HORSHAM, Pa., May 22, 2013 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today announced results for its second quarter and six months ended April 30, 2013.
Second Quarter Financial Highlights:
Douglas C. Yearley, Jr., Toll Brothers' chief executive officer, stated: "Demand accelerated significantly this quarter. Increased pricing power and stronger sales drove our agreements up 57% in dollars and 36% in units - the highest for any quarter in seven years.
"Our strong brand, land position and capital base are giving us a competitive advantage in many of our markets. Buyers who have been on the sidelines for six years are jumping in. Low interest rates, improved customer confidence, a strong stock market, rising home prices and a reawakening economy are stoking the demand that is fueling our luxury market.
"One year ago we were somewhat reluctant to raise home prices for fear of crimping demand. Now we are finding that in many markets as prices increase, a sense of urgency takes hold and demand continues to rise. We have raised prices this quarter approximately $26,000 per home on average.
"With our backlog up 69% in dollars and 52% in units, and with our community count increasing throughout FY 2014, we expect continued growth over the next few years."
Martin P. Connor, Toll Brothers' chief financial officer, stated: "Our gross margin improved slightly this quarter from one year ago and, as we enter the back half of FY 2013, we believe gross margin improvement will continue. Our operating margin should also improve significantly as we project a greater than 50% increase in revenues in the second half of FY 2013 over the first half of FY 2013.
"In early April we accessed the public debt markets and raised $300 million at 4.375% due in 2023. As the market improved, we re-opened that issuance to raise an additional $100 million at a yield of 4% in early May. This attractively priced capital will both support future growth and prepare us for upcoming debt maturities."
Robert I. Toll, executive chairman, stated: "The most recent ISI survey of large and mid-sized builders is near record highs. For those builders who have the capital to buy land and build homes it is a very good time.
"We believe the industry is still in the early stages of a recovery. Even so, this quarter our pace of contracts per community was consistent with second quarter paces we produced in the decade from 1993 to 2003 as the industry normalized after the previous downturn. While up significantly from the bottom, April 2013 industry-wide total annualized housing starts were approximately 853,000, just 55% of the 1.5 million houses started annually, on average, between 1987 and 2006. With new home production still well below the volumes required to meet projected demand based on history, population growth and the pace of current household formations, we believe we and the industry have lots of room to grow.
"We believe that as home prices continue to increase, homeowners' balance sheets should continue to improve as should bank balance sheets. People will feel wealthier, banks will lend more and the economy should continue to improve: We believe this should drive demand and, therefore, home prices are likely to continue to rise."
The financial highlights for the second quarter and six months ended April 30, 2013 (unaudited):
(1) Net debt-to-capital is calculated as total debt minus mortgage warehouse loans minus cash and marketable securities, divided by total debt minus mortgage warehouse loans minus cash and marketable securities plus stockholders' equity.
Toll Brothers will be broadcasting live via the Investor Relations section of its website, www.tollbrothers.com, a conference call hosted by CEO Douglas C. Yearley, Jr. at 2:00 p.m. (EDT) today, May 22 2013, to discuss these results and its outlook for the remainder of FY 2013. To access the call, enter the Toll Brothers website, click on the Investor Relations page, and select "Conference Calls." 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. Podcast (iTunes required) and MP3 format replays will be available after the conference call via the "Conference Calls" section of the Investor Relations portion of the Toll Brothers website.
Toll Brothers, Inc. is the nation's leading builder of luxury homes. The Company began business 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 and operates in 19 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Texas, Virginia, and Washington.
Toll Brothers builds an array of luxury residential communities, principally on land it develops and improves: single-family detached and attached home communities, master planned resort-style golf communities, and urban low-, mid- and high-rise communities. The Company operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security, and landscape subsidiaries. The Company also operates its own lumber distribution, house component assembly, and manufacturing operations. The Company acquires and develops commercial properties through Toll Commercial and its affiliate, Toll Brothers Realty Trust, and purchases distressed loan and real estate asset portfolios through its wholly owned subsidiary, Gibraltar Capital and Asset Management.
Toll Brothers, A FORTUNE 1000 Company, is honored to have won the three most coveted awards in the homebuilding industry: America's Best Builder from the National Association of Home Builders, the National Housing Quality Award and Builder of the Year. Toll Brothers was awarded Builder of the Year for 2012 and is the only two-time recipient. Toll Brothers proudly supports the communities in which it builds; among other philanthropic pursuits, the Company sponsors the Toll Brothers Metropolitan Opera International Radio Network, bringing opera to neighborhoods throughout the world. For more information, visit www.tollbrothers.com.
Information presented herein for the second quarter ended April 30, 2013 is subject to finalization of the Company's regulatory filings, related financial and accounting reporting procedures and external auditor procedures.
