HORSHAM, Pa., Dec. 4, 2012 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today announced results for earnings, revenues, contracts, and backlog for its fourth quarter and fiscal year ended October 31, 2012. In its fourth quarter, revenues rose 48% in dollars and 44% in units, contracts rose 75% in dollars and 70% in units, and backlog rose 70% in dollars and 54% in units, compared to FY 2011's fourth quarter. In the fourth quarter, pre-tax income was $60.7 million and net income was $411.4 million.
Fourth Quarter Financial Highlights:
FY 2012 Financial Highlights
Douglas C. Yearley, Jr., Toll Brothers' chief executive officer, stated: "Pent-up demand, rising home prices, low interest rates, and improving consumer confidence motivated buyers to return to the housing market in FY 2012. As household formations accelerated and unsold home inventories dropped to record lows, the industry took further steps toward a sustained housing recovery.
"We enjoyed resurgent activity across all of our product lines and in most of our geographic regions. The momentum that began in our first quarter of FY 2012 built throughout the year. Sequentially, over the four quarters of FY 2012, the value of net signed contracts rose 45%, 51%, 66% and 75% compared to FY 2011's same four quarters. Our net contracts per community ("same store sales"), which increased 33% and 60% respectively versus FY 2011's full year and fourth quarter, were the highest for a fiscal year since FY 2006 and the highest for a fourth quarter since FY 2005. Now, five weeks into FY 2013, our contracts are up 34% versus FY 2012's same period.
"Our large increase in FY 2012 contracts was achieved primarily through an increase in per-community sales. FY 2012's contracts per community of 18.2, while up 33% from FY 2011, were still 36% below our average annual pace from 1987 through 2006 of 28.6; therefore, as the economy strengthens, we believe there is great potential to increase sales paces per community.
"We believe the publicly traded home building companies are growing market share: As the only national home building company focused on the luxury market, we are particularly well positioned. Our financial strength gives us a competitive advantage over the small and mid-sized private builders in our luxury niche whose access to capital and land remains constricted.
"Our financial strength also gives us an advantage in buying land, as sellers know we have the appetite and capital to close transactions quickly. Since the start of our fourth quarter, we have been seeing great deal flow in some excellent locations. Our philosophy has always been to acquire exceptionally located sites – "on the corner of 'Main and Main.'" In contrast to the "just-in-time" model of some "land-light" builders, we often take this land through approvals while we have it under option and then improve it. This helps increase our profit margins and enables us to position the company for the future as we put land under control today that may translate into revenues starting several years later.
"As the economy slowly heals and more customers re-enter the housing market, we look forward to the future. Based on our strong balance sheet, solid land holdings, recognized brand and excellent team of associates, we believe we are well-positioned for the housing market's continuing recovery."
Martin P. Connor, Toll Brothers' chief financial officer, stated: "We ended FY 2012 with approximately $1.2 billion of cash and marketable securities, $814.9 million available under our 12-bank credit facility and a net-debt-to-capital ratio of 23.6%. Our stockholders' equity grew $535 million in FY 2012, due primarily to our operating income and the reversal of most of our valuation allowance.
"Our strong credit ratings enable us to access the capital markets at industry-leading rates. This quarter we raised $287.5 million through a 20-year exchangeable note offering, callable in September 2017, with a 0.50% coupon and a conversion premium set at $49.08 per share - 50% above our then-current stock price of $32.72.
"Subject to the caveats in our Statement on Forward-Looking Information included in this release, we offer the following limited guidance. We ended FY 2012 with a backlog of $1.67 billion and 2,569 units, up 70% in dollars and 54% in units, compared to FYE 2011. With this backlog and the lowest cancellation rate in our industry, we believe we will deliver between 3,600 and 4,400 homes in FY 2013 at an average price of between $595,000 and $630,000 per home. We expect to end FY 2013 with between 225 and 255 selling communities."
Robert I. Toll, executive chairman, stated: "Our optimism for our own and the housing industry's prospects is buoyed by basic demographics. During the last five years, population has continued to increase in the United States; however, household formations, a key driver of housing demand, have not kept pace. A recent study by Harvard University estimated that, based on historic trends, 1.8 to 2.8 million more U.S. households should have been formed since 2007 than actually were created. Recent trends suggest these formations are starting to occur.
"Meanwhile, new home production has been anemic. Many experts estimate that, going forward, the industry has to produce between 1.4 and 1.7 million new homes per year to keep pace with basic demographic-driven demand. From 2008 through 2011, that number dropped to 660,000 on average and is projected by the National Association of Home Builders to be about 757,000 for 2012. Clearly, more new home production will be needed to meet future demand.
