Toll Brothers Reports FY 2024 2nd Quarter Results
Toll Brothers (NYSE:TOL), a leading luxury home builder, reported its FY 2024 second-quarter results, highlighting a net income of $481.6 million or $4.55 per share, compared to $320.2 million or $2.85 per share in the same period last year. Home sales revenues increased by 6% to $2.65 billion, with 2,641 delivered homes. Net signed contract value rose by 29% to $2.94 billion, with 3,041 contracted homes. However, the backlog value decreased by 12% to $7.38 billion. The company repurchased $181 million in common stock and increased its quarterly dividend by 10%. Looking ahead, Toll Brothers expects to earn $14.00 per diluted share for the full fiscal year 2024.
- Net income increased by 50% to $481.6 million.
- Earnings per share rose to $4.55 from $2.85.
- Home sales revenues grew by 6% to $2.65 billion.
- Net signed contract value surged by 29% to $2.94 billion.
- Contracted homes increased by 30% to 3,041.
- Income from operations rose to $623.5 million.
- SG&A expenses improved to 9.0% of home sales revenues.
- Repurchased $181 million of common stock.
- Increased quarterly dividend by 10%.
- Backlog value decreased by 12% to $7.38 billion.
- Home sales gross margin slightly declined to 25.8%.
- Adjusted home sales gross margin fell to 28.2% from 28.3%.
- Cash and cash equivalents decreased to $1.03 billion from $1.30 billion at FYE 2023.
Insights
Toll Brothers has posted a strong performance for the second quarter of FY 2024. The key takeaway is the significant
The increase in home sales revenue by 6%, reaching
However, the backlog value decreased by 12% to
For investors, Toll Brothers' robust cash flow and low net debt-to-capital ratio of 18.7% are reassuring, showing financial stability and liquidity. The increase in dividends and share repurchases demonstrates the company's commitment to returning value to shareholders.
Short-term, investors might see volatility due to the reduced backlog value, but long-term growth prospects appear solid given the company's strategic initiatives in expanding market share and maintaining operational efficiency.
Toll Brothers' 30% increase in net signed contracts is a noteworthy highlight, indicating strong consumer demand and market confidence in the luxury home segment. The company's strategy to widen its price point and increase the supply of spec homes appears to be paying off, as these measures are likely attracting a broader customer base.
Despite the lower backlog value and slight decrease in gross margin, the company's ability to outperform its guidance on gross margin and SG&A expenses reflects operational efficiency. The 2.8% cancellation rate, down from 3.9%, also signals improved customer retention and satisfaction.
From a market perspective, the increasing home prices and demand can be attributed to macroeconomic factors such as resilient economic conditions, favorable demographics and limited housing supply. The chronic underproduction of housing in the U.S. and low resale inventory due to higher interest rates are driving this trend.
Investors should monitor the market dynamics and Toll Brothers' strategic initiatives to diversify its product offerings to capture more market share, which can yield long-term benefits. The company's ability to adapt to market conditions and leverage its operational strengths will be critical for sustaining growth.
Toll Brothers' performance reflects broader trends in the luxury real estate market. The company's focus on expanding its range of affordable luxury homes and spec homes is a strategic move to tap into a wider segment of buyers who are priced out of ultra-luxury homes but still seek premium features.
The 6% increase in delivered homes and the significant rise in net signed contracts indicate a strong demand pipeline. However, the 12% drop in backlog value is a point of concern, suggesting that while current sales are strong, future growth might face headwinds if new contract signings don't keep pace.
The company's land acquisition strategy, with substantial investments in purchasing lots, is aimed at securing future growth. Owning approximately 52% of its lots ensures control over development timelines and costs, which is important in the current market environment where land prices are volatile.
For investors, Toll Brothers' approach to balancing growth with financial prudence is commendable. The company's low debt levels and strong liquidity position provide a cushion against market fluctuations, making it a relatively stable investment in the real estate sector.
FORT WASHINGTON, Pa., May 21, 2024 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (TollBrothers.com), the nation’s leading builder of luxury homes, today announced results for its second quarter ended April 30, 2024.
