TOL
$48.26
Toll Brothers
$1.19
2.53%
Earnings Details
3rd Quarter July 2020
Tuesday, August 25, 2020 4:15:00 PM
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Summary

Toll Brothers Beats

Toll Brothers (TOL) reported 3rd Quarter July 2020 earnings of $0.90 per share on revenue of $1.7 billion. The consensus earnings estimate was $0.69 per share on revenue of $1.8 billion. The Earnings Whisper number was $0.75 per share. Revenue fell 6.5% compared to the same quarter a year ago.

The company said it expects fourth quarter revenue of $1.96 billion to $2.13 billion. The current consensus revenue estimate is $2.01 billion for the quarter ending October 31, 2020.

Toll Brothers Inc designs, builds, markets and arranges financing for single-family detached and attached homes in luxury residential communities.

Results
Reported Earnings
$0.90
Earnings Whisper
$0.75
Consensus Estimate
$0.69
Reported Revenue
$1.65 Bil
Revenue Estimate
$1.77 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Toll Brothers Reports FY 2020 3rd Quarter Results

HORSHAM, Pa., Aug. 25, 2020 (GLOBE NEWSWIRE) -- 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, 2020.

Iron Oak at Alamo Creek, Danville, CA
Toll Brothers America's Luxury Home Builder


FY 2020’s Third Quarter Financial Highlights (Compared to FY 2019’s Third Quarter):

  • Net income and earnings per share were $114.8 million and $0.90 per share diluted, compared to net income of $146.3 million and $1.00 per share diluted in FY 2019’s third quarter. 
  • Pre-tax income was $151.9 million, compared to $186.9 million in FY 2019’s third quarter.
  • Home sales revenues were $1.63 billion, down 7%; home building deliveries were 2,022, up 1%.
  • Net signed contract homes were 2,833, up 26%; contract value was $2.21 billion, up 18%.
  • Backlog in homes at third-quarter end was 7,239, up 6%; backlog value was $6.09 billion, up 4%.
  • Home sales gross margin was 19.0%; Adjusted Home Sales Gross Margin, which excludes interest and inventory write-downs (“Adjusted Home Sales Gross Margin”), was 21.9%.
  • Pre-tax inventory write-downs totaled $6.7 million.
  • SG&A, as a percentage of home sales revenues, was 9.9%.
  • Income from operations was $149.6 million.
  • Other income, income from unconsolidated entities, and land sales gross profit was $3.6 million.

Financial Guidance:

  • Fourth quarter deliveries of between 2,400 and 2,550 homes with an average price of between $815,000 and $835,000.
  • Fourth quarter Adjusted Home Sales Gross Margin of approximately 21.5%.
  • Fourth quarter SG&A, as a percentage of home sales revenues, of approximately 9.0%.
  • Fourth quarter other income, income from unconsolidated entities, and land sales gross profit of approximately $5 million.
  • Fourth quarter tax rate of approximately 26.0%.
  • Community count at  FYE 2020 of approximately 320 communities.
  • Community count growth of at least 10% from FYE 2020 to FYE 2021.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “We are very pleased with our overall performance in our third quarter, including revenues of $1.63 billion, net income of $114.8 million and backlog of $6.09 billion. Our adjusted gross margin of 21.9% in the quarter improved sequentially compared to 21.0% in the fiscal 2020 second quarter due to a shift in mix of deliveries and solid execution by our teams in the field. SG&A as a percentage of home sales revenue improved to 9.9% in the quarter from 10.6% in the prior year period, reflecting cost efficiencies  initiated  in our second quarter.

“Our third quarter net signed contracts were our highest third quarter ever in both units and dollars, and our contracts per community, at 8.5, were the highest third quarter in fifteen years. This strength has continued into August. We attribute the surge in demand to a number of factors, including historically low interest rates, a continued undersupply of homes, and consumers focused more than ever on the importance of home.

“With our well-located land holdings in twenty-four states and our strategic focus on expanding our geographic footprint, product lines and price points, we are well-positioned to take advantage of the resurgent housing market.”

Toll Brothers’ Financial Highlights for the FY 2020 third quarter ended July 31, 2020 (unaudited): 

  • FY 2020’s third quarter net income was $114.8 million, or $0.90 per share diluted, compared to FY 2019’s third quarter net income of $146.3 million, or $1.00 per share diluted.