"While general economic trends are encouraging, we hope there is recognition among our leaders that policies supportive of a housing recovery will have an exponentially positive impact on job growth and that an increase in home values will translate into stronger family balance sheets, improved consumer confidence and a greater propensity to spend, which will accelerate the economic recovery.
"In a speech on November 15, 2012, Federal Reserve Chairman Ben Bernanke stated the case for housing: 'Strengthening and broadening the housing recovery remain a critical challenge for policymakers, lenders and community leaders. The degree to which that challenge is met will help determine the strength and sustainability of the economic recovery and the extent to which its benefits are broadly felt.'"
"Toll Brothers was named 2012 Builder of the Year by Professional Builder magazine a few weeks ago. As we end 2012 and look forward to 2013, Doug and I especially want to thank our co-workers. Their enthusiasm, diligence, perseverance, excellence and commitment to quality is why Toll Brothers received this honor."
Toll Brothers' financial highlights for the fourth quarter and fiscal year ended October 31, 2012 (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. (EST) today, December 4, 2012, to discuss these results and its outlook for 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 approximately 48 hours 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 20 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, 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 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 fourth quarter and fiscal year ended October 31, 2012 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) | ||
October 31, 2012 |
October 31, 2011 |
|
(Unaudited) | ||
ASSETS | ||
Cash and cash equivalents | $ 778,824 | $ 906,340 |
Marketable securities | 439,068 | 233,572 |
Restricted cash | 47,276 | 19,760 |
Inventory | 3,761,187 | 3,416,723 |
Property, construction and office equipment, net | 106,214 | 99,712 |
Receivables, prepaid expenses and other assets | 148,315 | 105,576 |
Mortgage loans receivable | 86,386 | 63,175 |
Customer deposits held in escrow | 29,579 | 14,859 |
Investments in and advances to unconsolidated entities | 330,617 | 126,355 |
Investment in non-performing loan portfolios and foreclosed real estate | 95,522 | 69,174 |
Deferred tax assets | 364,125 | |
$ 6,187,113 | $ 5,055,246 | |
LIABILITIES AND EQUITY | ||
Liabilities: | ||
Loans payable | $ 99,817 | $ 106,556 |
Senior notes | 2,080,463 | 1,490,972 |
Mortgage company warehouse loan | 72,664 | 57,409 |
Customer deposits | 142,977 | 83,824 |
Accounts payable | 99,911 | 96,817 |
Accrued expenses | 476,350 | 521,051 |
Income taxes payable | 87,060 | 106,066 |
Total liabilities | 3,059,242 | 2,462,695 |
Equity: | ||
Stockholders' Equity | ||
Common stock | 1,687 | 1,687 |
Additional paid-in capital | 404,418 | 400,382 |
Retained earnings | 2,721,397 | 2,234,251 |
Treasury stock, at cost | (983) | (47,065) |
Accumulated other comprehensive loss | (4,819) | (2,902) |
Total stockholders' equity | 3,121,700 | 2,586,353 |
Noncontrolling interest | 6,171 | 6,198 |
Total equity | 3,127,871 | 2,592,551 |
$ 6,187,113 | $ 5,055,246 |
TOLL BROTHERS, INC. AND SUBSIDIARIES | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(Amount in thousands, except per share data) | ||||
(unaudited) | ||||
Twelve Months Ended October 31, |
Three Months Ended October 31, |
|||
2012 | 2011 | 2012 | 2011 | |
Revenues | $ 1,882,781 | $ 1,475,881 | $ 632,826 | $ 427,785 |
Cost of revenues | 1,532,095 | 1,260,770 | 505,738 | 362,504 |
Selling, general and administrative expenses | 287,257 | 261,355 | 74,472 | 68,449 |
Interest expense | -- | 1,504 | -- | -- |
1,819,352 | 1,523,629 | 580,210 | 430,953 | |
Income (loss) from operations | 63,429 | (47,748) | 52,616 | (3,168) |
Other: | ||||
