sales |
1,994 |
|
2,246 |
|
1,757.0 |
|
1,913.4 |
|
$ |
881,200 |
|
$ |
851,900 |
Land sales |
|
|
|
|
8.7 |
|
|
|
|
|
|
Total consolidated |
|
|
|
|
$ |
1,765.7 |
|
$ |
1,913.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
338 |
|
353 |
|
$ |
230.7 |
|
$ |
239.7 |
|
$ |
682,600 |
|
$ |
679,100 |
Mid-Atlantic |
451 |
|
544 |
|
301.9 |
|
343.0 |
|
669,500 |
|
630,600 |
South |
465 |
|
414 |
|
324.8 |
|
311.3 |
|
698,600 |
|
751,900 |
West |
698 |
|
566 |
|
513.6 |
|
417.9 |
|
735,700 |
|
738,400 |
California |
249 |
|
390 |
|
434.3 |
|
639.4 |
|
1,744,000 |
|
1,639,400 |
Traditional Home Building |
2,201 |
|
2,267 |
|
1,805.3 |
|
1,951.3 |
|
820,200 |
|
860,800 |
City Living |
40 |
|
49 |
|
63.5 |
|
80.7 |
|
1,587,100 |
|
1,646,300 |
Total consolidated |
2,241 |
|
2,316 |
|
$ |
1,868.8 |
|
$ |
2,032.0 |
|
$ |
833,900 |
|
$ |
877,400 |
|
|
|
|
|
|
|
|
|
|
|
|
BACKLOG |
|
|
|
|
|
|
|
|
|
|
|
North |
1,232 |
|
1,254 |
|
$ |
854.9 |
|
$ |
879.1 |
|
$ |
693,900 |
|
$ |
701,000 |
Mid-Atlantic |
1,329 |
|
1,342 |
|
879.9 |
|
878.6 |
|
662,100 |
|
654,700 |
South |
1,421 |
|
1,296 |
|
1,028.4 |
|
994.3 |
|
723,700 |
|
767,200 |
West |
1,680 |
|
1,610 |
|
1,248.7 |
|
1,179.0 |
|
743,300 |
|
732,300 |
California |
1,083 |
|
1,407 |
|
1,712.5 |
|
2,345.5 |
|
1,581,200 |
|
1,667,000 |
Traditional Home Building |
6,745 |
|
6,909 |
|
5,724.4 |
|
6,276.5 |
|
848,700 |
|
908,500 |
City Living |
94 |
|
191 |
|
119.7 |
|
202.6 |
|
1,272,900 |
|
1,060,700 |
Total consolidated |
6,839 |
|
7,100 |
|
$ |
5,844.1 |
|
$ |
6,479.1 |
|
$ |
854,500 |
|
$ |
912,600 |
|
|
|
Nine Months Ended July 31, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
852 |
|
950 |
|
$ |
602.3 |
|
|
$ |
626.7 |
|
$ |
706,900 |
|
$ |
659,700 |
Mid-Atlantic |
1,141 |
|
1,217 |
|
749.1 |
|
|
765.9 |
|
656,500 |
|
629,300 |
South |
1,101 |
|
942 |
|
811.0 |
|
|
711.5 |
|
736,600 |
|
755,300 |
West |
1,412 |
|
1,502 |
|
1,019.2 |
|
|
989.9 |
|
721,800 |
|
659,100 |
California |
753 |
|
822 |
|
1,382.8 |
|
|
1,336.2 |
|
1,836,400 |
|
1,625,500 |
Traditional Home Building |
5,259 |
|
5,433 |
|
4,564.4 |
|
|
4,430.2 |
|
867,900 |
|
815,400 |
City Living |
176 |
|
122 |
|
224.6 |
|
|
257.8 |
|
1,276,100 |
|
2,113,100 |
Corporate and other |
|
|
|
|
(0.7 |
) |
|
|
|
|
|
|
Total home sales |
5,435 |
|
5,555 |
|
4,788.3 |
|
|
4,688.0 |
|
$ |
881,000 |
|
$ |
843,900 |
Land sales |
|
|
|
|
56.6 |
|
|
|
|
|
|
|
Total consolidated |
|
|
|
|
$ |
4,844.9 |
|
|
$ |
4,688.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
986 |
|
987 |
|
$ |
687.7 |
|
|
$ |
689.7 |
|
$ |
697,500 |
|
$ |
698,800 |
Mid-Atlantic |
1,328 |
|
1,416 |
|
869.4 |
|
|
903.0 |
|
654,700 |
|
637,700 |
South |
1,231 |
|
1,183 |
|
868.4 |
|
|
889.8 |
|
705,400 |
|
752,200 |
West |
1,692 |
|
1,715 |
|
1,234.9 |
|
|
1,197.0 |
|
729,800 |
|
698,000 |
California |
703 |
|
1,342 |
|
1,208.8 |
|
|
2,186.5 |
|
1,719,500 |
|
1,629,300 |
Traditional Home Building |
5,940 |
|
6,643 |
|
4,869.2 |
|
|
5,866.0 |
|
819,700 |
|
883,000 |
City Living |
104 |
|
161 |
|
166.2 |
|
|
239.6 |
|
1,598,100 |
|
1,488,200 |
Total consolidated |
6,044 |
|
6,804 |
|
$ |
5,035.4 |
|
|
$ |
6,105.6 |
|
$ |