FY 2024’s Second Quarter Financial Highlights (Compared to FY 2023’s Second Quarter):
- Net income and earnings per share were
$481.6 million and$4.55 per diluted share, compared to net income of$320.2 million and$2.85 per diluted share in FY 2023’s second quarter. - Net income and earnings per share included
$124.1 million and$1.17 , respectively, related to the sale of a parcel of land to a commercial developer. Excluding these gains, net income and earnings per share were$357.5 million and$3.38 per diluted share in FY 2024’s second quarter. - Pre-tax income was
$649.8 million , compared to$430.6 million in FY 2023’s second quarter. - Home sales revenues were
$2.65 billion , up6% compared to FY 2023’s second quarter; delivered homes were 2,641, also up6% . - Net signed contract value was
$2.94 billion , up29% compared to FY 2023’s second quarter; contracted homes were 3,041, up30% . - Backlog value was
$7.38 billion at second quarter end, down12% compared to FY 2023’s second quarter; homes in backlog were 7,093, down6% . - Home sales gross margin was
25.8% , compared to FY 2023’s second quarter home sales gross margin of26.4% . - Adjusted home sales gross margin, which excludes interest and inventory write-downs, was
28.2% , compared to FY 2023’s second quarter adjusted home sales gross margin of28.3% . - SG&A, as a percentage of home sales revenues, was
9.0% , compared to9.1% in FY 2023’s second quarter. - Income from operations was
$623.5 million . - Other income, income from unconsolidated entities, and gross margin from land sales and other was
$203.7 million , which includes$175.2 million from the land sale referred to above.
Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “We are very pleased with our second quarter results. We delivered 2,641 homes at an average price of
“Demand for new homes continues to be driven by a resilient economy, favorable demographics and a lack of supply that reflects both the chronic underproduction of housing in the U.S. and the historically low levels of resale inventory caused by the lock-in effect of higher rates. Our strategy of widening our price points to include more affordable luxury homes and increasing our supply of spec homes has helped us grow market share. It also enables us to reduce cycle times, improve inventory turns and leverage our fixed costs, driving revenue growth and higher operating margins. With these strategies firmly in place and producing results, and with our more capital efficient land strategy, we are confident that we can continue to generate attractive returns well into the future.
“We have a healthy balance sheet with low net debt and ample liquidity, and we continue to generate significant operating cash flows. In the second quarter, we repurchased
| Third Quarter and FY 2024 Financial Guidance: | |||
| Third Quarter | Full Fiscal Year 2024 | ||
| Deliveries | 2,750 to 2,850 units | 10,400 to 10,800 units | |
| Average Delivered Price per Home | |||
| Adjusted Home Sales Gross Margin | |||
| SG&A, as a Percentage of Home Sales Revenues | |||
| Period-End Community Count | 400 | 410 | |
| Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other | $— | ||
| Tax Rate | |||
| Financial Highlights for the three months ended April 30, 2024 and 2023 (unaudited): | |||
| 2024 | 2023 | ||
| Net Income | |||
| Pre-Tax Income | |||
| Pre-Tax Inventory Impairments included in Home Sales Costs of Revenues | |||
| Home Sales Revenues | |||
| Net Signed Contracts | |||
| Net Signed Contracts per Community | 8.0 units | 7.0 units | |
| Quarter-End Backlog | |||
| Average Price per Home in Backlog | |||
| Home Sales Gross Margin | |||
| Adjusted Home Sales Gross Margin | |||
| Interest Included in Home Sales Cost of Revenues, as a percentage of Home Sales Revenues | |||
| SG&A, as a percentage of Home Sales Revenues | |||
| Income from Operations | |||
| Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other | |||
| Pre-Tax Land and Other Impairments included in Land Sales and Other Costs of Revenues | |||
| Quarterly Cancellations as a Percentage of Beginning-Quarter Backlog | |||