  • FY 2020’s third quarter pre-tax income was $151.9 million, compared to FY 2019’s third quarter pre-tax income of $186.9 million.

  • FY 2020’s third quarter results included pre-tax inventory impairments totaling $6.7 million, compared to FY 2019’s third quarter pre-tax inventory impairments of $4.7 million.

  • FY 2020’s third quarter home sales revenues were $1.63 billion and 2,022 units, compared to FY 2019’s third quarter totals of $1.76 billion and 1,994 units.

  • FY 2020's third quarter net signed contracts were $2.21 billion and 2,833 units, compared to FY 2019’s third quarter net signed contracts of $1.87 billion and 2,241 units.

  • FY 2020's third quarter net signed contracts, on a per-community basis, were 8.5 units, compared to third quarter net signed contracts on a per-community basis of 7.1 units in FY 2019, 8.1 units in FY 2018, 6.9 units in FY 2017 and 5.9 units in FY 2016.

  • In FY 2020, third quarter-end backlog was $6.09 billion and 7,239 units, compared to FY 2019’s third quarter-end backlog of $5.84 billion and 6,839 units. The average price of homes in backlog was $840,600, compared to $854,500 at FY 2019’s third quarter end.

  • FY 2020’s third quarter home sales gross margin was 19.0%, compared to FY 2019’s third quarter home sales gross margin of 20.2%. 

  • FY 2020’s third quarter Adjusted Home Sales Gross Margin was 21.9%, compared to FY 2019’s third quarter Adjusted Home Sales Gross Margin of 23.1%.

  • FY 2020’s third quarter interest included in cost of sales was 2.5% of revenue, compared to 2.7% in FY 2019’s third quarter. 

  • FY 2020’s third quarter SG&A, as a percentage of home sales revenues, was 9.9%, compared to 10.6% in FY 2019’s third quarter.

  • FY 2020’s third quarter income from operations of $149.6 million represented 9.1% of total revenues, compared to FY 2019’s third quarter of $171.0 million representing 9.7% of revenues. 

  • FY 2020's third quarter other income, income from unconsolidated entities, and land sales gross profit totaled $3.6 million, compared to FY 2019’s third quarter total of $18.4 million.

  • FY 2020’s third-quarter cancellation rate (current quarter cancellations divided by current quarter signed contracts) was 8.0%, compared to FY 2019’s third quarter cancellation rate of 6.5%. 

  • FY 2020's third-quarter cancellation rate as a percentage of beginning-quarter backlog was 3.8%, compared to FY 2019’s third quarter cancellation rate as a percentage of beginning-quarter backlog of 2.4%. 

Toll Brothers’ financial highlights for the nine months ended July 31, 2020 (unaudited):

  • FY 2020’s nine month period net income was $247.3 million, or $1.87 per share diluted, compared to FY 2019’s nine month period net income of $387.7 million, or $2.63 per share diluted.

  • FY 2020’s nine month period pre-tax income was $319.9 million, compared to FY 2019’s nine month period pre-tax income of $514.5 million.

  • FY 2020’s nine month period results included pre-tax inventory impairments totaling $21.9 million, compared to FY 2019’s nine month period pre-tax inventory impairments of $31.6 million.

  • FY 2020’s nine month period home sales revenues were $4.44 billion and 5,556 units, compared to FY 2019’s nine month period totals of $4.79 billion and 5,435 units.

  • FY 2020's nine month period net signed contracts were $5.26 billion and 6,525 units, compared to FY 2019’s nine month period net signed contracts of $5.04 billion and 6,044 units.

  • FY 2020’s nine month period income from operations of $289.7 million represented 6.4% of total revenues, compared to FY 2019’s nine month period of $455.9 million representing 9.4% of total revenues. 

  • FY 2020's nine month period other income, income from unconsolidated entities, and land sales gross profit totaled $39.9 million, compared to FY 2019’s nine month period total of $71.9 million.  

Additional Financial Information:

  • The Company ended its FY 2020 third quarter with $559.3 million in cash and cash equivalents, compared to $1.29 billion at FYE 2019 and $741.2 million at FY 2020’s second-quarter end. At FY 2020 third-quarter end, the Company also had $1.776 billion available under its $1.905 billion bank revolving credit facility.

  • On July 24, 2020, the Company paid its quarterly dividend of $0.11 per share to shareholders of record at the close of business on July 10, 2020.

  • Stockholders' Equity at FY 2020 third-quarter end was $4.68 billion, compared to $5.07 billion at FYE 2019.