Income (loss) from unconsolidated entities | 23,592 | (1,194) | 4,244 | 9,811 |
Other income - net | 25,921 | 23,403 | 3,889 | 9,047 |
Expenses related to early retirement of debt | (3,827) | (413) | ||
Income (loss) before income taxes | 112,942 | (29,366) | 60,749 | 15,277 |
Income tax (benefit) provision | (374,204) | (69,161) | (350,668) | 234 |
Net income | $ 487,146 | $ 39,795 | $ 411,417 | $ 15,043 |
Income per share: | ||||
Basic | $ 2.91 | $ 0.24 | $ 2.44 | $ 0.09 |
Diluted | $ 2.86 | $ 0.24 | $ 2.35 | $ 0.09 |
Weighted-average number of shares: | ||||
Basic | 167,346 | 167,140 | 168,416 | 166,896 |
Diluted | 170,154 | 168,381 | 174,775 | 167,525 |
TOLL BROTHERS, INC. AND SUBSIDIARIES | ||||
SUPPLEMENTAL DATA | ||||
(Amount in thousands) | ||||
(unaudited) | ||||
Twelve Months Ended October 31, |
Three Months Ended October 31, |
|||
2012 | 2011 | 2012 | 2011 | |
Impairment charges (recoveries) recognized: | ||||
Cost of sales | $ 14,739 | $ 51,837 | $ 1,491 | $ 16,976 |
Income (loss) from Unconsolidated entities | (2,310) | 40,870 | (689) | 1,270 |
$ 12,429 | $ 92,707 | $ 802 | $ 18,246 | |
Depreciation and amortization | $ 13,468 | $ 13,370 | $ 3,750 | $ 2,710 |
Interest incurred | $ 125,783 | $ 114,761 | $ 32,756 | $ 27,941 |
Interest expense: | ||||
Charged to cost of sales | $ 87,117 | $ 77,623 | $ 27,294 | $ 21,296 |
Charged to selling, general and administrative expense | 1,504 | |||
Charged to other income-net | 3,404 | 1,155 | 1,740 | 294 |
Interest reclassified to property construction and office equipment | 3,000 | |||
Capitalized interest on investments in unconsolidated entities | 3,438 | 1,178 | ||
Total | $ 93,959 | $ 83,282 | $ 30,212 | $ 21,590 |
Home sites controlled: | ||||
Owned | 31,327 | 30,199 | ||
Optioned | 9,023 | 7,298 | ||
40,350 | 37,497 |
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, South Carolina and Texas |
West: | Arizona, California, Colorado, Nevada, and Washington |
Three Months Ended October 31, |
Three Months Ended October 31, |
|||
Units | $ (Millions) | |||
HOME BUILDING REVENUES | 2012 | 2011 | 2012 | 2011 |
North | 274 | 205 | $ 149.9 | $ 108.0 |
Mid-Atlantic | 366 | 262 | 204.4 | 148.7 |
South | 182 | 159 | 110.8 | 87.7 |
West | 266 | 131 | 167.7 | 83.4 |
Total consolidated | 1,088 | 757 | $ 632.8 | $ 427.8 |
CONTRACTS | ||||
North | 239 | 179 | $ 139.2 | $ 115.4 |
Mid-Atlantic | 303 | 225 | 171.1 | 125.0 |
South | 259 | 133 | 169.1 | 81.9 |
West | 297 | 107 | 204.7 | 67.7 |
Total consolidated | 1,098 | 644 | $ 684.1 | $ 390.0 |
BACKLOG | ||||
North | 655 | 553 | $ 449.2 | $ 307.4 |
Mid-Atlantic | 658 | 487 | 386.2 | 288.9 |
South | 749 | 442 | 483.5 | 263.2 |
West | 507 | 185 | 351.0 | 121.6 |
Total consolidated | 2,569 | 1,667 | $ 1,669.9 | $ 981.1 |
Twelve Months Ended October 31, |
Twelve Months Ended October 31, |
|||
Units | $ (Millions) | |||
HOME BUILDING REVENUES | 2012 | 2011 | 2012 | 2011 |
North | 891 | 718 | $ 513.7 | $ 381.6 |
Mid-Atlantic | 1,025 | 887 | 564.5 | 499.7 |
South | 626 | 522 | 366.7 | 285.0 |
West | 744 | 484 | 437.9 | 309.6 |
Total consolidated | 3,286 | 2,611 | $ 1,882.8 | $ 1,475.9 |
CONTRACTS | ||||
North | 993 | 750 | $ 655.6 | $ 429.6 |
Mid-Atlantic | 1,196 | 899 | 661.6 | 504.3 |
South | 933 | 668 | 587.0 | 388.5 |
West | 1,037 | 467 | 653.7 | 282.4 |
Total consolidated | 4,159 | 2,784 | $ 2,557.9 | $ 1,604.8 |
Unconsolidated entities: | ||||
Information related to revenues and contracts of entities in which we have an interest for the three-month and twelve-months periods ended October 31, 2012 and 2011, and for backlog at October 31, 2012 and 2011 is as follows: | ||||
2012 Units |
2011 Units |
2012 $(Mill) |
2011 $(Mill) |
|
Three months ended October 31, | ||||
Revenues | 14 | 42 | $ 13.6 | $ 34.8 |
Contracts | 17 | 33 | $ 16.4 | $ 29.6 |
Twelve months ended October 31, | ||||
Revenues | 96 | 284 | $ 89.9 | $ 233.4 |
Contracts | 106 | 184 | $ 96.1 | $ 163.1 |
Backlog at October 31, | 36 | 26 | $ 27.2 | $ 21.0 |