| Quarterly Cancellations as a Percentage of Signed Contracts in Quarter | |||
| Financial Highlights for the six months ended April 30, 2024 and 2023 (unaudited): | |||
| 2024 | 2023 | ||
| Net Income | |||
| Pre-Tax Income | |||
| Pre-Tax Inventory Impairments included in Home Sales Costs of Revenues | |||
| Home Sales Revenues | |||
| Net Signed Contracts | |||
| Home Sales Gross Margin | |||
| Adjusted Home Sales Gross Margin | |||
| Interest Included in Home Sales Cost of Revenues, as a percentage of Home Sales Revenues | |||
| SG&A, as a percentage of Home Sales Revenues | |||
| Income from Operations | |||
| Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other | |||
| Pre-Tax Land and Other Impairments included in Land Sales and Other Costs of Revenues | |||
Additional Information:
- The Company ended its FY 2024 second quarter with approximately
$1.03 billion in cash and cash equivalents, compared to$1.30 billion at FYE 2023 and$754.8 million at FY 2024’s first quarter end. At FY 2024 second quarter end, the Company also had$1.7 billion available under its$1.9 billion revolving credit facility, which is scheduled to mature in February 2028. - On March 12, 2024, the Company announced a
10% increase in its quarterly cash dividend from$0.21 t o$0.23 per share. On April 19, 2024, the Company paid its quarterly dividend of$0.23 per share to shareholders of record at the close of business on April 5, 2024. - Stockholders’ Equity at FY 2024 second quarter end was
$7.31 billion , compared to$6.80 billion at FYE 2023. - FY 2024’s second quarter-end book value per share was
$70.98 per share, compared to$65.49 at FYE 2023. - The Company ended its FY 2024’s second quarter with a debt-to-capital ratio of
28.0% , compared to28.0% at FY 2024’s first quarter end and29.6% at FYE 2023. The Company ended FY 2024’s second quarter with a net debt-to-capital ratio(1) of18.7% , compared to21.4% at FY 2024’s first quarter end, and17.7% at FYE 2023. - The Company ended FY 2024’s second quarter with approximately 71,800 lots owned and optioned, compared to 70,400 one quarter earlier, and 71,300 one year earlier. Approximately
52% or 37,000, of these lots were owned, of which approximately 18,500 lots, including those in backlog, were substantially improved. - In the second quarter of FY 2024, the Company spent approximately
$472.0 million on land to purchase approximately 3,470 lots. - The Company ended FY 2024’s second quarter with 386 selling communities, compared to 377 at FY 2024’s first quarter end and 350 at FY 2023’s second quarter end.
- The Company repurchased approximately 1.5 million shares at an average price of
$120.60 per share for a total purchase price of approximately$181.2 million .
(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 and chief executive officer Douglas C. Yearley, Jr. at 8:30 a.m. (ET) Wednesday, May 22, 2024, to discuss these results and its outlook for the third quarter and FY 2024. 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.
ABOUT TOLL BROTHERS
Toll Brothers, Inc., a Fortune 500 Company, is the nation’s leading builder of luxury homes. The Company was founded 57 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, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds in over 60 markets 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. The Company operates its own architectural, engineering, mortgage, title, land development, insurance, smart home technology, and landscape subsidiaries. The Company also develops master-planned and golf course communities as well as operates its own lumber distribution, house component assembly, and manufacturing operations.
In 2024, Toll Brothers marked 10 years in a row being named to the Fortune World’s Most Admired Companies™ list. Toll Brothers has also been named Builder of the Year by Builder magazine and is the first two-time recipient of Builder of the Year from Professional Builder magazine. For more information visit 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).
From Fortune, ©2024 Fortune Media IP Limited. All rights reserved. Used under license.
