Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation’s
leading builder of luxury homes, today announced results for its
fourth quarter and fiscal year ended October 31, 2019.
FY 2019’s Fourth Quarter Financial
Highlights (Compared to FY 2018’s Fourth Quarter):
- Net income and earnings per share were $202.3 million and $1.41
per share diluted, compared to net income of $311.0 million and
$2.08 per share diluted in FY 2018’s fourth quarter.
- Pre-tax income decreased 31% to $272.6 million, compared to
$396.5 million in FY 2018’s fourth quarter.
- Home sales revenues were $2.29 billion, down 7%; home building
deliveries were 2,672, down 1%.
- Net signed contract value was $1.68 billion, up 12%; contract
units were 2,031, up 18%.
- Backlog value at fourth-quarter end was $5.26 billion, down 5%;
units in backlog totaled 6,266, up 3%.
- Home sales gross margin was 18.8%; Adjusted Home Sales Gross
Margin, which excludes interest and inventory write-downs
(“Adjusted Home Sales Gross Margin”), was 21.9%.
- SG&A, as a percentage of home sales revenues, was
9.0%.
- Income from operations was 9.5% of total revenues.
- Other income, income from unconsolidated entities, and land
sales gross profit was $48.4 million.
- The Company repurchased approximately 1.85 million shares of
its common stock during the quarter at an average price of $35.66
per share for an aggregate purchase price of approximately $66.0
million.
Full FY 2019 Highlights (Compared to Full FY
2018):
- Net income and earnings per share were $590.0 million and $4.03
per share diluted, compared to net income of $748.2 million and
$4.85 per share diluted, in FY 2018.
- Pre-tax income decreased 16% to $787.2 million, compared to
$933.9 million in FY 2018.
- Home sales revenues were $7.08 billion, down 1%; home building
deliveries were 8,107 units, down 2%.
- Net signed contract value was $6.71 billion, down 12%; contract
units were 8,075, down 5%.
- Home sales gross margin was 19.8%; Adjusted Home Sales Gross
Margin was 23.0%.
- SG&A, as a percentage of home sales revenues, was
10.4%.
- Income from operations was 9.4% of total revenues.
- Other income, income from unconsolidated entities, and land
sales gross profit was $120.3 million.
- The Company repurchased approximately 6.6 million shares at an
average price of $35.28 per share for a total purchase price of
approximately $233.5 million.
Financial Guidance:
- First quarter deliveries of between 1,650 and 1,850 units with
an average price of between $800,000 and $820,000.
- First quarter Adjusted Home Sales Gross Margin of approximately
21.25%, which is projected to be the low point of the fiscal
year.
- First quarter SG&A, as a percentage of home sales revenues,
of approximately 13.5%. First quarter SG&A includes
approximately $10 million of G&A expense that is not expected
to occur in subsequent quarters of fiscal 2020.
- First quarter other income, income from unconsolidated
entities, and land sales gross profit of approximately $15
million.
- First quarter tax rate of approximately 26.5%.
- FYE 2020 community count growth of approximately 10%.
Douglas C. Yearley, Jr., Toll Brothers’ chairman
and chief executive officer, stated: “Fiscal 2019 ended on a strong
note. Building on steady improvement in buyer demand
throughout the year, our fourth quarter contracts were up 18% in
units and 12% in dollars, and our contracts per-community were up
10% compared to one year ago. Through the first six weeks of fiscal
2020's first quarter, we have seen even stronger demand than the
order growth of fiscal 2019’s fourth quarter. This market
improvement should positively impact gross margins over the course
of fiscal 2020.
"We are positioning ourselves for growth as we
expand our luxury brand to new price points, product lines, and
geographies. Our land position and 10% increase in projected fiscal
2020 community count reflect this strategy, and, we believe,
provide the platform for continued growth in coming years.
"We are focused on improving our capital
efficiency in our land acquisition process. Additionally, in
fiscal 2019 we repurchased $234 million of stock, and paid
dividends totaling $0.44 per share. As we begin fiscal 2020,
we have over $3 billion of liquidity through cash and undrawn bank
credit facilities with no public or bank debt maturities in the
next 24 months.
