Record 3rd Qtr EPS Increases 92 Percent to $1.27 Per Share
Expects Net Income Growth of Over 80% and EPS Growth of Over 75
Percent for FYE 2005
Record 3rd Qtr Revenues Grow 54 Percent to $1.56 Billion
Record 3rd Qtr-End Backlog is Up 48 Percent to $6.43 Billion
Record 3rd Qtr Contracts Increase 19 Percent to $1.92 Billion
HORSHAM, Pa., Aug. 25, 2005 (PRIMEZONE) -- Toll Brothers, Inc., (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today reported record third-quarter and nine-month results for earnings, revenues, backlog and contracts for the periods ended July 31, 2005. The Company's third-quarter net income, revenues and backlog were the highest for any quarter in its history.
Robert I. Toll, chairman and chief executive officer, stated: "We attribute these tremendous results to our team's diligence, our strong land position and the pricing power we enjoy in our affluent markets. While the supply of buildable lots seems increasingly to be constrained by governmental regulation, demographics-driven demand continues to grow. These dynamics have put us on track for our thirteenth consecutive year of record earnings in FY 2005, and, we believe, assuming continued healthy demand, approximately 20% net income growth in both FY 2006 and FY 2007.
"In recent weeks, it appears that bubble mania and reports of a strengthening employment picture with associated interest rate fears have rattled investors. We believe strong job numbers and an improving economy are positive factors for the housing industry, in general, and our luxury niche in particular. Mortgage rates remain low and the projected Fed Funds target of about 4.5% is below its peak in 1994, 1995, 1996, 1997, 1998, 1999 and 2000, which were all years of record home sales for Toll Brothers.
"We believe our success is determined more by our brand name and our well-located communities than by fluctuations in the mortgage market. In the past decade, there have been several periods of mortgage rate hikes, three years in which national housing starts dropped, a recession, and a major stock market decline. None of these have stifled our ability to expand and produce record results.
"We've watched some markets go from overheated to warm and back to hot. It appears to us that the basic fundamentals of wealth accumulation, constrained lot supplies and growing demand should continue to support our business model. With approximately 79,500 lots under control, we believe we can continue on a path of growth for many years to come."
Joel H. Rassman, chief financial officer, stated: "Based on our record third quarter backlog of 9,490 homes, we now expect to deliver between 2,750 and 2,850 homes (including deliveries from our recent Landstar acquisition) in our fourth quarter 2005 at an average price of between $675,000 and $685,000. We now expect net income growth of over 80% (and over 75% earnings per share growth) in FY 2005 compared to FY 2004's record results.
"Based on our backlog, we believe we should deliver between 10,200 and 10,600 homes in FY 2006 at an average price of approximately $665,000, which should translate into FY 2006 home building revenues in the range of approximately $6.78 billion to approximately $7.05 billion."
Toll Brothers' financial highlights for the three-month and nine-month periods ended July 31, 2005 (unaudited):
-- The Company's FY 2005 third-quarter net income of $215.5
million, the highest for any quarter in the Company's
history, grew by 103% over FY 2004's third-quarter net income
of $106.0 million, the previous third-quarter record. FY 2005
third-quarter earnings per share of $1.27, also a single
quarter record, rose 92% over FY 2004's earnings per share
of $0.66.
-- The Company's FY 2005 record nine-month net income of $495.9
million grew by 117% over FY 2004's nine-month net income of
$228.5 million, the previous nine-month record. FY 2005 record
nine-month earnings per share of $2.94 rose 109% over FY
2004's nine-month earnings per share of $1.41, the previous
nine-month record.
-- FY 2005 third-quarter revenues of $1.56 billion, the highest
for any quarter in the Company's history, increased 54% over
FY 2004's third-quarter revenues of $1.01 billion, the
previous third-quarter record. FY 2005 third-quarter home
building revenues of $1.54 billion (2,310 homes), also the
highest for any quarter in the Company's history, increased
55% over FY 2004's third-quarter home building revenues of
$991.3 million (1,684 homes), the previous third-quarter
record. Revenues from land sales totaled $10.6 million for FY
2005's third quarter, compared to $12.9 million in FY 2004's
third quarter.
