HORSHAM, Pa., May 23, 2006 (PRIMEZONE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today reported that, for the three month period ended April 30, 2006, record second quarter net income rose 3% to $174.9 million; record second quarter total revenues rose 17% to $1.44 billion; record second quarter-end backlog rose 3% to $6.07 billion; and signed contracts of $1.56 billion declined 29%, compared to FY 2005's record second quarter results. For the six-month period ended April 30, 2006, record net income rose 21% to $338.8 million; record total revenues rose 25% to $2.78 billion; and signed contracts of $2.70 billion declined 26%, compared to FY 2005's record six-month results.
Robert I. Toll, chairman and chief executive officer, stated: "Demand, while obviously diminished, has not disappeared. We believe many customers currently feel a lack of urgency to purchase due to their uncertainty over the direction of home prices: This has contributed to keeping many potential buyers on the sidelines.
"While the general economy remains healthy, the new home economy is beset by an oversupply of investor specs, builders' specs and specs created through buyer cancellations. We believe that once this excess inventory is absorbed, demand should once again exceed supply. This should increase customer confidence and improve perceptions of the market's health; then, we believe those buyers who have been on the sidelines will come back into the market and prices should start to rise again.
"We continue to increase our community count and expect to end FY 2006 with approximately 295 selling communities compared to 230 at FYE 2005. Most of these new communities have been under option and in approvals for several years, and have recently begun to emerge successfully from the approval pipeline. Since newer communities generally offer greater choice and shorter delivery times, we believe this expansion will lead to more sales.
"We continue to find attractive land opportunities, which we are putting under option and then taking through the approval process. These sites will become new communities several years hence, once approvals are received. We currently control approximately 91,000 lots, of which 51% are under option and 49% are owned. We see this as a major source of future growth."
Joel H. Rassman, chief financial officer, stated: "On May 5, 2006, when we released preliminary second quarter FY 2006 results, we adjusted our range of estimated FY 2006 home deliveries to between 9,000 and 9,700. Based on this modification, as well as our estimate of increased material and labor costs, and higher write-downs in our second quarter, a majority of which resulted from continuing weakness in the metro Detroit market, we now believe net income will be between $780 million and $850 million and earnings per share will be between $4.69 and $5.16 in FY 2006. This would translate into a return on beginning equity of between 28% and 31%.
"In addition to the 3.9 million shares we have bought back during the previous nine months, since our last conference call on May 5, 2006 we have repurchased another 515,000 shares at an average price of $29.40."
Toll Brothers' financial highlights for the second quarter and six-month periods ended April 30, 2006 (unaudited):
-- FY 2006's second-quarter net income of $174.9 million grew
3% versus FY 2005's second-quarter net income of $170.1
million. FY 2006's second-quarter earnings of $1.06 per
share diluted grew 6% versus FY 2005's second quarter
earnings of $1.00 per share diluted, the previous
second-quarter record.
-- FY 2006's six-month net income of $338.8 million grew 21%
versus FY 2005's six-month net income of $280.3 million.
FY 2006's six-month earnings of $2.04 per share diluted
grew 22% versus FY 2005's six-month earnings of $1.67 per
share diluted, the previous six-month record.
-- FY 2006's second-quarter total revenues of $1.44 billion
increased 17% over FY 2005's second-quarter revenues of
$1.24 billion, the previous second-quarter record. FY
2006's second-quarter home building revenues of $1.44
billion increased 17% over FY 2005's second-quarter home
building revenues of $1.23 billion, the previous
second-quarter record. Revenues from land sales totaled
$2.1 million in FY 2006's second quarter, compared to
$9.8 million in FY 2005's second quarter.
-- FY 2006's six-month total revenues of $2.78 billion
increased 25% over FY 2005's six-month revenues of $2.23
billion, the previous six-month record. FY 2006's six-month
home building revenues of $2.78 billion increased 25% over
FY 2005's six-month home building revenues of $2.22 billion,
the previous six-month record. Revenues from land sales
totaled $6.8 million in FY 2006's first six months, compared
to $11.0 million in the first six months of FY 2005.
-- In addition, in the Company's second quarter and first six
months of FY 2006, unconsolidated entities in which the
Company had an interest delivered $29.0 million and $81.0
million of homes, respectively, compared to $38.4 million
and $64.9 million during the second quarter and first
six months, respectively, of FY 2005. The Company's share
of profits from the delivery of these homes is included
in "Equity Earnings from Unconsolidated Entities" on the
Company's Income Statement.