"October housing starts were at the highest
level since July of 2007, while the months’ supply of homes on the
market remains constrained. Consumer confidence is healthy,
household formations are strong, and interest rates and
unemployment remain low. With this positive environment as a
backdrop, we are excited by our prospects for fiscal 2020."
Toll Brothers’ Financial Highlights for
the three months ended October 31, 2019
(unaudited):
- FY 2019’s fourth quarter net income was $202.3 million, or
$1.41 per share diluted, compared to FY 2018’s fourth quarter net
income of $311.0 million, or $2.08 per share diluted.
- FY 2019’s fourth quarter pre-tax income was $272.6 million,
compared to FY 2018’s fourth quarter pre-tax income of $396.5
million.
- FY 2019’s fourth quarter results included pre-tax inventory
impairments totaling $10.7 million, compared to FY 2018’s
fourth quarter pre-tax inventory impairments of $6.4 million.
- FY 2019’s fourth quarter home sales revenues were $2.29 billion
and 2,672 units, compared to FY 2018’s fourth quarter totals of
$2.46 billion and 2,710 units.
- FY 2019's fourth quarter net signed contracts were $1.68
billion and 2,031 units, compared to FY 2018’s fourth quarter net
contracts of $1.50 billion and 1,715 units.
- FY 2019's fourth quarter net signed contracts on a
per-community basis were 6.1 units, compared to fourth quarter net
signed contracts on a per-community basis of 5.6 units in FY 2018,
6.3 units in FY 2017, 5.8 in FY 2016 and 5.2 in FY 2015.
- In FY 2019, fourth quarter-end backlog was $5.26 billion and
6,266 units, compared to FY 2018’s fourth quarter-end backlog of
$5.52 billion and 6,105 units. The average price of homes in
backlog was $839,000, compared to $904,600 at FY 2018’s fourth
quarter end.
- FY 2019’s fourth quarter home sales gross margin was 18.8%,
compared to FY 2018’s fourth quarter home sales gross margin of
21.4%.
- FY 2019’s fourth quarter Adjusted Home Sales Gross Margin was
21.9%, compared to FY 2018’s fourth quarter Adjusted Home Sales
Gross Margin of 24.1%.
- FY 2019’s fourth quarter interest included in cost of sales was
2.6% of revenue, compared to 2.5% in FY 2018’s fourth quarter.
- FY 2019’s fourth quarter SG&A, as a percentage of home
sales revenues, was 9.0%, compared to 7.6% in FY 2018’s fourth
quarter.
- FY 2019’s fourth quarter income from operations of $224.9
million represented 9.5% of total revenues, compared to FY 2018’s
fourth quarter of $338.4 million and 13.8% of revenues.
- FY 2019's fourth quarter other income, income from
unconsolidated entities, and land sales gross profit totaled $48.4
million, compared to FY 2018’s fourth quarter of $58.0
million.
- FY 2019’s fourth-quarter cancellation rate (current quarter
cancellations divided by current quarter signed contracts) was
8.9%, compared to FY 2018’s fourth quarter cancellation rate of
9.3%.
- FY 2019's fourth-quarter cancellation rate as a percentage of
beginning quarter backlog was 2.9%, compared to FY 2018’s fourth
quarter cancellation rate as a percentage of beginning quarter
backlog 2.5%.
Toll Brothers' Financial Highlights for
Full FY 2019 (Compared to Full FY 2018):
- FY 2019’s net income was $590.0 million, or $4.03 per share
diluted, compared to FY 2018’s net income of $748.2 million, or
$4.85 per share diluted.
- FY 2019’s pre-tax income was $787.2 million, compared to FY
2018’s pre-tax income of $933.9 million.
- FY 2019’s pre-tax income results included pre-tax inventory
write-downs totaling $42.4 million. FY 2018’s pre-tax income
results included pre-tax inventory write-downs of $35.2
million.
- FY 2019’s home sales revenues of $7.08 billion and 8,107 units
decreased 1% in dollars and 2% in units, compared to FY 2018’s
totals of $7.14 billion and 8,265 units.
- FY 2019's net signed contracts of $6.71 billion and 8,075 units
were down 12% in dollars and 5% in units, compared to net signed
contracts of $7.60 billion and 8,519 units in FY 2018.