FORWARD-LOOKING STATEMENTS
Information presented herein for the second quarter ended April 30, 2024 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: expectations regarding inflation and interest rates; the markets in which we operate or may operate; our strategic priorities; our land acquisition, land development and capital allocation priorities; market conditions; demand for our homes; our build-to-order and spec home strategy; 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 effect of general economic conditions, including employment rates, housing starts, inflation rates, interest and mortgage rates, 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 land;
- access to adequate capital on acceptable terms;
- geographic concentration of our operations;
- levels of competition;
- the price and availability of lumber, other raw materials, home components and labor;
- 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, unavailability of insurance, and shortages and price increases in labor or materials associated with such natural disasters;
- risks arising from acts of war, terrorism or outbreaks of contagious diseases, such as Covid-19;
- federal and state tax policies;
- transportation costs;
- 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;
- the effect of potential loss of key management personnel;
- changes in accounting principles;
- risks related to unauthorized access to our computer systems, theft of our and 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, 2023 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 further discussion of factors that we believe could cause actual results to differ materially from expected and historical results, 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. 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.
| TOLL BROTHERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands) | |||||||
| April 30, 2024 | October 31, 2023 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Cash and cash equivalents | $ | 1,030,530 | $ | 1,300,068 | |||
| Inventory | 9,926,939 | 9,057,578 | |||||
| Property, construction and office equipment - net | 321,166 | 323,990 | |||||
| Receivables, prepaid expenses and other assets | 724,399 | 691,256 | |||||
| Mortgage loans held for sale | 136,346 | 110,555 | |||||
| Customer deposits held in escrow | 108,521 | 84,530 | |||||
| Investments in unconsolidated entities | 1,002,458 | 959,041 | |||||
| $ | 13,250,359 | $ | 12,527,018 | ||||
| LIABILITIES AND EQUITY | |||||||
| Liabilities: | |||||||
| Loans payable | $ | 1,113,126 | $ | 1,164,224 | |||
| Senior notes | 1,596,644 | 1,596,185 | |||||
| Mortgage company loan facility | 127,541 | 100,058 | |||||
| Customer deposits | 542,877 | 540,718 | |||||
| Accounts payable | 694,422 | 597,582 | |||||
| Accrued expenses | 1,636,722 | 1,548,781 | |||||
| Income taxes payable | 214,833 | 166,268 | |||||
| Total liabilities | 5,926,165 | 5,713,816 | |||||
| Equity: | |||||||
| Stockholders’ Equity | |||||||
| Common stock, 112,937 shares issued at April 30, 2024 and October 31, 2023 | 1,129 | 1,129 | |||||
| Additional paid-in capital | 689,259 | 698,548 | |||||
| Retained earnings | 7,350,235 | 6,675,719 | |||||
| Treasury stock, at cost — 9,974 and 9,146 shares at April 30, 2024 and October 31, 2023, respectively | (772,476 | ) | (619,150 | ) | |||
| Accumulated other comprehensive income | 39,827 | 40,910 | |||||
| Total stockholders’ equity | 7,307,974 | 6,797,156 | |||||
| Noncontrolling interest | 16,220 | 16,046 | |||||
| Total equity | 7,324,194 | 6,813,202 | |||||
| $ | 13,250,359 | $ | 12,527,018 | ||||
| TOLL BROTHERS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share data and percentages) (Unaudited) | |||||||||||||||||||||||
| Three Months Ended April 30, | Six Months Ended April 30, | ||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||
| $ | % | $ | % | $ | % | $ | % | ||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Home sales | $ | 2,647,020 | $ | 2,490,098 | $ | 4,578,856 | $ | 4,239,520 | |||||||||||||||
| Land sales and other | 190,466 | 16,881 | 206,478 | 47,628 | |||||||||||||||||||