-- In FY 2006, the Company's second-quarter-end backlog of
$6.07 billion increased 3% over FY 2005's second-quarter
-end backlog of $5.87 billion, the previous second-quarter
record. In addition, at the end of second quarter FY 2006,
unconsolidated entities in which the Company had an
interest had a backlog of $7.7 million.
-- The Company's FY 2006 second-quarter contracts of $1.56
billion declined by 29% compared to FY 2005's second-quarter
contracts of $2.20 billion, the second-quarter record.
The Company's FY 2006 six-month contracts of $2.70 billion
declined by 26% compared to FY 2005's same period contracts
of $3.65 billion, the six-month record. In addition, in the
second quarter and first six months of FY 2006,
unconsolidated entities in which the Company had an
interest signed contracts of $15.9 million and $32.7
million, respectively.
-- The Company revised its earnings guidance for FY 2006 to
between $4.69 and $5.16 per share, compared to its previous
guidance of $4.77 and $5.26 per share. The revision was
due in part to the Company's revised outlook for increased
material and labor costs on homes to be delivered in the
second half of FY 2006 and a second quarter write-down of
$12.0 million, or approximately $.04 per share, the majority
of which was attributable to the continuing weakness in
the metro Detroit market and its impact on several existing
communities. Prior to its 2:00 PM conference call today
May 23, 2006 to discuss its second quarter results, the
Company intends to file a Form 8-K with the Securities
and Exchange Commission containing detailed guidance for
expected results of operations for Fiscal 2006 which
will be discussed on the call.
-- During the second quarter of FY 2006, the Company bought
back 1.3 million shares of its stock at an average price
of $30.49. For the first six months of FY 2006, the Company
bought back 1.94 million shares of its stock at an average
price of $31.83. Since April 30, 2006 the Company has
repurchased approximately 515,000 more shares at an
average price of $29.40.
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, May 23, 2006, to discuss these results and our outlook for the remainder of fiscal 2006. 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 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 July 31, 2006.
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 21 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, Virginia and West 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 and number 102 on the Forbes Platinum 400 based on five-year annualized total return performance, 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. Toll Brothers proudly supports the communities in which it builds; among other philanthropic pursuits, the Company now sponsors the Toll Brothers - Metropolitan Opera International Radio Network, bringing opera to neighborhoods throughout the world. 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 to be realized from our investments in unconsolidated entities, 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)
April 30, October 31,
2006 2005
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $ 398,110 $ 689,219
Inventory 5,939,352 5,068,624
Property, construction and office
equipment, net 95,640 79,524
Receivables, prepaid expenses and
other assets 170,945 185,620
Contracts receivable 97,524
Mortgage loans receivable 59,606 99,858
Customer deposits held in escrow 87,636 68,601
Investments in and advances to
unconsolidated entities 224,697 152,394
----------- -----------
$ 7,073,510 $ 6,343,840
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Loans payable $ 689,837 $ 250,552
Senior notes 1,140,597 1,140,028
Senior subordinated notes 350,000 350,000
Mortgage company warehouse loan 48,679 89,674
Customer deposits 446,564 415,602
Accounts payable 259,995 256,557
Accrued expenses 757,334 791,769
Income taxes payable 276,715 282,147
----------- -----------
Total liabilities 3,969,721 3,576,329
----------- -----------
Minority interest 6,983 3,940