- FY 2019's income from operations of $680.8 million represented
9.4% of total revenues in FY 2019, compared to $786.2 million and
11.0% of revenues in FY 2018.
- FY 2019's other income, income from unconsolidated entities,
and land sales gross profit totaled $120.3 million, compared to
$147.7 million in FY 2018.
Additional Financial Information:
- During the fourth quarter of FY 2019, the Company entered into
a five-year $1.905 billion senior unsecured revolving
credit facility maturing in November 2024 to replace the Company's
existing $1.295 billion revolving credit facility, which
was scheduled to mature in May 2021. The Company also
extended the maturity of its existing $800 million senior
unsecured term loan facility from November 2023 to November 2024.
In addition, in September 2019, the Company issued $400 million of
3.800% senior notes due November 1, 2029 and, in October 2019,
redeemed its $250 million of 6.750% senior notes due
November 1, 2019.
- The Company ended FY 2019 with $1.29 billion in cash and cash
equivalents, compared to $836.3 million at FY 2019’s third-quarter
end, and $1.18 billion at FYE 2018. At FYE 2019, the Company also
had $1.73 billion available under its $1.905 billion bank revolving
credit facility.
- During the fourth quarter of FY 2019, the Company repurchased
approximately 1.85 million shares at an average price per share of
$35.66, for an aggregate purchase price of approximately $66.0
million.
- In FY 2019, the Company repurchased approximately 6.6 million
shares of its common stock at an average price of $35.28, for a
total purchase price of approximately $233.5 million.
- On October 25, 2019, the Company paid its quarterly
dividend of $0.11 per share to shareholders of record at the close
of business on October 11, 2019.
- FYE 2019 Stockholders' Equity was $5.07 billion, compared to
$4.76 billion at FYE 2018.
- FY 2019's fourth-quarter end book value per share was $35.99
per share, compared to $32.57 at FY 2018’s fourth-quarter end.
- The Company ended its FY 2019 fourth quarter with a
debt-to-capital ratio of 43.6%, compared to 43.2% at FY 2019’s
third-quarter end and 43.7% at FY 2018’s fourth-quarter end.
The Company ended FY 2019’s fourth quarter with a net
debt-to-capital ratio (1) of 32.9%, compared to 35.9% at FY 2019’s
third-quarter end, and 33.2% at FY 2018’s fourth-quarter end.
- The Company ended FY 2019’s fourth quarter with approximately
59,200 lots owned and optioned, compared to 57,400 one quarter
earlier, and 53,400 one year earlier. Approximately 36,600 of these
lots were owned, of which approximately 16,800 lots, including
those in backlog, were substantially improved.
- In the fourth quarter of FY 2019, the Company spent
approximately $358.7 million on land to purchase approximately
4,509 lots.
- The Company ended FY 2019’s fourth quarter with 333 selling
communities, compared to 322 at FY 2019’s third-quarter end and 315
at FY 2018’s fourth-quarter end.(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. (EST) Tuesday, December 10, 2019, to discuss
