Record 2nd Qtr EPS Rises 24% to $0.89 Per Share
Record 2nd Qtr Revenues Grow 35% to $819.5 Million
Record 2nd Qtr Contracts Grow 73% to $1.6 Billion
Record 2nd Qtr-End Backlog Increases 69% to $3.7 Billion
HUNTINGDON VALLEY, Pa., May 26, 2004 (PRIMEZONE) -- Toll Brothers, Inc. (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today reported record second quarter and six-month results for net income, revenues, contracts and backlog for the period ended April 30, 2004. The Company's contracts and backlog were the highest for any quarter in its history, and its net income and revenues set second quarter records.
Robert I. Toll, chairman and chief executive officer, stated: "Demand remains tremendous. We don't expect much impact from interest rate fluctuations because we believe the strengthening economy and job growth will outweigh the effects of rising interest rates. In 1995 mortgage rates peaked at 9.4%, in 1997 at 8.1%, and in 2000 at 8.75%; business was excellent in all of those periods. Today's rates are lower than they were through the entire 1990's, which was a very strong decade for home building."
"Our record quarter-end backlog of $3.74 billion contains most of our projected revenues through second quarter 2005. And in May, we've enjoyed record traffic and deposits, which means we are already beginning to sign contracts for Toll Brothers homes to be delivered in the third quarter of 2005. Therefore, we believe we will achieve record results in 2004 and 2005."
"We are building upon our well-established brand name in move-up, empty-nester and master planned resort-style communities by diversifying into other upscale product lines. We have established a strong presence in the luxury active-adult market and are rapidly expanding our offerings of low-, mid- and high-rise communities in urban and suburban infill locations. By broadening our offerings within the luxury market we are increasing our opportunities for growth and profit."
"This quarter we increased the lots we control to 58,000, a five- to six-year supply based on our current pace of growth. With increasing lot shortages, growing numbers of affluent households, and maturing baby boomers entering their peak earning years, we believe our land position and ability to expand our land supply in lot-constrained affluent markets positions us for sustainable long-term growth."
Toll Brothers' financial highlights for the period ended April 30, 2004 (unaudited):
-- FY 2004's second quarter net income of $72.4 million ($0.89 per
share diluted) grew 37% versus FY 2003's record second
quarter net income of $52.9 million ($0.72 per share diluted).
FY 2004's six-month net income of $122.5 million ($1.51 per
share diluted) grew 25% versus FY 2003's record six-month
net income of $98.3 million ($1.33 per share diluted).
Toll Brothers' second quarter and six-month 2004 results
included a previously announced $0.06 per share after tax
expense due to early retirement of $170 million of 8 1/8%
senior subordinated notes due 2009 in the second quarter.
FY 2003's six-month results included a similar expense of
$0.03 per share for early retirement of debt in the first
quarter of FY 2003.
-- FY 2004's second quarter revenues of $819.5 million rose 35%
versus FY 2003's second quarter revenues of $607.9 million, the
previous second quarter record. FY 2004 second quarter home
building revenues of $814.31 million (1,463 homes) increased 35%
versus FY 2003's second quarter home building revenues of $601.0
million (1,109 homes), the previous second quarter record.
Revenues from land sales totaled $2.0 million for FY 2004's
second quarter compared to $4.0 million in FY 2003's second
quarter.
-- FY 2004's six-month revenues of $1.42 billion rose 20% versus
FY 2003's six-month revenues of $1.18 billion, the previous
record. FY 2004's six-month home building revenues of $1.40
billion (2,548 homes) increased 21% versus FY 2003's six-month
home building revenues of $1.16 billion (2,145 homes), the
previous record. FY 2004 revenues from land sales for the
six-month period totaled $8.0 million compared to $13.4
million in the same period in FY 2003.
-- The Company's FY 2004 second quarter contracts of $1.60 billion
(2,600 homes), the highest for any quarter in its history,
grew by 73% versus FY 2003's second quarter contracts of
$926.5 million (1,667 homes), the previous second quarter
record.
