Toll Brothers Reports FY 2022 3rd Quarter Results

Toll Brothers, Inc. (TollBrothers.com), the nation’s leading builder of luxury homes, today announced results for its third quarter ended July 31, 2022.

FY 2022’s Third Quarter Financial Highlights (Compared to FY 2021’s Third Quarter):

• Net income and earnings per share were $273.5 million and $2.35 per share diluted, compared to net income of $234.9 million and $1.87 per share diluted in FY 2021’s third quarter.
• Pre-tax income was $366.0 million, compared to $303.4 million in FY 2021’s third quarter.
• Home sales revenues were $2.3 billion, up 1% compared to FY 2021’s third quarter; delivered homes were 2,414, down 7%.
• Net signed contract value was $1.7 billion, down 44% compared to FY 2021’s third quarter; contracted homes were 1,266, down 60%.
• Backlog value was $11.2 billion at third quarter end, up 19% compared to FY 2021’s third quarter; homes in backlog were 10,725, up 1%.
• Home sales gross margin was 26.0%, compared to FY 2021’s third quarter home sales gross margin of 22.7%.
• Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 27.9%, compared to FY 2021’s third quarter adjusted home sales gross margin of 25.6%.
• SG&A, as a percentage of home sales revenues, was 10.3%, compared to 10.5% in FY 2021’s third quarter.
• Income from operations was $361.7 million.
• Other income, income from unconsolidated entities, and gross margin from land sales and other was $13.2 million.
• The Company repurchased approximately 2.0 million shares at an average price of $44.93 per share for a total purchase price of approximately $91.6 million.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “Our third quarter earnings per share of $2.35 grew by 26% from one year ago driven by a 230-basis point improvement in adjusted gross margin to 27.9%. While we achieved record third quarter revenue and earnings, and exceeded our gross margin forecast, deliveries were below our guidance due to unforeseen delays with municipal inspectors, continued labor shortages and supply chain disruptions, as well as a softer demand environment.

“Due to these challenges, we have lowered our full year deliveries guidance. We now expect to deliver between 10,000 and 10,300 homes in FY 2022 at an average price of approximately $920,000. Based on the strong pricing embedded in our $11.2 billion backlog, we expect continued gross margin expansion in our fourth quarter to 29.2%. We also reaffirm our full year adjusted gross margin guidance of 27.5% for FY 2022.

“As our third quarter progressed, we saw a significant decline in demand as the combined impact of sharply rising mortgage rates, higher home prices, stock market volatility and macroeconomic uncertainty caused many prospective buyers to step to the sidelines. However, in more recent weeks, we have seen signs of increased demand as sentiment is improving and buyers are returning to the market. Average weekly deposits in the first three weeks of August were up 25% compared to July.

“We continue to believe the long-term fundamentals underpinning the housing market remain firmly in place. These include favorable demographics, with more millennials entering their prime homebuying years and baby boomers experiencing new lifestyles, the structural shortage of homes in America resulting from over a decade of undersupply, migration trends, and the greater appreciation for home that Americans have embraced in recent years.”

Additional Information:

• The Company ended its FY 2022 third quarter with approximately $316.5 million in cash and cash equivalents, compared to $1.6 billion at FYE 2021 and $535.0 million at FY 2022’s second quarter end. At FY 2022 third quarter end, the Company also had $1.8 billion available under its $1.9 billion bank revolving credit facility, substantially all of which is scheduled to mature in November 2026.
• On July 22, 2022, the Company paid its quarterly dividend of $0.20 per share to shareholders of record at the close of business on July 8, 2022.
• Stockholders’ Equity at FY 2022 third quarter end was $5.5 billion, compared to $5.3 billion at FYE 2021.
• FY 2022’s third quarter-end book value per share was $48.74 per share, compared to $44.08 at FYE 2021.
• The Company ended its FY 2022 third quarter with a debt-to-capital ratio of 37.5%, compared to 38.1% at FY 2022’s second quarter end and 40.2% at FYE 2021. The Company ended FY 2022’s third quarter with a net debt-to-capital ratio⁽¹⁾ of 34.3%, compared to 33.1% at FY 2022’s second quarter end, and 25.1% at FYE 2021.
• The Company ended FY 2022’s third quarter with approximately 82,100 lots owned and optioned, compared to 85,800 one quarter earlier, and 79,500 one year earlier. Approximately 49% or 39,900, of these lots were owned, of which approximately 18,700 lots, including those in backlog, were substantially improved.
• In the third quarter of FY 2022, the Company spent approximately $243.5 million on land to purchase approximately 1,932 lots.
• The Company ended FY 2022’s third quarter with 332 selling communities, compared to 328 at FY 2022’s second quarter end and 314 at FY 2021’s third quarter end.
• The Company repurchased approximately 2.0 million shares of its common stock during the quarter at an average price of $44.93 per share for an aggregate purchase price of approximately $91.6 million.

For the complete press release, click here.

About Toll Brothers

Toll Brothers, Inc., A FORTUNE 500 Company, is the nation’s leading builder of luxury homes. The Company was founded 55 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, golf course development, smart home technology, and landscape subsidiaries. The Company also operates its own lumber distribution, house component assembly, and manufacturing operations.

Toll Brothers was named the World’s Most Admired Homebuilder in FORTUNE magazine’s 2022 survey of the World’s Most Admired Companies®, the seventh year it has been so honored. 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).

Contact:

Frederick N. Cooper – Media Contact – fcooper@tollbrothers.com – (215) 938-8312

Source: Toll Brothers, Inc.