these results and its outlook for the first quarter of FY 2020. 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 23 states: Arizona, California, Colorado,
Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Maryland,
Massachusetts, Michigan, Nevada, New Jersey, New York, North
Carolina, Oregon, Pennsylvania, South Carolina, 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 a full range of technology solutions. 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 Statements
Information presented herein for the fourth
quarter ended October 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)
|
October 31, 2019 |
|
October 31, 2018 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
1,286,014 |
|
|
$ |
1,182,195 |
|
Inventory |
7,873,048 |
|
|
7,598,219 |
|
Property, construction and
office equipment, net |
273,412 |
|
|
193,281 |
|
Receivables, prepaid expenses
and other assets |
715,441 |
|
|
550,778 |
|
Mortgage loans held for
sale |
218,777 |
|
|
170,731 |
|
Customer deposits held in
escrow |
74,403 |
|
|
117,573 |
|
Investments in unconsolidated
entities |
366,252 |
|
|
431,813 |
|
Income taxes receivable |
20,791 |
|
|
|
|
$ |
10,828,138 |
|
|
$ |
10,244,590 |
|
|
|
|
|
LIABILITIES AND EQUITY |
|
|
|
Liabilities: |
|
|
|
Loans payable |
$ |
1,111,449 |
|
|
$ |
686,801 |
|
Senior notes |
2,659,898 |
|
|
2,861,375 |
|
Mortgage company loan facility |
150,000 |
|
|
150,000 |
|
Customer deposits |
385,596 |
|
|
410,864 |
|
Accounts payable |
348,599 |
|
|
362,098 |
|
Accrued expenses |
950,932 |
|
|
973,581 |
|
Income taxes payable |
102,971 |
|
|
30,959 |
|
Total liabilities |
5,709,445 |
|
|
5,475,678 |
|
|
|
|
|
Equity: |
|
|
|
Stockholders’ Equity |
|
|
|
Common stock |
1,529 |
|
|
1,779 |
|
Additional paid-in capital |
726,879 |
|
|
727,053 |
|
Retained earnings |
4,774,422 |
|
|
5,161,551 |
|
Treasury stock, at cost |
(425,183 |
) |
|
(1,130,878 |
) |
Accumulated other comprehensive (loss) income |
(5,831 |
) |
|
694 |
|
Total stockholders' equity |
5,071,816 |
|
|
4,760,199 |
|
Noncontrolling interest |
46,877 |
|
|
8,713 |
|
Total equity |
5,118,693 |
|
|
4,768,912 |
|
|
$ |
10,828,138 |
|
|
$ |
10,244,590 |
|
TOLL BROTHERS, INC. AND
SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS(Amounts in thousands, except per share
data and percentages)(Unaudited)
|
Twelve Months Ended October 31, |
|
Three Months Ended October 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
$ |
% |
|
$ |
% |
|
$ |
% |
|
$ |
% |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
Home sales |
$ |
7,080,379 |
|
|
|
$ |
7,143,258 |
|
|
|
$ |
2,292,044 |
|
|
|
$ |
2,455,238 |
|
|
Land sales (1) |
143,587 |
|
|
|
|
|
|
86,956 |
|
|
|
|
|
|
7,223,966 |
|
|
|
7,143,258 |
|
|
|
2,379,000 |
|
|
|
2,455,238 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues: |
|
|
|
|
|
|
|
|
|
|
|
Home sales |
5,678,914 |
|
80.2 |
% |
|
5,673,007 |
|
79.4 |
% |
|
1,860,567 |
|
81.2 |
% |
|
1,930,751 |
|
78.6 |
% |
Land sales (1) |
129,704 |
|
90.3 |
% |
|
|
|