Stockholders' equity:
Common stock 1,563 1,563
Additional paid-in capital 230,119 242,546
Retained earnings 2,914,848 2,576,061
Treasury stock (49,724) (56,599)
----------- -----------
Total stockholders' equity 3,096,806 2,763,571
----------- -----------
$ 7,073,510 $ 6,343,840
=========== ===========
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
(Unaudited)
Six months ended Three months ended
April 30, April 30,
------------------------ ----------------------
2006 2005 2006 2005
---------- ----------------------- ----------
Revenues:
Traditional
home sales $2,679,187 $2,215,095 $1,400,478 $1,225,998
Percentage
of completion 97,524 39,955
Land sales 6,778 11,025 2,100 9,800
---------- ---------- ---------- ----------
2,783,489 2,226,120 1,442,533 1,235,798
---------- ---------- ---------- ----------
Costs of
revenues:
Traditional
home sales 1,860,634 1,516,142 976,543 830,649
Percentage of
completion 78,524 31,178
Land sales 5,939 6,095 2,103 5,316
Interest 58,629 49,938 29,875 28,126
---------- ---------- ---------- ----------
2,003,726 1,572,175 1,039,699 864,091
---------- ---------- ---------- ----------
Selling,
general and
administrative 281,224 223,423 142,046 116,358
---------- ---------- ---------- ----------
Income from
operations 498,539 430,522 260,788 255,349
Other:
Equity
earnings from
unconsolidated
entities 29,393 5,308 12,824 3,373
Interest
and other 22,293 15,992 10,966 9,109
---------- ---------- ---------- ----------
Income before
income taxes 550,225 451,822 284,578 267,831
Income taxes 211,438 171,496 109,641 97,698
---------- ---------- ---------- ----------
Net income $ 338,787 $ 280,326 $ 174,937 $ 170,133
========== ========== ========== ==========
Earnings
per share:
Basic $ 2.19 $ 1.83 $ 1.13 $ 1.10
========== ========== ========== ==========
Diluted $ 2.04 $ 1.67 $ 1.06 $ 1.00
========== ========== ========== ==========
Weighted
average number
of shares:
Basic 154,919 153,140 154,763 154,627
Diluted 166,377 167,718 165,727 169,352
Additional
information:
Interest
incurred $ 66,654 $ 58,148 $ 34,218 $ 28,998
========== ========== ========== ==========
Depreciation
and
amortization $ 15,326 $ 10,879 $ 8,213 $ 5,678
========== ========== ========== ==========
Interest
expense by
source of
revenue:
Traditional
home sales $ 55,346 $ 49,512 $ 28,516 $ 27,754
Percentage
of completion 2,545 1,128
Land sales 738 426 231 372
---------- ---------- ---------- ----------
$ 58,629 $ 49,938 $ 29,875 $ 28,126
========== ========== ========== ==========
Three Months Ended April 30,
UNITS $ (MILL)
----------------- -------------------
HOME BUILDING REVENUES 2006 2005 2006 2005
------------------------ ------ ------ -------- --------
Northeast
(CT, MA, NJ, NY, RI) 351 254 225.2 140.3
Mid-Atlantic
(DE, MD, PA, VA) 687 759 454.5 458.7
Midwest
(IL, MI, MN, OH) 115 141 82.4 89.1
Southeast
(FL, NC, SC) 392 197 208.9 105.4
Southwest
(AZ, CO, NV, TX) 378 305 266.4 188.9
West (CA) 140 256 163.1 243.6
------ ------ -------- --------
Total traditional 2,063 1,912 1,400.5 1,226.0
Percentage of completion(a) 40.0
------ ------ -------- --------
Total consolidated 2,063 1,912 1,440.5 1,226.0
Unconsolidated entities 45 87 29.0 38.4
------ ------ -------- --------
2,108 1,999 1,469.5 1,264.4
====== ====== ======== ========
CONTRACTS
------------------------
Northeast
(CT, MA, NJ, NY, RI) 311 435 211.7 289.3
Mid-Atlantic
(DE, MD, PA, VA) 643 1,177 412.6 784.1
Midwest
(IL, MI, MN, OH) 171 212 110.6 144.4
Southeast
(FL, NC, SC) 307 462 193.0 260.8
Southwest
(AZ, CO, NV, TX) 434 579 332.0 403.5
West (CA) 210 255 218.0 291.4
------ ------ -------- --------
Total traditional 2,076 3,120 1,477.9 2,173.5
Percentage of completion(a) 91 61 86.3 31.0
------ ------ -------- --------
Total consolidated 2,167 3,181 1,564.2 2,204.5
Unconsolidated entities 25 123 15.9 85.2
------ ------ -------- --------
2,192 3,304 1,580.1 2,289.7
====== ====== ======== ========
At April 30,
UNITS $ (MILL)
----------------- -------------------
BACKLOG 2006 2005 2006 2005