  • FY 2020's third-quarter end book value per share was $37.12 per share, compared to $35.99 at FYE 2019.

  • The Company ended its FY 2020 third quarter with a debt-to-capital ratio of 45.3%, compared to 48.6% at FY 2020’s second-quarter end and 43.6% at FYE 2019. The Company ended FY 2020’s third quarter with a net debt-to-capital ratio (1) of 40.5%, compared to 43.2% at FY 2020’s second-quarter end, and 32.9% at FYE 2019.

  • The Company ended FY 2020’s third quarter with approximately 61,400 lots owned and optioned, compared to 62,100 one quarter earlier, and 57,400 one year earlier. Approximately 35,300 of these lots were owned, of which approximately 17,100 lots, including those in backlog, were substantially improved.

  • In the third quarter of FY 2020, the Company spent approximately $50.9 million on land to purchase approximately 600 lots.

  • The Company ended FY 2020’s third quarter with 323 selling communities, compared to 326 at FY 2020’s second-quarter end and 322 at FY 2019’s third-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, investors.TollBrothers.com, a conference call hosted by Chairman & CEO Douglas C. Yearley, Jr. at 11:00 a.m. (EDT) Wednesday, August 26, 2020, to discuss these results and its outlook for the remainder 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 first-time, move-up, empty-nester, active-adult, affordable luxury and second-home buyers, as well as urban and suburban renters. It operates in 24 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, 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 operates its own alarm monitoring company through TBI Smart Home Solutions, a complete home technology division.  In addition to providing security monitoring, TBI Smart Home Solutions offers homeowners a full range of low voltage options, allowing buyers to maximize the potential of technology in their new home. 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 2020, Toll Brothers was named World’s Most Admired Home Building Company in Fortune magazine’s survey of the World’s Most Admired Companies®, the sixth 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.  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 Statements

Information presented herein for the third quarter ended July 31, 2020 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 the Private Securities Litigation Reform Act of 1995. 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,” “likely,” “will,” and other words or phrases of similar meaning. Such statements may include, but are not limited to, information and statements regarding: the impact of Covid-19 on the U.S. economy, the markets in which we operate or may operate, and on our business; our strategic priorities; our land acquisition, land development and capital allocation priorities; market conditions; demand for our homes; anticipated operating results and guidance; home deliveries; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues, including expected labor and material costs; 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; our ability to acquire or dispose of land and pursue real estate opportunities; our ability to gain approvals and open new communities; our ability to market, construct and sell homes and properties; our ability to deliver homes from backlog; our ability to secure materials and subcontractors; our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; and the outcome of legal proceedings, investigations, and claims.

Any or all of the forward-looking statements included in this release are not guarantees of future performance and may turn out to be inaccurate. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. The major risks and uncertainties – and assumptions that are made – that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:

  • the effects of the ongoing Covid-19 pandemic, which are highly uncertain, cannot be predicted and will depend upon future developments, including the severity of Covid-19 and the duration of the outbreak, the duration of existing social distancing and shelter-in-place orders, further mitigation strategies taken by applicable government authorities, the availability of a vaccine, adequate testing and therapeutic treatments and the prevalence of widespread immunity to Covid-19;

  • the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar;

  • market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions;

  • the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels;

  • access to adequate capital on acceptable terms;

  • geographic concentration of our operations;

  • levels of competition;

  • raw material and labor prices and availability;

  • the effect of U.S. trade policies, including the imposition of tariffs and duties on home building products and retaliatory measures taken by other countries;

  • the effects of weather and the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters;

  • the risk of loss from acts of war, terrorism or outbreaks of contagious diseases, such as Covid-19;

  • transportation costs;

  • federal and state tax policies;

  • the effect of land use, environment and other governmental laws and regulations;

  • legal proceedings or disputes and the adequacy of reserves;

  • risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, indebtedness, financial condition, losses and future prospects;

  • changes in accounting principles;

  • risks related to unauthorized access to our computer systems, theft of our homebuyers’ confidential information or other forms of cyber-attack; and

  • other factors described in “Risk Factors” included in our Annual Report on Form 10-K for the year ended October 31, 2019 and in subsequent  filings we make with the Securities and Exchange Commission (“SEC”).

Many of the factors mentioned above or in other reports or public statements made by us 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.

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.