833,100 |
|
$ |
897,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unconsolidated entities:
Information related to revenues and contracts of
entities in which we have an interest for the three-month and
nine-month periods ended July 31, 2019 and 2018, and for
backlog at July 31, 2019 and 2018 is as follows:
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Three months ended July
31, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
33 |
|
19 |
|
$ |
95.8 |
|
$ |
36.0 |
|
$ |
2,902,000 |
|
$ |
1,896,900 |
Contracts |
15 |
|
25 |
|
$ |
42.4 |
|
$ |
67.5 |
|
$ |
2,823,600 |
|
$ |
2,699,100 |
|
|
|
|
|
|
|
|
|
|
|
|
Nine months ended July
31, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
105 |
|
73 |
|
$ |
217.6 |
|
$ |
104.0 |
|
$ |
2,072,400 |
|
$ |
1,424,000 |
Contracts |
31 |
|
143 |
|
$ |
98.5 |
|
$ |
259.2 |
|
$ |
3,177,400 |
|
$ |
1,812,900 |
|
|
|
|
|
|
|
|
|
|
|
|
Backlog at July 31, |
98 |
|
186 |
|
$ |
202.2 |
|
$ |
322.7 |
|
$ |
2,063,400 |
|
$ |
1,735,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 July 31, |
|
|
2019 |
|
2018 |
Revenues - homes sales |
$ |
1,756,970 |
|
|
$ |
1,913,353 |
|
Cost of revenues -
home sales |
1,401,755 |
|
|
1,509,619 |
|
Home sales gross
margin |
355,215 |
|
|
403,734 |
|
Add: |
Interest recognized in cost of
revenues - home sales |
46,635 |
|
|
50,003 |
|
|
Inventory write-downs |
4,679 |
|
|
11,061 |
|
Adjusted homes
sales gross margin |
$ |
406,529 |
|
|
$ |
464,798 |
|
|
|
|
|
|
Homes sales gross
margin as a percentage of home sale revenues |
20.2 |
% |
|
21.1 |
% |
|
|
|
|
|
Adjusted Home
Sales Gross Margin as a percentage of home sale revenues |
23.1 |
% |
|
24.3 |
% |
|
|
|
|
|
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 fourth 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 fourth 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)
|
|
|
|
|
|
|
|
|
July 31, 2019 |
|
July 31, 2018 |
|
April 30, 2019 |
Loans payable |
$ |
1,089,137 |
|
|
$ |
694,409 |
|
|
$ |
1,027,408 |
|
Senior notes |
2,512,877 |
|
|
2,860,771 |
|
|
2,512,404 |
|
Mortgage company
loan facility |
150,000 |
|
|
82,274 |
|
|
110,012 |
|
Total debt |
3,752,014 |
|
|
3,637,454 |
|
|
3,649,824 |
|
Total
stockholders' equity |
4,939,085 |
|
|
4,528,664 |
|
|
4,941,154 |
|
Total capital |
$ |
8,691,099 |
|
|
$ |
8,166,118 |
|
|
$ |
8,590,978 |
|
Ratio of
debt-to-capital |
43.2 |
% |
|
44.5 |
% |
|
42.5 |
% |
|
|
|
|
|
|
|
Total debt |
$ |
3,752,014 |
|
|
$ |
3,637,454 |
|
|
$ |
3,649,824 |
|
Less: |
Mortgage company loan
facility |
(150,000 |
) |
|
(82,274 |
) |
|
(110,012 |
) |
|
Cash and cash equivalents |
(836,258 |
) |
|
(522,181 |
) |
|
(924,448 |
) |
Total net
debt |
2,765,756 |
|
|
3,032,999 |
|
|
2,615,364 |
|
Total
stockholders' equity |
4,939,085 |
|
|
4,528,664 |
|
|
4,941,154 |
|
Total net
capital |
$ |
7,704,841 |
|
|
$ |
7,561,663 |
|
|
$ |
7,556,518 |
|
Net
debt-to-capital ratio |
35.9 |
% |
|
40.1 |
% |
|
34.6 |
% |
|
|
|
|
|
|
|
|
|
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
https://www.globenewswire.com/NewsRoom/AttachmentNg/476d9da0-6497-4dee-b533-74dd6ff15201
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