| 2,837,486 | 2,506,979 | 4,785,334 | 4,287,148 | ||||||||||||||||||||
| Cost of revenues: | |||||||||||||||||||||||
| Home sales | 1,963,283 | 74.2 | % | 1,832,878 | 73.6 | % | 3,362,509 | 73.4 | % | 3,133,801 | 73.9 | % | |||||||||||
| Land sales and other | 12,979 | 6.8 | % | 20,850 | 123.5 | % | 23,140 | 11.2 | % | 63,285 | 132.9 | % | |||||||||||
| 1,976,262 | 1,853,728 | 3,385,649 | 3,197,086 | ||||||||||||||||||||
| Gross margin - home sales | 683,737 | 25.8 | % | 657,220 | 26.4 | % | 1,216,347 | 26.6 | % | 1,105,719 | 26.1 | % | |||||||||||
| Gross margin - land sales and other | 177,487 | 93.2 | % | (3,969 | ) | (23.5 | )% | 183,338 | 88.8 | % | (15,657 | ) | (32.9 | )% | |||||||||
| Selling, general and administrative expenses | 237,698 | 9.0 | % | 227,537 | 9.1 | % | 467,744 | 10.2 | % | 439,034 | 10.4 | % | |||||||||||
| Income from operations | 623,526 | 425,714 | 931,941 | 651,028 | |||||||||||||||||||
| Other: | |||||||||||||||||||||||
| Income (loss) from unconsolidated entities | 5,887 | (5,302 | ) | (3,285 | ) | (9,735 | ) | ||||||||||||||||
| Other income - net | 20,366 | 10,180 | 32,284 | 43,095 | |||||||||||||||||||
| Income before income taxes | 649,779 | 430,592 | 960,940 | 684,388 | |||||||||||||||||||
| Income tax provision | 168,162 | 110,376 | 239,765 | 172,642 | |||||||||||||||||||
| Net income | $ | 481,617 | $ | 320,216 | $ | 721,175 | $ | 511,746 | |||||||||||||||
| Per share: | |||||||||||||||||||||||
| Basic earnings | $ | 4.60 | $ | 2.88 | $ | 6.87 | $ | 4.60 | |||||||||||||||
| Diluted earnings | $ | 4.55 | $ | 2.85 | $ | 6.80 | $ | 4.56 | |||||||||||||||
| Cash dividend declared | $ | 0.23 | $ | 0.21 | $ | 0.44 | $ | 0.41 | |||||||||||||||
| Weighted-average number of shares: | |||||||||||||||||||||||
| Basic | 104,794 | 111,214 | 104,958 | 111,306 | |||||||||||||||||||
| Diluted | 105,803 | 112,184 | 106,034 | 112,260 | |||||||||||||||||||
| Effective tax rate | 25.9 | % | 25.6 | % | 25.0 | % | 25.2 | % | |||||||||||||||
| TOLL BROTHERS, INC. AND SUBSIDIARIES SUPPLEMENTAL DATA (Amounts in thousands) (unaudited) | |||||||||||
| Three Months Ended April 30, | Six Months Ended April 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||
| Inventory impairments and write-offs included in home sales cost of revenues: | |||||||||||
| Pre-development costs and option write offs | $ | 1,288 | $ | 5,844 | $ | 2,759 | $ | 8,448 | |||
| Land owned for future communities | — | 325 | — | 325 | |||||||
| Land owned for operating communities | 27,140 | 4,900 | 27,140 | 10,300 | |||||||
| $ | 28,428 | $ | 11,069 | $ | 29,899 | $ | 19,073 | ||||
| Land and other impairments included in land sales and other cost of revenues | $ | 600 | $ | 4,700 | $ | 600 | $ | 17,700 | |||
| Depreciation and amortization | $ | 19,590 | $ | 18,611 | $ | 35,283 | $ | 34,093 | |||
| Interest incurred | $ | 27,405 | $ | 33,581 | $ | 56,164 | $ | 66,628 | |||
| Interest expense: | |||||||||||
| Charged to home sales cost of revenues | $ | 34,740 | $ | 37,558 | $ | 58,318 | $ | 62,638 | |||
| Charged to land sales and other cost of revenues | 726 | 1,350 | 1,020 | 4,827 | |||||||
| $ | 35,466 | $ | 38,908 | $ | 59,338 | $ | 67,465 | ||||
| Home sites controlled: | April 30, 2024 | April 30, 2023 | |||||||||
| Owned | 36,985 | 36,348 | |||||||||
| Optioned | 34,779 | 34,947 | |||||||||
| 71,764 | 71,295 | ||||||||||
Inventory at April 30, 2024 and October 31, 2023 consisted of the following (amounts in thousands):
| April 30, 2024 | October 31, 2023 | ||||
| Land deposits and costs of future communities | $ | 509,981 | $ | 549,035 | |
| Land and land development costs | 2,952,101 | 2,631,147 | |||
| Land and land development costs associated with homes under construction | 3,203,677 | 2,916,334 | |||
| Total land and land development costs | 6,665,759 | 6,096,516 | |||
| Homes under construction | 2,782,555 | 2,515,484 | |||
| Model homes (1) | 478,625 | 445,578 | |||
| $ | 9,926,939 | $ | 9,057,578 | ||
(1) Includes the allocated land and land development costs associated with each of our model homes in operation.