------------------------ ------ ------ -------- --------
Northeast
(CT, MA, NJ, NY, RI) 1,202 1,299 827.6 825.9
Mid-Atlantic
(DE, MD, PA, VA) 2,153 2,767 1,444.4 1,782.3
Midwest
(IL, MI, MN, OH) 457 534 313.7 360.6
Southeast
(FL, NC, SC) 1,792 1,159 1,012.5 672.5
Southwest
(AZ, CO, NV, TX) 1,872 1,743 1,356.8 1,162.7
West (CA) 643 940 696.9 964.0
------ ------ -------- --------
Total traditional 8,119 8,442 5,651.9 5,768.0
------ ------ -------- --------
Percentage of completion(a)
Undelivered 620 119 516.0 98.4
Less, revenue
recognized (97.6)
------ ------ -------- --------
Net percentage of
completion 620 119 418.4 98.4
------ ------ -------- --------
Total consolidated 8,739 8,561 6,070.3 5,866.4
Unconsolidated entities 12 183 7.7 111.7
------ ------ -------- --------
8,751 8,744 6,078.0 5,978.1
====== ====== ======== ========
Six Months Ended April 30,
UNITS $ (MILL)
------------------- -------------------
HOME BUILDING REVENUES 2006 2005 2006 2005
-------------------------- -------- -------- -------- --------
Northeast
(CT, MA, NJ, NY, RI) 659 483 421.3 263.6
Mid-Atlantic
(DE, MD, PA, VA) 1,276 1,422 848.1 845.6
Midwest (IL, MI, MN, OH) 224 236 158.0 146.1
Southeast (FL, NC, SC) 789 352 421.7 189.7
Southwest (AZ, CO, NV, TX) 718 553 513.7 344.8
West (CA) 276 456 316.4 425.3
-------- -------- -------- --------
Total traditional 3,942 3,502 2,679.2 2,215.1
Percentage of completion(a) 97.6
-------- -------- -------- --------
Total consolidated 3,942 3,502 2,776.8 2,215.1
Unconsolidated entities 144 150 81.0 64.9
-------- -------- -------- --------
4,086 3,652 2,857.8 2,280.0
======== ======== ======== ========
CONTRACTS
--------------------------
Northeast
(CT, MA, NJ, NY, RI) 509 754 347.0 490.0
Mid-Atlantic
(DE, MD, PA, VA) 1,099 1,944 726.1 1,255.5
Midwest (IL, MI, MN, OH) 238 324 152.7 222.4
Southeast (FL, NC, SC) 561 841 357.0 463.2
Southwest (AZ, CO, NV, TX) 741 945 561.4 657.8
West (CA) 323 483 343.2 524.7
-------- -------- -------- --------
Total traditional 3,471 5,291 2,487.4 3,613.6
Percentage of completion(a) 240 63 216.7 34.0
-------- -------- -------- --------
Total consolidated 3,711 5,354 2,704.1 3,647.6
Unconsolidated entities 53 159 32.7 100.7
-------- -------- -------- --------
3,764 5,513 2,736.8 3,748.3
======== ======== ======== ========
(a) Mid- and High-Rise projects that are accounted for under the
percentage of completion accounting method. See details below.
PERCENTAGE OF COMPLETION
Three Months ended April 30,
----------------------------------------------
UNITS $ (MILL)
---------------------- ---------------------
HOME BUILDING REVENUES 2006 2005 2006 2005
---------------------- --------- --------- --------- ---------
Northeast 22.5 N/A
Southeast 15.2
Southwest 2.3
--------- ---------
Total 40.0 N/A
========= =========
CONTRACTS
----------------------
Northeast 71 60 64.9 29.5
Mid-Atlantic 5 1.7
Southeast 4 1 11.5 1.5
Southwest 11 8.2
--------- --------- --------- ---------
Total 91 61 86.3 31.0
========= ========= ========= =========
At April 30,
----------------------------------------------
UNITS $ (MILL)
---------------------- ---------------------
BACKLOG 2006 2005 2006 2005
---------------------- --------- --------- --------- ---------
Northeast 473 60 364.0 29.5
Mid-Atlantic 48 20.0
Southeast 76 59 114.3 68.9
Southwest 23 17.7
Less, revenue recognized (97.6)
--------- --------- --------- ---------
Total-Net 620 119 418.4 98.4
========= ========= ========= =========
Six Months ended April 30,
----------------------------------------------
UNITS $ (MILL)
---------------------- ---------------------
HOME BUILDING REVENUES 2006 2005 2006 2005
---------------------- --------- --------- --------- ---------
Northeast 62.2 N/A
Southeast 33.1
Southwest 2.3
--------- ---------
Total 97.6 N/A
========= =========
CONTRACTS
----------------------
Northeast 202 60 181.2 29.5
Mid-Atlantic 18 7.0
Southeast 4 3 16.3 4.5
Southwest 16 12.2
--------- --------- --------- ---------
Total 240 63 216.7 34.0
========= ========= ========= =========