-- FY 2005 record nine-month revenues of $3.81 billion increased
57% versus FY 2004's nine-month revenues of $2.43 billion, the
previous nine-month record. FY 2005 record nine-month home
building revenues of $3.75 billion (5,812 homes) increased 57%
over FY 2004's nine-month home building revenues of $2.40
billion (4,232 homes), also the previous nine-month record. FY
2005 revenues from land sales for the nine-month period
totaled $21.6 million, compared to $20.9 million in the same
period in FY 2004.
-- In addition, in the Company's FY 2005 third-quarter and nine-
month periods, unconsolidated entities in which the Company
had an interest delivered $25.7 million (57 homes) and $90.5
million (207 homes), respectively, compared to $12.1 million
(30 homes) and $15.5 million (41 homes), respectively, in the
same periods of fiscal 2004. The Company's share of the
profits from the delivery of these homes is included in
'Equity Earnings in Unconsolidated Entities' on the Company's
Income Statement.
-- The Company's record FY 2005 third-quarter contracts of $1.92
billion (2,746 homes), grew by 19% over FY 2004's third-
quarter contracts of $1.61 billion (2,329 homes), the previous
third-quarter record. In addition, in third quarter 2005,
unconsolidated entities in which the Company had an interest
signed contracts of $63.4 million (111 homes).
-- FY 2005's record nine-month contracts of $5.56 billion (8,100
homes), grew by 35% over FY 2004's total of $4.11 billion
(6,436 homes), the previous nine-month record. In addition, in
the nine-month FY 2005 period, unconsolidated entities in
which the Company had an interest signed contracts of $164.1
million (270 homes).
-- FY 2005 third-quarter-end backlog of $6.43 billion (9,490
homes), the highest for any quarter in the Company's history,
increased 48% over FY 2004's third-quarter-end backlog of
$4.35 billion (6,856 homes), the previous third-quarter
record. In addition, at the end of FY 2005's third quarter,
unconsolidated entities in which the Company had an interest
had a backlog of $149.4 million (237 homes).
-- In FY 2005's third quarter, the Company redeemed all of its
$100 million of Toll Corp. 8% Senior Subordinated Notes due
2009 and repaid all of its $222.5 million First Huntingdon
Finance Corp. Bank Term Loan Facility due 2005. The
redemption and repayment resulted in an after-tax charge for
the Company's third-quarter and nine-month periods of $0.01
per share (diluted). In FY 2004, the Company's nine-month
results included an after-tax charge of $0.03 per share
(diluted) due to early retirement of $170 million of 8 1/8%
senior subordinated notes due 2009 and the write-off of
unamortized debt issuance costs related to the replacement of
Toll Brothers' $575 million revolving credit facility with a
$1.2 billion revolving credit facility of longer term and
lower pricing.
Toll Brothers will be broadcasting live via the Investor Relations section of its website, www.tollbrothers.com, a conference call hosted by chairman and chief executive officer Robert I. Toll at 2:00 p.m. (EDT) today, August 25, 2005, to discuss these results and our outlook for fiscal 2005. Prior to this conference call, the Company intends to file a Form 8-K with the Securities and Exchange Commission containing its guidance for expected results of operations for Fiscal 2005 and Fiscal 2006, which will be discussed on the call. To access the call, enter the Toll Brothers website, then 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 on-line replay which will follow and continue through October 31, 2005.
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 and the Pacific Exchange under the symbol "TOL". The Company serves move-up, empty-nester, active-adult and second-home home buyers and operates in 20 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Massachusetts, Maryland, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Texas, and Virginia.
Toll Brothers builds luxury single-family detached and attached home communities, master planned luxury residential resort-style golf communities and urban low-, mid- and high-rise communities, principally on land it develops and improves. The Company operates its own architectural, engineering, mortgage, title, land development and land sale, golf course development and management, home security, landscape, cable T.V. and broadband Internet delivery subsidiaries. The Company also operates its own lumber distribution, and house component assembly and manufacturing operations.
Toll Brothers, a FORTUNE 500 Company, is the only publicly traded national home building company to have won all three of the industry's highest honors: America's Best Builder from the National Association of Home Builders, the National Housing Quality Award and Builder of the Year. For more information, visit tollbrothers.com.