|
|
86,298 |
|
99.2 |
% |
|
|
|
|
|
5,808,618 |
|
|
|
|
5,673,007 |
|
|
|
|
1,946,865 |
|
|
|
|
1,930,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin - home sales |
1,401,465 |
|
19.8 |
% |
|
1,470,251 |
|
20.6 |
% |
|
431,477 |
|
18.8 |
% |
|
524,487 |
|
21.4 |
% |
Gross margin - land sales
(1) |
13,883 |
|
9.7 |
% |
|
|
|
|
|
658 |
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses |
$ |
734,548 |
|
10.4 |
% |
|
$ |
684,035 |
|
9.6 |
% |
|
$ |
207,230 |
|
9.0 |
% |
|
$ |
186,045 |
|
7.6 |
% |
Income from operations |
680,800 |
|
9.4 |
% |
|
786,216 |
|
11.0 |
% |
|
224,905 |
|
9.5 |
% |
|
338,442 |
|
13.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Other: |
|
|
|
|
|
|
|
|
|
|
|
Income from unconsolidated entities |
24,868 |
|
|
|
85,240 |
|
|
|
7,109 |
|
|
|
31,327 |
|
|
Other income - net |
81,502 |
|
|
|
62,460 |
|
|
|
40,635 |
|
|
|
26,704 |
|
|
Income before income
taxes |
787,170 |
|
|
|
933,916 |
|
|
|
272,649 |
|
|
|
396,473 |
|
|
Income tax provision |
197,163 |
|
|
|
185,765 |
|
|
|
70,334 |
|
|
|
85,497 |
|
|
Net income |
$ |
590,007 |
|
|
|
$ |
748,151 |
|
|
|
$ |
202,315 |
|
|
|
$ |
310,976 |
|
|
Per share: |
|
|
|
|
|
|
|
|
|
|
|
Basic earnings |
$ |
4.07 |
|
|
|
$ |
4.92 |
|
|
|
$ |
1.43 |
|
|
|
$ |
2.10 |
|
|
Diluted earnings |
$ |
4.03 |
|
|
|
$ |
4.85 |
|
|
|
$ |
1.41 |
|
|
|
$ |
2.08 |
|
|
Cash dividend declared |
$ |
0.44 |
|
|
|
$ |
0.41 |
|
|
|
$ |
0.11 |
|
|
|
$ |
0.11 |
|
|
Weighted-average number of
shares: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
145,008 |
|
|
|
151,984 |
|
|
|
141,909 |
|
|
|
148,066 |
|
|
Diluted |
146,501 |
|
|
|
154,201 |
|
|
|
143,567 |
|
|
|
149,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
25.0 |
% |
|
|
19.9 |
% |
|
|
25.8 |
% |
|
|
21.6 |
% |
|
(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 year ended October 31,
2018, we recognized land sales revenues and land sales cost of
revenues of $134.3 million and $128.0 million, respectively.
During the three months ended October 31, 2018, we recognized land
sales revenues and land sales cost of revenues of $78.2 million and
$76.0 million, respectively.
TOLL BROTHERS, INC. AND
SUBSIDIARIESSUPPLEMENTAL
DATA(Amounts in
thousands)(unaudited)
|
Twelve Months Ended October 31, |
|
Three Months Ended October 31, |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Impairment charges
recognized: |
|
|
|
|
|
|
|
Cost of home sales - land owned/controlled for future
communities |
$ |
11,285 |
|
|
$ |
5,005 |
|
|
$ |
4,029 |
|
|
$ |
2,385 |
|
Cost of home sales - operating communities |
31,075 |
|
|
30,151 |
|
|
6,695 |
|
|
4,025 |
|
|
$ |
42,360 |
|
|
$ |
35,156 |
|
|
$ |
10,724 |
|
|
$ |
6,410 |
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
$ |
72,149 |
|
|
$ |
25,259 |
|
|
$ |
20,726 |
|
|
$ |
6,535 |
|
Interest incurred |
$ |
178,035 |
|
|
$ |
165,977 |
|
|
$ |
46,205 |
|
|
$ |
42,949 |
|
Interest expense: |
|
|
|
|
|
|
|
Charged to home sales cost of sales |
$ |
185,045 |
|
|
$ |
190,734 |
|
|
$ |
59,183 |
|
|
$ |
61,819 |
|
