Toll Brothers Reports FY 2021 1st Quarter Results

Toll Brothers, Inc., the nation’s leading builder of luxury homes, announced results for its first quarter ended January 31, 2021.

FY 2021’s First Quarter Financial Highlights:

• Net income and earnings per share were $96.5 million and $0.76 per share diluted, compared to net income of $56.9 million and $0.41 per share diluted in FY 2020’s first quarter.
• Pre-tax income was $127.4 million, compared to $65.9 million in FY 2020’s first quarter.
• Home sales revenues were $1.41 billion, up 9% compared to FY 2020’s first quarter; delivered homes were 1,777, up 10%.
• Net signed contract value was $2.51 billion, up 68% compared to FY 2020’s first quarter; contracted homes were 2,874, up 59%.
• Backlog value was $7.47 billion at first quarter end, up 37% compared to FY 2020’s first quarter; homes in backlog were 8,888, up 38%.
• Home sales gross margin was 20.5%, compared to FY 2020’s first quarter home sales gross margin of 20.4%.
• Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 22.9%, compared to FY 2020’s first quarter adjusted home sales gross margin of 23.0%.
• SG&A, as a percentage of home sales revenues, was 14.9%, compared to 16.8% in FY 2020’s first quarter.
• Income from operations was $119.1 million.
• Other income, income from unconsolidated entities, and land sales and other gross profit was $49.2 million.
• The Company repurchased approximately 4.0 million shares of its common stock during the quarter at an average price of $44.54 per share for an aggregate purchase price of approximately $179.4 million, which reduced share count by approximately 3% compared to FYE 2020.
• In January 2021, the Company voluntarily repaid $150.0 million of the $800.0 million principal amount outstanding under its five-year senior unsecured bank term loan. The remaining principal amount outstanding under the term loan is scheduled to mature on November 1, 2025. No prepayment charges were incurred in connection with the repayment.

Second Quarter and Full Year Financial Guidance:

• Second quarter deliveries of approximately 2,175 homes with an average price of between $785,000 and $805,000. Delivery guidance for the second quarter reflects the slower COVID-19 impacted sales environment of mid-March through May 2020.
• FY 2021 deliveries of between 10,000 and 10,400 homes with an average price of between $790,000 and $810,000.
• Second quarter adjusted home sales gross margin of approximately 23.4%.
• FY 2021 adjusted home sales gross margin of approximately 24.3%.
• Second quarter SG&A, as a percentage of home sales revenues, of approximately 13.0%.
• FY 2021 SG&A, as a percentage of home sales revenues, of approximately 11.9%.
• Second quarter other income, income from unconsolidated entities, and land sales and other gross profit of approximately $7 million.
• FY 2021 other income, income from unconsolidated entities, and land sales and other gross profit of approximately $80 million.
• Second quarter tax rate of approximately 26.0%.
• FY 2021 tax rate of approximately 25.8%.
• Community count growth to approximately 320 at second quarter end.
• Community count growth to approximately 340 at fiscal year end.
• In February 2021, the Company delivered a notice of redemption to holders of all $250 million of its outstanding 5.625% senior notes due 2024. The notes will be redeemed on March 15, 2021. The Company expects to incur a pre-tax charge of approximately $33 million in the second quarter for the early extinguishment of debt.
• FY 2021 return on beginning equity increase of approximately 425 basis points.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “The housing market remains very strong, driven by a tight supply of new and existing homes for sale, favorable demographic trends, low mortgage rates, and a heightened appreciation for home ownership, especially among our customers.

“These market conditions, which we expect to continue for the foreseeable future, clearly play to our strengths. We have luxury communities in desirable locations in both high-growth and high barrier-to-entry markets where our tremendous brand, broad range of home price points and unique build-to-order model give us a competitive advantage. In addition, our extensive geographic footprint and deep land position will allow us to grow community count in FY 2021 and 2022, even as we sell out of existing communities faster than anticipated and deliver the most homes in our history in FY 2021.

“We produced strong first quarter results and raised our fiscal year guidance across nearly all key metrics. Our backlog provides good visibility through the first half of FY 2022, when we expect even stronger results. We remain acutely focused on driving our return on equity while growing our business, increasing gross margin and reducing SG&A. We have substantial liquidity and expect continued strong operating cash flow, which gives us the financial flexibility to further invest in growth, return capital to shareholders and reduce debt.”