Certain information included herein and in other Company reports, SEC filings, statements and presentations is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements concerning anticipated operating results, financial resources, changes in revenues, changes in profitability, interest expense, growth and expansion, anticipated income from joint ventures and the Toll Brothers Realty Trusts Group, the ability to acquire land, the ability to secure governmental approvals and the ability to open new communities, the ability to sell homes and properties, the ability to deliver homes from backlog, the average delivered price of homes, the ability to secure materials and subcontractors, the ability to maintain the liquidity and capital necessary to expand and take advantage of future opportunities, and stock market valuations. 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 local, regional and national economic conditions, the demand for homes, domestic and international political events, uncertainties created by terrorist attacks, the effects of governmental regulation, the competitive environment in which the Company operates, fluctuations in interest rates, changes in home prices, the availability and cost of land for future growth, the availability of capital, uncertainties and fluctuations in capital and securities markets, changes in tax laws and their interpretation, legal proceedings, the availability of adequate insurance at reasonable cost, the ability of customers to finance the purchase of homes, the availability and cost of labor and materials, and weather conditions.
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
July 31, October 31,
2005 2004
----------- -----------
ASSETS (Unaudited)
Cash and cash
equivalents $ 505,947 $ 465,834
Marketable securities 115,029
Inventory 4,840,115 3,878,260
Property, construction
and office equipment,
net 72,735 52,429
Receivables, prepaid
expenses and other
assets 166,858 146,212
Mortgage loans
receivable 82,929 99,914
Customer deposits held
in escrow 86,721 53,929
Investments in and
advances to
unconsolidated entities 126,566 93,971
----------- -----------
$ 5,881,871 $ 4,905,578
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Liabilities:
Loans payable $ 152,655 $ 340,380
Senior notes 1,139,743 845,665
Senior subordinated
notes 350,000 450,000
Mortgage company
warehouse loan 72,149 92,053
Customer deposits 438,184 291,424
Accounts payable 261,244 181,972
Accrued expenses 767,510 574,202
Income taxes payable 173,708 209,895
----------- -----------
Total liabilities 3,355,193 2,985,591
----------- -----------
Stockholders' equity:
Preferred stock, none
issued
Common stock 1,563 770
Additional paid-in
capital 260,178 200,938
Retained earnings 2,265,808 1,770,730
Unearned compensation (760)
Treasury stock (111) (52,451)
----------- -----------
Total stockholders'
equity 2,526,678 1,919,987
----------- -----------
$ 5,881,871 $ 4,905,578
=========== ===========
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Nine months ended Three months ended
July 31, July 31,
---------------------- ----------------------
2005 2004 2005 2004
---------------------- ----------------------
Revenues:
Home sales $3,751,594 $2,395,150 $1,536,499 $ 991,264
Land sales 21,608 20,938 10,583 12,940
Equity earnings in
unconsolidated
entities 9,539 6,945 4,231 5,551
Interest and other 26,575 7,483 10,583 3,364
---------------------- ----------------------
3,809,316 2,430,516 1,561,896 1,013,119
---------------------- ----------------------
Costs and expenses:
Home sales 2,539,885 1,716,535 1,023,743 709,484
Land sales 15,707 14,315 9,612 7,509
Selling, general
and
administrative
expenses 349,706 270,155 126,283 103,608
Interest 85,532 59,970 35,594 24,216
Expenses related
to early
retirement of debt 4,056 8,229 4,056 481
---------------------- ----------------------
2,994,886 2,069,204 1,199,288 845,298
---------------------- ----------------------
Income before income
taxes 814,430 361,312 362,608 167,821
Income taxes 318,572 132,775 147,076 61,806
---------------------- ----------------------
Net income $ 495,858 $ 228,537 $ 215,532 $ 106,015
====================== ======================
Earnings per share:
Basic $ 3.22 $ 1.54 $ 1.39 $ .71
Diluted $ 2.94 $ 1.41 $ 1.27 $ .66
Weighted average
number of shares:
Basic 153,851 148,398 155,274 148,705
Diluted 168,426 162,110 169,843 161,840
Additional
information:
Interest incurred $ 87,069 $ 85,137 $ 28,921 $ 28,632
Depreciation and
amortization $ 17,206 $ 11,231 $ 6,327 $ 3,895
THREE MONTHS ENDED JULY 31, UNITS $ (MILL)
3rd Qtr. 3rd Qtr. 3rd Qtr. 3rd Qtr.