For a more detailed discussion of these factors, see 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 and in subsequent reports filed with the SEC.



TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

 July 31,
2020
 October 31,
2019
 (Unaudited)  
ASSETS   
Cash and cash equivalents$559,348   $1,286,014  
Inventory8,034,515   7,873,048  
Property, construction and office equipment, net313,513   273,412  
Receivables, prepaid expenses and other assets968,416   715,441  
Mortgage loans held for sale161,540   218,777  
Customer deposits held in escrow78,094   74,403  
Investments in unconsolidated entities412,766   366,252  
Income taxes receivable9,239   20,791  
 $10,537,431   $10,828,138  
    
LIABILITIES AND EQUITY   
Liabilities:   
Loans payable$1,082,025   $1,111,449  
Senior notes2,661,301   2,659,898  
Mortgage company loan facility122,189   150,000  
Customer deposits437,008   385,596  
Accounts payable375,900   348,599  
Accrued expenses1,014,822   950,932  
Income taxes payable118,058   102,971  
Total liabilities5,811,303   5,709,445  
    
Equity:   
Stockholders’ Equity   
Common stock1,529   1,529  
Additional paid-in capital722,115   726,879  
Retained earnings4,978,832   4,774,422  
Treasury stock, at cost(1,022,406)  (425,183) 
Accumulated other comprehensive loss(4,996)  (5,831) 
Total stockholders' equity4,675,074   5,071,816  
Noncontrolling interest51,054   46,877  
Total equity4,726,128   5,118,693  
 $10,537,431   $10,828,138  



TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data and percentages)
(Unaudited)

 Nine Months Ended
July 31,
 Three Months Ended
July 31,
 2020 2019 2020 2019
 $% $% $% $%
Revenues:           
Home sales$4,441,383   $4,788,335   $1,627,812    $1,756,970  
Land sales90,609   56,631   23,677    8,721  
 4,531,992   4,844,966   1,651,489    1,765,691  
            
Cost of revenues:           
Home sales3,629,525 81.7% 3,818,347 79.7% 1,318,936  81.0% 1,401,755 79.8%
Land sales80,959 89.3% 43,406 76.6% 22,259  94.0% 6,232 71.5%
 3,710,484   3,861,753   1,341,195    1,407,987  
            
Gross margin - home sales811,858 18.3% 969,988 20.3% 308,876  19.0% 355,215 20.2%
Gross margin - land sales9,650 10.7% 13,225 23.4% 1,418  6.0% 2,489 28.5%
            
Selling, general and administrative expenses$531,819 12.0% $527,318 11.0% $160,649  9.9% $186,709 10.6%
Income from operations289,689 6.4% 455,895 9.4% 149,645  9.1% 170,995 9.7%
            
Other:           
Income (loss) from unconsolidated entities5,304   17,759   (2,566)   7,200  
Other income - net24,917   40,867   4,786    8,721  
Income before income taxes319,910   514,521   151,865    186,916  
Income tax provision72,603   126,829   37,104    40,598  
Net income$247,307   $387,692   $114,761    $146,318  
Per share:           
Basic earnings$1.89   $2.65   $0.91    $1.01  
Diluted earnings$1.87   $2.63   $0.90    $1.00  
Cash dividend declared$0.33   $0.33   $0.11    $0.11  
Weighted-average number of shares:           
Basic131,024   146,041   126,722    144,750  
Diluted132,032   147,479   127,399    146,275  
            
Effective tax rate22.7 %  24.6 %  24.4 %  21.7 % 



TOLL BROTHERS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
(Amounts in thousands)
(unaudited)

 Nine Months Ended
July 31,
 Three Months Ended
July 31,
 2020 2019 2020 2019
Inventory impairment charges recognized:       
Cost of home sales - land owned/controlled for future communities$21,634  $7,256  $6,690  $3,579 
Cost of home sales - operating communities300  24,380    1,100 
 $21,934  $31,636  $6,690  $4,679 
        
Depreciation and amortization$46,700  $51,423  $16,415  $18,109 
Interest incurred$131,547  $131,830  $41,794  $43,968 
Interest expense:       
Charged to home sales cost of sales$111,278  $125,862  $40,467  $46,635 
Charged to land sales cost of sales4,124  945  2,820  310 
Charged to other income - net2,440       
 $117,842  $126,807  $43,287  $46,945 
        