Toll Brothers’ Financial Highlights for the FY 2021 first quarter ended January 31, 2021 (unaudited):

• FY 2021’s first quarter net income was $96.5 million, or $0.76 per share diluted, compared to FY 2020’s first quarter net income of $56.9 million, or $0.41 per share diluted.
• FY 2021’s first quarter pre-tax income was $127.4 million, compared to FY 2020’s first quarter pre-tax income of $65.9 million.
• FY 2021’s first quarter results included pre-tax inventory impairments totaling $1.3 million, compared to FY 2020’s first quarter pre-tax inventory impairments of $1.0 million.
• FY 2021’s first quarter home sales revenues were $1.41 billion and 1,777 units, compared to FY 2020’s first quarter totals of $1.30 billion and 1,611 units.
• FY 2021’s first quarter net signed contracts were $2.51 billion and 2,874 units, compared to FY 2020’s first quarter net signed contracts of $1.49 billion and 1,806 units.
• FY 2021’s first quarter net signed contracts, on a per-community basis, were 9.4 units, compared to first quarter net signed contracts on a per-community basis of 5.6 units in FY 2020, 4.4 units in FY 2019, 6.0 units in FY 2018 and 4.7 units in FY 2017.
• In FY 2021, first quarter-end backlog was $7.47 billion and 8,888 units, compared to FY 2020’s first quarter-end backlog of $5.45 billion and 6,461 units. The average price of homes in backlog was $840,900, compared to $843,500 at FY 2020’s first quarter end.
• FY 2021’s first quarter home sales gross margin was 20.5%, compared to FY 2020’s first quarter home sales gross margin of 20.4%. 
• FY 2021’s first quarter adjusted home sales gross margin was 22.9%, compared to FY 2020’s first quarter adjusted home sales gross margin of 23.0%.
• FY 2021’s first quarter interest included in cost of sales was 2.4% of revenue, compared to 2.5% in FY 2020’s first quarter.
• FY 2021’s first quarter SG&A, as a percentage of home sales revenues, was 14.9%, compared to 16.8% in FY 2020’s first quarter.
• FY 2021’s first quarter other income, income from unconsolidated entities, and land sales and other gross profit totaled $49.2 million, compared to FY 2020’s first quarter total of $20.2 million.
• FY 2021’s first quarter cancellation rate (current quarter cancellations divided by current quarter signed contracts) was 3.7%, compared to FY 2020’s first quarter cancellation rate of 9.4%.
• FY 2021’s first quarter cancellation rate as a percentage of beginning-quarter backlog was 1.4%, compared to FY 2020’s first quarter cancellation rate as a percentage of beginning-quarter backlog of 3.0%.

Additional Financial Information:

• The Company ended its FY 2021 first quarter with approximately $950 million in cash and cash equivalents, compared to $1.37 billion at FYE 2020 and $520 million at FY 2020’s first-quarter end. At FY 2021 first quarter end, the Company also had $1.785 billion available under its $1.905 billion bank revolving credit facility, substantially all of which is scheduled to mature in November 2025.
• On January 8, 2021, the Company paid its quarterly dividend of $0.11 per share to shareholders of record at the close of business on January 22, 2021.
• The Company repurchased approximately 4.0 million shares of its common stock during the quarter at an average price of $44.54 per share for an aggregate purchase price of approximately $179.4 million, which reduced share count by approximately 3% compared to FYE 2020.
• Stockholders’ Equity at FY 2021 first quarter end was $4.79 billion, compared to $4.88 billion at FYE 2020.
• FY 2021’s first quarter end book value per share was $38.93 per share, compared to $38.53 at FYE 2020.
• The Company ended its FY 2021 first quarter with a debt-to-capital ratio of 43.8%, compared to 44.8% at FY 2020’s fourth quarter end and 46.4% at FY 2020’s first quarter end. The Company ended FY 2021’s first quarter with a net debt-to-capital ratio⁽¹⁾ of 35.8%, compared to 33.3% at FY 2020’s fourth quarter end, and 42.3% at FY 2020’s first quarter end.
• The Company ended FY 2021’s first quarter with approximately 67,700 lots owned and optioned, compared to 63,200 one quarter earlier, and 62,000 one year earlier. Approximately 36,400 of these lots were owned, of which approximately 17,400 lots, including those in backlog, were substantially improved.
• In the first quarter of FY 2021, the Company spent approximately $195.0 million on land to purchase approximately 2,095 lots.
• The Company ended FY 2021’s first quarter with 309 selling communities, compared to 317 at FY 2020’s fourth quarter end and 328 at FY 2020’s first quarter end.
• In February 2021, the Company delivered a notice of redemption to holders of all $250 million of its outstanding 5.625% senior notes due 2024. The notes will be redeemed on March 15, 2021. The Company expects to incur a pre-tax charge of approximately $33 million in the second quarter for the early extinguishment of debt.
• In January 2021, the Company voluntarily repaid $150.0 million of the $800.0 million principal amount outstanding under its five-year senior unsecured term loan. The remaining principal amount outstanding under the term loan is scheduled to mature on November 1, 2025. No prepayment charges were incurred in connection with the repayment.

(1)   See “Reconciliation of Non-GAAP Measures” below for more information on the calculation of the Company’s net debt-to-capital ratio.

About Toll Brothers

Toll Brothers, Inc., A FORTUNE 500 Company, is the nation’s leading builder of luxury homes. The Company was founded 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, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds 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, golf course development, smart home technology, and landscape subsidiaries. The Company also operates its own lumber distribution, house component assembly, and manufacturing operations.

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. For more information visit TollBrothers.com.

Contact:

Frederick N. Cooper – Senior Vice President – fcooper@tollbrothers.com – (215) 938-8312

Source: Toll Brothers, Inc.