CLOSINGS 2005 2004 2005 2004
--------------------------- ------- ------- -------- --------
Northeast
(CT, MA, NH, NJ, NY, RI) 310 256 184.0 149.8
Mid-Atlantic (DE, MD, PA,
VA) 886 616 554.4 314.4
Midwest (IL, MI, OH) 178 136 110.7 74.4
Southeast (FL, NC, SC) 236 205 139.0 97.9
Southwest (AZ, CO, NV, TX) 361 205 239.2 124.7
West Coast (CA) 339 266 309.2 230.1
----- ----- ------- -------
2,310 1,684 1,536.5 991.3
Unconsolidated entities 57 30 25.7 12.1
----- ----- ------- -------
2,367 1,714 1,562.2 1,003.4
===== ===== ======= =======
CONTRACTS
---------------------------
Northeast
(CT, MA, NH, NJ, NY, RI) 459 270 295.1 155.4
Mid-Atlantic (DE, MD, PA,
VA) 758 748 522.9 473.8
Midwest (IL, MI, OH) 149 164 108.4 105.9
Southeast (FL, NC, SC) 606 361 360.0 229.5
Southwest (AZ, CO, NV, TX) 544 455 391.6 300.0
West Coast (CA) 230 331 238.2 341.6
----- ----- ------- -------
2,746 2,329 1,916.2 1,606.2
Unconsolidated entities 111 188 63.4 79.1
----- ----- ------- -------
2,857 2,517 1,979.6 1,685.3
===== ===== ======= =======
BACKLOG
---------------------------
Northeast
(CT, MA, NH, NJ, NY, RI) 1,508 1,051 966.5 596.1
Mid-Atlantic (DE, MD, PA,
VA) 2,639 2,305 1,750.8 1,320.6
Midwest (IL, MI, OH) 505 458 358.3 279.2
Southeast (FL, NC, SC) 2,081 696 1,150.1 421.5
Southwest (AZ, CO, NV, TX) 1,926 1,278 1,315.1 774.7
West Coast (CA) 831 1,068 893.0 953.7
----- ----- ------- -------
9,490 6,856 6,433.8 4,345.8
Unconsolidated entities 237 172 149.4 71.4
----- ----- ------- -------
9,727 7,028 6,583.2 4,417.2
===== ===== ======= =======
NINE MONTHS ENDED JULY 31, UNITS $ (MILL)
9 Months 9 Months 9 Months 9 Months
CLOSINGS 2005 2004 2005 2004
--------------------------- ------- ------- -------- --------
Northeast
(CT, MA, NH, NJ, NY, RI) 793 655 447.6 379.1
Mid-Atlantic (DE, MD, PA,
VA) 2,308 1,555 1,400.0 789.9
Midwest (IL, MI, OH) 414 307 256.8 174.0
Southeast (FL, NC, SC, TN) 588 518 328.7 243.0
Southwest (AZ, CO, NV, TX) 914 544 584.0 313.9
West Coast (CA) 795 653 734.5 495.3
----- ----- ------- -------
5,812 4,232 3,751.6 2,395.2
Unconsolidated entities 207 41 90.5 15.5
----- ----- ------- -------
6,019 4,273 3,842.1 2,410.7
===== ===== ======= =======
CONTRACTS
---------------------------
Northeast
(CT, MA, NH, NJ, NY, RI) 1,273 774 814.5 455.8
Mid-Atlantic (DE, MD, PA,
VA) 2,702 2,186 1,778.5 1,273.5
Midwest (IL, MI, OH) 473 471 330.8 289.9
Southeast (FL, NC, SC, TN) 1,450 803 827.7 446.3
Southwest (AZ, CO, NV, TX) 1,489 1,113 1,049.4 691.8
West Coast (CA) 713 1,089 762.9 951.8
----- ----- ------- -------
8,100 6,436 5,563.8 4,109.1
Unconsolidated entities 270 198 164.1 82.2
----- ----- ------- -------
8,370 6,634 5,727.9 4,191.3
===== ===== ======= =======