Certain information included in this release is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, information related to: anticipated operating results; anticipated financial performance, resources and condition; selling communities; home deliveries; average home prices; consumer demand and confidence; contract pricing; business and investment opportunities; and market and industry trends.
Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports, SEC filings, statements and presentations. These risks and uncertainties include, among others: local, regional, national and international economic conditions; fluctuating consumer demand and confidence; interest and unemployment rates; changes in sales conditions, including home prices, in the markets where we build homes; conditions in our newly entered markets and newly acquired operations; the competitive environment in which we operate; the availability and cost of land for future growth; conditions that could result in inventory write-downs or write-downs associated with investments in unconsolidated entities; the ability to recover our deferred tax assets; the availability of capital; uncertainties in the capital and securities markets; liquidity in the credit markets; changes in tax laws and their interpretation; effects of governmental legislation and regulation; the outcome of various legal proceedings; the availability of adequate insurance at reasonable cost; the impact of construction defect, product liability and home warranty claims, including the adequacy of self-insurance accruals, and the applicability and sufficiency of our insurance coverage; the ability of customers to obtain financing for the purchase of homes; the ability of home buyers to sell their existing homes; the ability of the participants in various joint ventures to honor their commitments; the availability and cost of labor and building and construction materials; the cost of raw materials; construction delays; domestic and international political events; and weather conditions. 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 and our subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.
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. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
TOLL BROTHERS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(Amounts in thousands) |
||
April 30, 2013 |
October 31, 2012 |
|
(Unaudited) | ||
ASSETS | ||
Cash and cash equivalents | $ 703,101 | $ 778,824 |
Marketable securities | 232,899 | 439,068 |
Restricted cash | 33,801 | 47,276 |
Inventory | 4,367,217 | 3,761,187 |
Property, construction and office equipment, net | 125,289 | 109,971 |
Receivables, prepaid expenses and other assets | 165,745 | 144,558 |
Mortgage loans held for resale | 66,538 | 86,386 |
Customer deposits held in escrow | 45,304 | 29,579 |
Investments in and advances to unconsolidated entities | 357,532 | 330,617 |
Investment in distressed loans | 48,707 | 37,169 |
Investment in foreclosed real estate | 71,458 | 58,353 |
Deferred tax assets, net of valuation allowances | 341,014 | 358,056 |
$ 6,558,605 | $ 6,181,044 | |
LIABILITIES AND EQUITY | ||
Liabilities: | ||
Loans payable | $ 96,572 | $ 99,817 |
Senior notes | 2,322,397 | 2,080,463 |
Mortgage company warehouse loan | 58,526 | 72,664 |
Customer deposits | 205,821 | 142,977 |
Accounts payable | 149,601 | 99,911 |
Accrued expenses | 469,233 | 476,350 |
Income taxes payable | 84,157 | 80,991 |
Total liabilities | 3,386,307 | 3,053,173 |
Equity: | ||
Stockholders' Equity | ||
Common stock | 1,693 | 1,687 |
Additional paid-in capital | 418,844 | 404,418 |
Retained earnings | 2,750,503 | 2,721,397 |
Treasury stock, at cost | (78) | (983) |
Accumulated other | ||
comprehensive loss | (4,861) | (4,819) |
Total stockholders' equity | 3,166,101 | 3,121,700 |
Noncontrolling interest | 6,197 | 6,171 |
Total equity | 3,172,298 | 3,127,871 |
$ 6,558,605 | $ 6,181,044 |
TOLL BROTHERS, INC. AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(Amount in thousands, except per share data) | ||||
(unaudited) | ||||
Six Months Ended April 30, |
Three Months Ended April 30, |
|||