Charged to land sales cost of sales |
1,787 |
|
|
|
|
842 |
|
|
|
Charged to other income - net |
|
|
3,760 |
|
|
|
|
1,501 |
|
|
$ |
186,832 |
|
|
$ |
194,494 |
|
|
$ |
60,025 |
|
|
$ |
63,320 |
|
|
|
|
|
|
|
|
|
Home sites controlled: |
October 31, 2019 |
|
October 31, 2018 |
|
|
|
|
Owned |
36,567 |
|
|
32,503 |
|
|
|
|
|
Optioned |
22,663 |
|
|
20,919 |
|
|
|
|
|
|
59,230 |
|
|
53,422 |
|
|
|
|
|
Inventory at October 31, 2019 and October 31, 2018
consisted of the following (amounts in thousands):
|
October 31, 2019 |
|
October 31, 2018 |
Land and land development
costs |
$ |
2,304,949 |
|
|
$ |
1,917,354 |
|
Construction in progress |
4,984,989 |
|
|
4,917,917 |
|
Sample homes |
414,107 |
|
|
493,037 |
|
Land deposits and costs of
future development |
169,003 |
|
|
245,114 |
|
Other |
|
|
24,797 |
|
|
$ |
7,873,048 |
|
|
$ |
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, South Carolina and Texas |
West: |
|
Arizona, Colorado, Idaho, Nevada, Oregon, Utah and
Washington |
California: |
|
California |
|
Three Months Ended October 31, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
473 |
|
|
503 |
|
|
$ |
321.0 |
|
|
$ |
348.9 |
|
|
$ |
678,600 |
|
|
$ |
693,700 |
|
Mid-Atlantic |
567 |
|
|
583 |
|
|
363.7 |
|
|
375.2 |
|
|
641,500 |
|
|
643,600 |
|
South |
624 |
|
|
449 |
|
|
433.5 |
|
|
333.9 |
|
|
694,800 |
|
|
743,700 |
|
West |
553 |
|
|
628 |
|
|
398.9 |
|
|
461.5 |
|
|
721,200 |
|
|
734,800 |
|
California |
427 |
|
|
500 |
|
|
746.6 |
|
|
872.6 |
|
|
1,748,500 |
|
|
1,745,100 |
|
Traditional Home Building |
2,644 |
|
|
2,663 |
|
|
2,263.7 |
|
|
2,392.1 |
|
|
856,200 |
|
|
898,300 |
|
City Living |
28 |
|
|
47 |
|
|
28.6 |
|
|
63.1 |
|
|
1,022,500 |
|
|
1,343,600 |
|
Corporate and other |
|
|
|
|
(0.3 |
) |
|
|
|
|
|
|
Total home sales |
2,672 |
|
|
2,710 |
|
|
2,292.0 |
|
|
2,455.2 |
|
|
$ |
857,800 |
|
|
$ |
906,000 |
|
Land sales |
|
|
|
|
87.0 |
|
|
|
|
|
|
|
Total consolidated |
|
|
|
|
$ |
2,379.0 |
|
|
$ |
2,455.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
317 |
|
|
347 |
|
|
$ |
222.4 |
|
|
$ |
238.4 |
|
|
$ |
701,600 |
|
|
$ |
687,100 |
|
Mid-Atlantic |
397 |
|
|
383 |
|
|
268.4 |
|
|
255.3 |
|
|
675,900 |
|
|
666,700 |
|
South |
474 |
|
|
319 |
|
|
308.9 |
|
|
242.9 |
|
|
651,700 |
|
|
761,400 |
|
West |
611 |
|
|
418 |
|
|
470.8 |
|
|
313.5 |
|
|
770,600 |
|
|
750,000 |
|
California |
186 |
|
|
226 |
|
|
346.5 |
|
|
410.4 |
|
|
1,862,900 |
|
|
1,815,800 |
|
Traditional Home Building |
1,985 |
|
|
1,693 |
|
|
1,617.0 |
|
|
1,460.5 |
|
|
814,600 |
|
|
862,700 |
|
City Living |
46 |
|
|
22 |
|
|
58.5 |
|
|
38.1 |
|
|
1,271,800 |
|
|
1,732,900 |
|
Total consolidated |
2,031 |
|
|
1,715 |
|
|
$ |
1,675.5 |
|
|
$ |
1,498.6 |
|
|
$ |
825,000 |
|
|
$ |
873,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
BACKLOG |
|
|
|
|
|
|
|
|
|
|
|
North |
1,076 |
|
|
1,098 |
|
|
$ |
757.1 |
|
|
$ |
768.5 |
|
|
$ |
703,600 |
|
|
$ |
699,900 |
|
Mid-Atlantic |
1,159 |
|
|
1,142 |
|
|
785.1 |
|
|
758.8 |
|
|
677,400 |
|
|
664,400 |
|
South |
1,339 |
|
|
1,166 |
|
|