Toll Brothers operates in the following five geographic segments, with current operations generally located in the states listed below:
- North: Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Jersey, New York and Pennsylvania
- 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
| Three Months Ended April 30, | |||||||||||||||||
| Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| REVENUES | |||||||||||||||||
| North | 349 | 408 | $ | 335.2 | $ | 381.3 | $ | 960,500 | $ | 934,600 | |||||||
| Mid-Atlantic | 378 | 274 | 376.1 | 309.6 | $ | 995,000 | $ | 1,129,900 | |||||||||
| South | 804 | 659 | 658.4 | 519.4 | $ | 818,900 | $ | 788,100 | |||||||||
| Mountain | 686 | 767 | 603.6 | 674.2 | $ | 879,800 | $ | 879,100 | |||||||||
| Pacific | 424 | 384 | 674.7 | 605.9 | $ | 1,591,200 | $ | 1,577,800 | |||||||||
| Home Building | 2,641 | 2,492 | 2,648.0 | 2,490.4 | $ | 1,002,600 | $ | 999,300 | |||||||||
| Corporate and other | (1.0 | ) | (0.3 | ) | |||||||||||||
| Total home sales | 2,641 | 2,492 | 2,647.0 | 2,490.1 | $ | 1,002,300 | $ | 999,200 | |||||||||
| Land sales and other | 190.5 | 16.9 | |||||||||||||||
| Total Consolidated | $ | 2,837.5 | $ | 2,507.0 | |||||||||||||
| CONTRACTS | |||||||||||||||||
| North | 412 | 396 | $ | 422.1 | $ | 366.1 | $ | 1,024,600 | $ | 924,400 | |||||||
| Mid-Atlantic | 376 | 316 | 348.9 | 325.4 | $ | 928,000 | $ | 1,029,700 | |||||||||
| South | 892 | 749 | 746.8 | 590.9 | $ | 837,200 | $ | 789,000 | |||||||||
| Mountain | 944 | 529 | 814.6 | 449.4 | $ | 862,900 | $ | 849,500 | |||||||||
| Pacific | 417 | 343 | 608.6 | 543.5 | $ | 1,459,400 | $ | 1,584,600 | |||||||||
| Total Consolidated | 3,041 | 2,333 | $ | 2,941.0 | $ | 2,275.3 | $ | 967,100 | $ | 975,300 | |||||||
| BACKLOG | |||||||||||||||||
| North | 1,055 | 1,081 | $ | 1,108.0 | $ | 1,097.6 | $ | 1,050,300 | $ | 1,015,300 | |||||||
| Mid-Atlantic | 912 | 969 | 900.8 | 1,052.3 | $ | 987,700 | $ | 1,085,900 | |||||||||
| South | 2,344 | 2,539 | 2,120.2 | 2,362.4 | $ | 904,500 | $ | 930,400 | |||||||||
| Mountain | 1,891 | 2,037 | 1,836.2 | 2,161.1 | $ | 971,000 | $ | 1,060,900 | |||||||||
| Pacific | 891 | 948 | 1,412.8 | 1,702.9 | $ | 1,585,600 | $ | 1,796,300 | |||||||||
| Total Consolidated | 7,093 | 7,574 | $ | 7,378.0 | $ | 8,376.3 | $ | 1,040,200 | $ | 1,105,900 | |||||||
| Six Months Ended April 30, | |||||||||||||||||
| Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| REVENUES | |||||||||||||||||
| North | 638 | 765 | $ | 607.9 | $ | 704.1 | $ | 952,800 | $ | 920,400 | |||||||
| Mid-Atlantic | 655 | 440 | 640.3 | 498.7 | $ | 977,600 | $ | 1,133,400 | |||||||||
| South | 1,435 | 1,148 | 1,191.3 | 912.3 | $ | 830,200 | $ | 794,700 | |||||||||