2013 | 2012 | 2013 | 2012 | |
Revenues | $ 940,605 | $ 695,636 | $ 516,004 | $ 373,681 |
Cost of revenues | 765,950 | 578,429 | 420,013 | 306,821 |
Selling, general and administrative expenses | 157,597 | 137,893 | 79,550 | 68,256 |
923,547 | 716,322 | 499,563 | 375,077 | |
Income (loss) from operations | 17,058 | (20,686) | 16,441 | (1,396) |
Other: | ||||
Income from unconsolidated entities | 8,076 | 13,676 | 4,993 | 6,989 |
Other income-net | 24,160 | 16,251 | 19,534 | 10,056 |
Income before income taxes | 49,294 | 9,241 | 40,968 | 15,649 |
Income tax provision (benefit) | 20,188 | (4,845) | 16,294 | (1,223) |
Net income | $ 29,106 | $ 14,086 | $ 24,674 | $ 16,872 |
Income per share: | ||||
Basic | $ 0.17 | $ 0.08 | $ 0.15 | $ 0.10 |
Diluted | $ 0.17 | $ 0.08 | $ 0.14 | $ 0.10 |
Weighted-average number of | ||||
shares: | ||||
Basic | 169,222 | 166,652 | 169,380 | 166,994 |
Diluted | 177,949 | 167,821 | 178,136 | 168,535 |
TOLL BROTHERS, INC. AND SUBSIDIARIES | ||||
SUPPLEMENTAL DATA | ||||
(Amount in thousands) | ||||
(unaudited) | ||||
Six Months Ended April 30, |
Three Months Ended April 30, |
|||
2013 | 2012 | 2013 | 2012 | |
Impairment charges (recoveries) recognized: | ||||
Cost of sales | $ 1,738 | $ 10,128 | $ 1,029 | $ 2,008 |
Income from unconsolidated entities | (1,621) | (1,621) | ||
$ 1,738 | $ 8,507 | $ 1,029 | $ 387 | |
Depreciation and amortization | $ 12,593 | $ 6,238 | $ 6,068 | $ 3,387 |
Interest incurred | $ 64,051 | $ 60,468 | $ 32,303 | $ 31,568 |
Interest expense: | ||||
Charged to cost of sales | $ 42,990 | $ 33,989 | $ 23,016 | $ 17,668 |
Charged to other income-net | 1,221 | 1,582 | 1,133 | 1,582 |
Capitalized interest on investments in unconsolidated entities | 2,872 | 1,137 | 1,509 | 1,137 |
$ 47,083 | $ 36,708 | $ 25,658 | $ 20,387 | |
Home sites controlled: | ||||
Owned | 33,117 | 32,275 | ||
Optioned | 12,060 | 7,202 | ||
45,177 | 39,477 |
Toll Brothers operates in four geographic segments: | |
North: | Connecticut, Illinois, Massachusetts, Michigan, Minnesota, |
New Jersey and New York | |
Mid-Atlantic: | Delaware, Maryland, Pennsylvania and Virginia |
South: | Florida, North Carolina, and Texas |
West: | Arizona, California, Colorado, Nevada, and Washington |
Three Months Ended April 30, |
Three Months Ended April 30, |
|||
Units | $ (Millions) | |||
HOME BUILDING REVENUES | 2013 | 2012 | 2013 | 2012 |
North | 187 | 200 | $ 104.3 | $ 111.1 |
Mid-Atlantic | 276 | 190 | 147.5 | 103.6 |
South | 224 | 143 | 135.6 | 82.4 |
West | 207 | 138 | 128.6 | 76.6 |
Total consolidated | 894 | 671 | $ 516.0 | $ 373.7 |
CONTRACTS | ||||
North | 436 | 326 | $ 291.1 | $ 189.8 |
Mid-Atlantic | 520 | 374 | 302.0 | 206.4 |
South | 378 | 251 | 255.1 | 161.6 |
West | 419 | 339 | 339.7 | 196.9 |
Total consolidated | 1,753 | 1,290 | $ 1,187.9 | $ 754.7 |
BACKLOG | ||||
North | 995 | 743 | $ 688.3 | $ 488.9 |
Mid-Atlantic | 937 | 674 | 562.6 | 395.2 |
South | 963 | 574 | 653.3 | 362.2 |
West | 760 | 412 | 627.4 | 252.2 |
Total consolidated | 3,655 | 2,403 | $ 2,531.6 | $ 1,498.5 |
Six Months Ended April 30, |
Six Months Ended April 30, |
|||
Units | $ (Millions) | |||
HOME BUILDING REVENUES | 2013 | 2012 | 2013 | 2012 |
North | 348 | 337 | $ 197.0 | $ 186.7 |
Mid-Atlantic | 518 | 369 | 279.7 | 204.4 |
South | 367 | 278 | 222.7 | 158.8 |
West | 407 | 251 | 241.2 | 145.7 |
Total consolidated | 1,640 | 1,235 | $ 940.6 | $ 695.6 |
CONTRACTS | ||||
North | 688 | 527 | $ 436.0 | $ 368.3 |
Mid-Atlantic | 797 | 556 | 456.1 | 310.7 |
South | 581 | 410 | 392.6 | 257.8 |
West | 660 | 449 | 517.7 | 262.6 |
Total consolidated | 2,726 | 1,942 | $ 1,802.4 | $ 1,199.4 |
Unconsolidated entities: | ||||
Information related to revenues and contracts of entities in which we have an interest for the three-month and six-months periods ended April 30, 2013 and 2012 is as follows: | ||||
2013 Units |
2012 Units |
2013 $(Mill) |
2012 $(Mill) |
|
Three months ended April 30, | ||||
Revenues | 15 | 25 | $ 11.0 | $ 24.0 |
Contracts | 22 | 42 | $ 16.0 | $ 38.2 |
Six months ended April 30, | ||||
Revenues | 25 | 53 | $ 19.9 | $ 47.5 |
Contracts | 32 | 67 | $ 22.2 | $ 59.7 |
Backlog at April 30, | 43 | 40 | $ 29.5 | $ 33.2 |