930.0 |
|
|
903.2 |
|
|
694,600 |
|
|
774,600 |
|
West |
1,738 |
|
|
1,400 |
|
|
1,321.2 |
|
|
1,031.1 |
|
|
760,200 |
|
|
736,500 |
|
California |
842 |
|
|
1,133 |
|
|
1,314.1 |
|
|
1,883.3 |
|
|
1,560,700 |
|
|
1,662,200 |
|
Traditional Home Building |
6,154 |
|
|
5,939 |
|
|
5,107.5 |
|
|
5,344.9 |
|
|
829,900 |
|
|
900,000 |
|
City Living |
112 |
|
|
166 |
|
|
149.6 |
|
|
177.6 |
|
|
1,335,600 |
|
|
1,069,700 |
|
Total consolidated |
6,266 |
|
|
6,105 |
|
|
$ |
5,257.1 |
|
|
$ |
5,522.5 |
|
|
$ |
839,000 |
|
|
$ |
904,600 |
|
|
Twelve Months Ended October 31, |
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
North |
1,325 |
|
|
1,453 |
|
|
$ |
923.3 |
|
|
$ |
975.7 |
|
|
$ |
696,800 |
|
|
$ |
671,500 |
|
Mid-Atlantic |
1,708 |
|
|
1,800 |
|
|
1,112.8 |
|
|
1,141.1 |
|
|
651,500 |
|
|
633,900 |
|
South |
1,725 |
|
|
1,391 |
|
|
1,244.6 |
|
|
1,045.4 |
|
|
721,500 |
|
|
751,500 |
|
West |
1,965 |
|
|
2,130 |
|
|
1,418.0 |
|
|
1,451.4 |
|
|
721,600 |
|
|
681,400 |
|
California |
1,180 |
|
|
1,322 |
|
|
2,129.5 |
|
|
2,208.7 |
|
|
1,804,700 |
|
|
1,670,700 |
|
Traditional Home Building |
7,903 |
|
|
8,096 |
|
|
6,828.2 |
|
|
6,822.3 |
|
|
864,000 |
|
|
842,700 |
|
City Living |
204 |
|
|
169 |
|
|
253.2 |
|
|
321.0 |
|
|
1,241,200 |
|
|
1,899,400 |
|
Corporate and other |
|
|
|
|
(1.0 |
) |
|
|
|
|
|
|
Total home sales |
8,107 |
|
|
8,265 |
|
|
7,080.4 |
|
|
7,143.3 |
|
|
$ |
873,400 |
|
|
$ |
864,300 |
|
Land sales |
|
|
|
|
143.6 |
|
|
|
|
|
|
|
Total consolidated |
|
|
|
|
$ |
7,224.0 |
|
|
$ |
7,143.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONTRACTS |
|
|
|
|
|
|
|
|
|
|
|
North |
1,303 |
|
|
1,334 |
|
|
$ |
910.1 |
|
|
$ |
928.1 |
|
|
$ |
698,500 |
|
|
$ |
695,700 |
|
Mid-Atlantic |
1,725 |
|
|
1,799 |
|
|
1,137.8 |
|
|
1,158.3 |
|
|
659,600 |
|
|
643,900 |
|
South |
1,705 |
|
|
1,502 |
|
|
1,177.3 |
|
|
1,132.7 |
|
|
690,500 |
|
|
754,100 |
|
West |
2,303 |
|
|
2,133 |
|
|
1,705.7 |
|
|
1,510.5 |
|
|
740,600 |
|
|
708,200 |
|
California |
889 |
|
|
1,568 |
|
|
1,555.3 |
|
|
2,596.9 |
|
|
1,749,500 |
|
|
1,656,200 |
|
Traditional Home Building |
7,925 |
|
|
8,336 |
|
|
6,486.2 |
|
|
7,326.5 |
|
|
818,400 |
|
|
878,900 |
|
City Living |
150 |
|
|
183 |
|
|
224.7 |
|
|
277.8 |
|
|
1,498,000 |
|
|
1,518,000 |
|
Total consolidated |
8,075 |
|
|
8,519 |
|
|
$ |
6,710.9 |
|
|
$ |
7,604.3 |
|
|
$ |
831,100 |
|
|
$ |
892,600 |
|
Unconsolidated entities:
Information related to revenues and contracts of
entities in which we have an interest for the three-month and
twelve-month periods ended October 31, 2019 and 2018, and for
backlog at October 31, 2019 and 2018 is as follows:
|
Units |
|
$ (Millions) |
|
Average Price Per Unit $ |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Three months ended October
31, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
81 |
|
|
27 |
|
|
$ |
158.4 |
|
|
$ |
44.0 |
|
|
$ |
1,955,200 |
|
|
$ |
1,631,400 |
|
Contracts |
9 |
|
|
13 |
|
|
$ |
32.5 |
|
|
$ |
42.6 |
|
|
$ |
3,607,700 |
|
|
$ |