| Mountain | 1,171 | 1,315 | 1,056.9 | 1,154.4 | $ | 902,600 | $ | 877,900 | |||||||||
| Pacific | 669 | 650 | 1,083.7 | 970.6 | $ | 1,619,900 | $ | 1,493,200 | |||||||||
| Home Building | 4,568 | 4,318 | 4,580.1 | 4,240.1 | $ | 1,002,600 | $ | 982,000 | |||||||||
| Corporate and other | (1.2 | ) | (0.6 | ) | |||||||||||||
| Total home sales | 4,568 | 4,318 | 4,578.9 | 4,239.5 | $ | 1,002,400 | $ | 981,800 | |||||||||
| Land sales and other | 206.5 | 47.6 | |||||||||||||||
| Total Consolidated | $ | 4,785.3 | $ | 4,287.1 | |||||||||||||
| CONTRACTS | |||||||||||||||||
| North | 737 | 724 | $ | 751.0 | $ | 681.3 | $ | 1,019,000 | $ | 941,000 | |||||||
| Mid-Atlantic | 622 | 567 | 587.6 | 589.5 | $ | 944,700 | $ | 1,039,700 | |||||||||
| South | 1,467 | 1,164 | 1,216.7 | 919.4 | $ | 829,400 | $ | 789,900 | |||||||||
| Mountain | 1,485 | 828 | 1,313.4 | 713.3 | $ | 884,400 | $ | 861,500 | |||||||||
| Pacific | 772 | 511 | 1,137.1 | 826.0 | $ | 1,472,900 | $ | 1,616,400 | |||||||||
| Total Consolidated | 5,083 | 3,794 | $ | 5,005.8 | $ | 3,729.5 | $ | 984,800 | $ | 983,000 | |||||||
Note: Due to rounding, amounts may not add.
Unconsolidated entities:
Information related to revenues and contracts of entities in which we have an interest for the three-month and six-month periods ended April 30, 2024 and 2023, and for backlog at April 30, 2024 and 2023 is as follows:
| Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Three months ended April 30, | |||||||||||||||||
| Revenues | 40 | 3 | $ | 40.9 | $ | 8.6 | $ | 1,021,400 | $ | 2,864,500 | |||||||
| Contracts | 33 | 29 | $ | 43.9 | $ | 37.3 | $ | 1,328,900 | $ | 1,286,000 | |||||||
| Six months ended April 30, | |||||||||||||||||
| Revenues | 40 | 6 | $ | 40.9 | $ | 23.4 | $ | 1,021,400 | $ | 3,906,700 | |||||||
| Contracts | 55 | 52 | $ | 65.4 | $ | 70.2 | $ | 1,189,700 | $ | 1,350,300 | |||||||
| Backlog at April 30, | 164 | 127 | $ | 184.5 | $ | 143.4 | $ | 1,125,200 | $ | 1,128,800 | |||||||
| 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 home sales gross margin, adjusted net income, adjusted diluted earnings per share and the Company’s net debt-to-capital ratio.
These four 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 home sales gross margin as a percentage of home sales revenues (calculated in accordance with GAAP) to the Company’s adjusted home sales gross margin (a non-GAAP financial measure). Adjusted home sales gross margin is calculated as (i) home sales gross margin plus interest recognized in home sales cost of revenues plus inventory write-downs recognized in home sales cost of revenues divided by (ii) home sales revenues.