Home sites controlled:July 31,
2020
 July 31,
2019
    
Owned35,289  34,577     
Optioned26,151  22,857     
 61,440  57,434     

Inventory at July 31, 2020 and October 31, 2019 consisted of the following (amounts in thousands):

 July 31,
2020
 October 31,
2019
Land and land development costs$2,163,668  $2,224,308 
Construction in progress5,165,742  4,984,989 
Sample homes432,165  414,107 
Land deposits and costs of future development272,940  249,644 
 $8,034,515  $7,873,048 

Toll Brothers operates in two segments: Traditional Home Building and Urban Infill ("City Living"). Within Traditional Home Building, Toll operates in five geographic segments. As previously reported, during the first quarter of fiscal 2020, management realigned certain of the states falling within its five home building regions. Within Traditional Home Building, the Company operates in the following five geographic segments, with current operations in the states listed below:

  • North: Connecticut, Delaware, Illinois, Massachusetts, Michigan, Pennsylvania, New Jersey and New York
  • Mid-Atlantic: Georgia, Maryland, North Carolina, Tennessee and Virginia
  • South: Florida, South Carolina and Texas
  • Mountain: Arizona, Colorado, Idaho, Nevada and Utah
  • Pacific: California, Oregon and Washington

The realignment did not have any impact on the Company’s consolidated financial position, results of operations, earnings per share or cash flows for the periods presented.  Prior period results have been recast to conform with the Company’s current segments in the tables below:

 Three Months Ended
July 31,
 Units $ (Millions) Average Price Per Unit $
 2020 2019 2020 2019 2020 2019
REVENUES           
North412  546  $290.4  $360.0  $704,900  $659,400 
Mid-Atlantic305  330  201.3  213.7  $659,900  $647,600 
South410  312  276.3  243.5  $674,000  $780,200 
Mountain612  437  425.4  292.7  $695,100  $669,800 
Pacific263  329  406.4  573.5  $1,545,300  $1,743,100 
Traditional Home Building2,002  1,954  1,599.8  1,683.4  $799,100  $861,500 
City Living20  40  26.4  71.9  $1,318,300  $1,797,300 
Corporate and other    1.6  1.7     
Total home sales2,022  1,994  1,627.8  1,757.0  $805,000  $881,100 
Land sales    23.7  8.7     
Total consolidated    $1,651.5  $1,765.7     
            
CONTRACTS           
North620  611  $428.0  $400.4  $690,400  $655,400 
Mid-Atlantic478  299  334.5  201.6  $699,800  $674,200 
South538  344  344.1  255.5  $639,500  $742,700 
Mountain801  622  561.8  414.5  $701,400  $666,500 
Pacific393  325  536.7  533.3  $1,365,600  $1,640,800 
Traditional Home Building2,830  2,201  2,205.1  1,805.3  $779,200  $820,200 
City Living3  40  8.8  63.5  $2,936,000  $1,587,100 
Total consolidated2,833  2,241  $2,213.9  $1,868.8  $781,500  $833,900 
            
BACKLOG           
North1,885  1,950  $1,325.5  $1,305.4  $703,200  $669,500 
Mid-Atlantic954  965  707.5  642.6  $741,600  $665,900 
South1,302  1,067  930.7  815.2  $714,800  $764,000 
Mountain1,888  1,554  1,408.8  1,081.5  $746,200  $695,900 
Pacific1,129  1,209  1,581.6  1,879.7  $1,400,900  $1,554,800 
Traditional Home Building7,158  6,745  5,954.1  5,724.4  $831,800  $848,700 
City Living81  94  131.1  119.7  $1,617,900  $1,272,900 
Total consolidated7,239  6,839  $6,085.2  $5,844.1  $840,600  $854,500 


 Nine Months Ended
July 31,
 Units $ (Millions) Average Price Per Unit $
 2020 2019 2020 2019 2020 2019
REVENUES           
North1,254  1,448  $840.5   $976.6   $670,300  $674,400 
Mid-Atlantic848  793  556.6   522.7   $656,400  $659,100 
South1,032  853  690.8   663.1   $669,400  $777,400 
Mountain1,518  1,219  1,026.0   804.9   $675,900  $660,300 
Pacific819  946  1,225.1   1,597.1   $1,495,800  $1,688,300 
Traditional Home Building5,471  5,259  4,339.0   4,564.4   $793,100  $867,900 
City Living85  176  103.0   224.6   $1,211,800  $1,276,100 
Corporate and other    (0.6)  (0.7)     
Total home sales5,556  5,435  4,441.4   4,788.3   $799,400  $881,000 
Land sales    90.6   56.6      
Total consolidated    $4,532.0   $4,844.9      
            