3,279,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months ended October
31, |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
186 |
|
|
100 |
|
|
$ |
376.0 |
|
|
$ |
148.0 |
|
|
$ |
2,021,300 |
|
|
$ |
1,480,000 |
|
Contracts |
40 |
|
|
156 |
|
|
$ |
131.0 |
|
|
$ |
301.9 |
|
|
$ |
3,274,200 |
|
|
$ |
1,935,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Backlog at October 31, |
26 |
|
|
172 |
|
|
$ |
76.3 |
|
|
$ |
321.3 |
|
|
$ |
2,935,200 |
|
|
$ |
1,868,100 |
|
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 October 31, |
|
Twelve Months Ended October 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Revenues - homes
sales |
$ |
2,292,044 |
|
|
$ |
2,455,238 |
|
|
$ |
7,080,379 |
|
|
$ |
7,143,258 |
|
Cost of revenues -
home sales |
1,860,567 |
|
|
1,930,751 |
|
|
5,678,914 |
|
|
5,673,007 |
|
Home sales gross
margin |
431,477 |
|
|
524,487 |
|
|
1,401,465 |
|
|
1,470,251 |
|
Add: |
Interest recognized in cost of
revenues - home sales |
59,183 |
|
|
61,819 |
|
|
185,045 |
|
|
190,734 |
|
|
Inventory write-downs |
10,724 |
|
|
6,410 |
|
|
42,360 |
|
|
35,156 |
|
Adjusted homes
sales gross margin |
$ |
501,384 |
|
|
$ |
592,716 |
|
|
$ |
1,628,870 |
|
|
$ |
1,696,141 |
|
|
|
|
|
|
|
|
|
|
Homes sales gross
margin as a percentage of home sale revenues |
18.8 |
% |
|
21.4 |
% |
|
19.8 |
% |
|
20.6 |
% |
|
|
|
|
|
|
|
|
|
Adjusted Home
Sales Gross Margin as a percentage of home sale revenues |
21.9 |
% |
|
24.1 |
% |
|
23.0 |
% |
|
23.7 |
% |
|
|
|
|
|
|
|
|
|
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 first quarter 2020
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 first quarter. The variability of these charges may have a
potentially unpredictable, and potentially significant, impact on
our first quarter fiscal 2020 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)
|
|
October 31, 2019 |
|
October 31, 2018 |
|
July 31, 2019 |
Loans payable |
$ |
1,111,449 |
|
|
$ |
686,801 |
|
|
$ |
1,089,137 |
|
Senior notes |
2,659,898 |
|
|
2,861,375 |
|
|
2,512,877 |
|
Mortgage company
loan facility |
150,000 |
|
|
150,000 |
|
|
150,000 |
|
Total debt |
3,921,347 |
|
|
3,698,176 |
|
|
3,752,014 |
|
Total
stockholders' equity |
5,071,816 |
|
|
4,760,199 |
|
|
4,939,085 |
|
Total capital |
$ |
8,993,163 |
|
|
$ |
8,458,375 |
|
|
$ |
8,691,099 |
|
Ratio of
debt-to-capital |
43.6 |
% |
|
43.7 |
% |
|
43.2 |
% |
|
|
|
|
|
|
|
Total debt |
$ |
3,921,347 |
|
|
$ |
3,698,176 |
|
|
$ |
3,752,014 |
|
Less: |
Mortgage company loan
facility |
(150,000 |
) |
|
(150,000 |
) |
|
(150,000 |
) |
|
Cash and cash equivalents |
(1,286,014 |
) |
|
(1,182,195 |
) |
|
(836,258 |
) |
Total net
debt |
2,485,333 |
|
|
2,365,981 |
|
|
2,765,756 |
|
Total
stockholders' equity |
5,071,816 |
|
|
4,760,199 |
|
|
4,939,085 |
|
Total net
capital |
$ |
7,557,149 |
|
|
$ |
7,126,180 |
|
|
$ |
7,704,841 |
|
Net
debt-to-capital ratio |
32.9 |
% |
|
33.2 |
% |
|
35.9 |
% |
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/3cfe878b-a396-444f-80ed-39f2bac95a30
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