| Adjusted Home Sales Gross Margin Reconciliation (Amounts in thousands, except percentages) | ||||||||||||||||
| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenues - home sales | $ | 2,647,020 | $ | 2,490,098 | $ | 4,578,856 | $ | 4,239,520 | ||||||||
| Cost of revenues - home sales | 1,963,283 | 1,832,878 | 3,362,509 | 3,133,801 | ||||||||||||
| Home sales gross margin | 683,737 | 657,220 | 1,216,347 | 1,105,719 | ||||||||||||
| Add: | Interest recognized in cost of revenues - home sales | 34,740 | 37,558 | 58,318 | 62,638 | |||||||||||
| Inventory impairments and write-offs in cost of revenues - home sales | 28,428 | 11,069 | 29,899 | 19,073 | ||||||||||||
| Adjusted home sales gross margin | $ | 746,905 | $ | 705,847 | $ | 1,304,564 | $ | 1,187,430 | ||||||||
| Home sales gross margin as a percentage of home sale revenues | 25.8 | % | 26.4 | % | 26.6 | % | 26.1 | % | ||||||||
| Adjusted home sales gross margin as a percentage of home sale revenues | 28.2 | % | 28.3 | % | 28.5 | % | 28.0 | % | ||||||||
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 Home Sales Gross Margin
The Company has not provided projected third quarter and full FY 2024 home sales gross margin or a GAAP reconciliation for forward-looking adjusted home 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 and full FY 2024. The variability of these charges may have a potentially unpredictable, and potentially significant, impact on our third quarter and full FY 2024 home sales gross margin.
Adjusted Net Income and Diluted Earnings Per Share Reconciliation
The following table reconciles the Company’s net income and earnings per share (calculated in accordance with GAAP) to the Company’s adjusted net income and diluted earnings per share (a non-GAAP financial measure).
| Adjusted Net Income and Diluted Per Share Reconciliation (Amounts in thousands, except per share data) | ||||||||||||||
| Three Months Ended April 30, | Six Months Ended April 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||
| Net income | $ | 481,617 | $ | 320,216 | $ | 721,175 | $ | 511,746 | ||||||
| Subtract: | Net income resulting from the sale of a parcel of land to a commercial developer | (124,119 | ) | — | (124,119 | ) | — | |||||||
| Adjusted net income | $ | 357,498 | $ | 320,216 | $ | 597,056 | $ | 511,746 | ||||||
| Diluted earnings per share | $ | 4.55 | $ | 2.85 | $ | 6.80 | $ | 4.56 | ||||||
| Subtract: | Diluted earnings per share resulting from the sale of a parcel of land to a commercial developer | (1.17 | ) | — | (1.17 | ) | — | |||||||
| Adjusted diluted earnings per share | $ | 3.38 | $ | 2.85 | $ | 5.63 | $ | 4.56 | ||||||
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) | ||||||||||||
| April 30, 2024 | January 31, 2024 | October 31, 2023 | ||||||||||
| Loans payable | $ | 1,113,126 | $ | 1,064,149 | $ | 1,164,224 | ||||||
| Senior notes | 1,596,644 | 1,596,414 | 1,596,185 | |||||||||
| Mortgage company loan facility | 127,541 | 63,194 | 100,058 | |||||||||
| Total debt | 2,837,311 | 2,723,757 | 2,860,467 | |||||||||
| Total stockholders’ equity | 7,307,974 | 7,019,271 | 6,797,156 | |||||||||
| Total capital | $ | 10,145,285 | $ | 9,743,028 | $ | 9,657,623 | ||||||
| Ratio of debt-to-capital | 28.0 | % | 28.0 | % | 29.6 | % | ||||||
| Total debt | $ | 2,837,311 | $ | 2,723,757 | $ | 2,860,467 | ||||||
| Less: | Mortgage company loan facility | (127,541 | ) | (63,194 | ) | (100,058 | ) | |||||
| Cash and cash equivalents | (1,030,530 | ) | (754,793 | ) | (1,300,068 | ) | ||||||
| Total net debt | 1,679,240 | 1,905,770 | 1,460,341 | |||||||||
| Total stockholders’ equity | 7,307,974 | 7,019,271 | 6,797,156 | |||||||||
| Total net capital | $ | 8,987,214 | $ | 8,925,041 | $ | 8,257,497 | ||||||
| Net debt-to-capital ratio | 18.7 | % | 21.4 | % | 17.7 | % | ||||||
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/8896d5f0-0a75-4129-9749-02c7fc35e5c7
FAQ
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