CONTRACTS           
North1,397  1,700  $985.0   $1,130.5   $705,100  $665,000 
Mid-Atlantic1,014  896  723.9   598.8   $713,900  $668,300 
South1,286  949  861.8   696.2   $670,100  $733,600 
Mountain1,800  1,553  1,281.3   1,061.2   $711,800  $683,300 
Pacific974  842  1,320.5   1,382.5   $1,355,700  $1,641,900 
Traditional Home Building6,471  5,940  5,172.5   4,869.2   $799,300  $819,700 
City Living54  104  83.9   166.2   $1,553,700  $1,598,100 
Total consolidated6,525  6,044  $5,256.4   $5,035.4   $805,600  $833,100 

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, 2020 and 2019, and for backlog at July 31, 2020 and 2019 is as follows:

 Units $ (Millions) Average Price Per Unit $
 2020 2019 2020 2019 2020 2019
Three months ended July 31,           
Revenues9  33  $35.6  $95.8  $3,957,900  $2,902,000 
Contracts2  15  $7.0  $42.4  $3,510,600  $2,823,600 
            
Nine months ended July 31,           
Revenues41  105  $127.0  $217.6  $3,098,200  $2,072,400 
Contracts17  31  $57.5  $98.5  $3,381,900  $3,177,400 
            
Backlog at July 31,2  98  $6.8  $202.2  $3,390,600  $2,063,400 

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 home building 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 home builders 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 home builders to the extent they provide similar information.

Adjusted Home Sales Gross Margin
The 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,
 Nine Months Ended
July 31,
 Three
Months Ended
April 30,
  2020 2019 2020 2019 2020
Revenues - homes sales$1,627,812  $1,756,970  $4,441,383  $4,788,335  $1,516,234 
Cost of revenues - home sales1,318,936  1,401,755  3,629,525  3,818,347  1,250,689 
Home sales gross margin308,876  355,215  811,858  969,988  265,545 
Add:Interest recognized in cost of revenues - home sales40,467  46,635  111,278  125,862  38,037 
 Inventory write-downs6,690  4,679  21,934  31,636  14,214 
Adjusted homes sales gross margin$356,033  $406,529  $945,070  $1,127,486  $317,796 
           
Homes sales gross margin as a percentage of home sale revenues19.0% 20.2% 18.3% 20.3% 17.5%
           
Adjusted Home Sales Gross Margin as a percentage of home sale revenues21.9% 23.1% 21.3% 23.5% 21.0%

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 home building 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 home building operations and making strategic decisions regarding community location and product mix.

Forward-looking Adjusted Homes Sales Gross Margin
The Company has not provided projected fourth quarter and full fiscal 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 fourth quarter and full fiscal year 2020. The variability of these charges may have a potentially unpredictable, and potentially significant, impact on our fourth quarter and full fiscal year 2020 homes sales gross margin. 

Net Debt-to-Capital Ratio
The 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, 2020   April 30, 2020   October 31, 2019 
Loans payable
 $1,082,025  $1,556,572  $1,111,449 
Senior notes
  2,661,301   2,660,815   2,659,898 
Mortgage company loan facility
  122,189   106,018   150,000 
Total debt
  3,865,515   4,323,405   3,921,347 
Total stockholders' equity
  4,675,074   4,564,518   5,071,816 
Total capital
            
   $8,540,589  $8,887,923  $8,993,163 
Ratio of debt-to-capital
  45.3 %  48.6 %  43.6 %
              
Total debt
 $3,865,515  $4,323,405  $3,921,347 
Less:Mortgage company loan facility  (122,189)  (106,018)  (150,000)
 Cash and cash equivalents  (559,348)  (741,222)  (1,286,014)
Total net debt
  3,183,978   3,476,165   2,485,333 
Total stockholders' equity
  4,675,074   4,564,518   5,071,816 
Total net capital
 $7,859,052  $8,040,683  $7,557,149 
Net debt-to-capital ratio
  40.5 %  43.2 %  32.9 %

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) 938-8312
fcooper@tollbrothers.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/e6414d3f-1a56-48d7-9a50-5d172df25663


Toll Brothers logo.jpg

Source: Toll Brothers, Inc.