-- FY 2004's six-month contracts of $2.51 billion (4,117 homes)
grew by 66% versus FY 2003's six-month total of $1.51
billion (2,733 homes), the previous record.
-- FY 2004's second quarter-end backlog of $3.74 billion
(6,225 homes), the highest in the Company's history,
increased 69% versus FY 2003's record second quarter-end
backlog of $2.21 billion (3,937 homes).
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 26, 2004, to discuss these results and our outlook for the remainder of fiscal 2004. 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, 2004.
Toll Brothers builds luxury single-family and attached home communities and master-planned luxury multi-product residential resort-style golf 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 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 www.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)
April 30, October 31,
2004 2003
---------- -----------
ASSETS (Unaudited)
Cash and cash equivalents $ 287,505 $ 425,251
Inventory 3,578,025 3,080,349
Property,
construction and
office equipment, net 46,035 43,711
Receivables, prepaid
expenses and other assets 132,131 113,633
Mortgage loans receivable 78,044 57,500
Customer deposits held in escrow 49,320 31,547
Investments in and advances to
unconsolidated entities 68,486 35,400
----------- -----------
$ 4,239,546 $ 3,787,391
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Loans payable $ 294,326 $ 281,697
Senior notes 845,387 546,669
Subordinated notes 450,000 620,000
Mortgage company
warehouse loan 69,294 49,939
Customer deposits 253,215 176,710
Accounts payable 175,167 151,730
Accrued expenses 376,094 346,944
Income taxes payable 142,495 137,074
--------- ---------
Total liabilities 2,605,978 2,310,763
--------- ---------
Stockholders' equity:
Preferred stock, none issued
Common stock 770 770
Additional paid-in capital 204,227 190,596
Retained earnings 1,484,141 1,361,619
Treasury stock (55,570) (76,357)
----------- -----------
Total stockholders' equity 1,633,568 1,476,628
----------- -----------
$ 4,239,546 $3,787,391
=========== ===========
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,
---------- ----------- ---------- ----------
2004 2003 2004 2003
---------- ----------- ---------- ----------
Revenues:
Housing
sales $1,403,886 $1,158,863 $ 814,309 $ 600,977
Land sales 7,998 13,387 2,011 3,953
Equity
earnings
(loss) from
unconsolidated
entities 1,394 145 729 (108)
Interest and
other 4,119 5,797 2,436 3,110
---------- ----------- --------- ----------
1,417,397 1,178,192 819,485 607,932
---------- ----------- --------- ----------
Costs and expenses:
Housing sales 1,007,051 842,406 584,623 437,234
Land sales 6,806 10,717 1,503 3,103
Selling, general
and
administrative
expenses 166,547 133,138 89,894 67,515
Interest 35,754 32,505 21,196 16,464
Expenses related
to early
retirement
of debt 7,748 3,890 7,748
---------- ----------- --------- ----------
1,223,906 1,022,656 704,964 524,316
---------- ----------- --------- ----------
Income before
income taxes 193,491 155,536 114,521 83,616
Income taxes 70,969 57,257 42,083 30,751
---------- ----------- --------- ----------
Net income $122,522 $ 98,279 $ 72,438 $ 52,865
========== =========== ========== ==========
Earnings per share:
Basic $ 1.65 $ 1.40 $ 0.97 $ 0.76
Diluted $ 1.51 $ 1.33 $ 0.89 $ 0.72
Weighted average
number of shares:
Basic 74,123 70,133 74,406 69,859
Diluted 81,123 73,955 81,426 73,601
Additional information:
Interest
incurred $ 56,505 $ 51,031 $ 28,265 $ 25,249
Depreciation
and
amortization $ 7,336 $ 5,928 $ 3,773 $ 2,883
PERIOD ENDING APRIL 30:
UNITS $ (MILL)
2nd Qtr. 2nd Qtr. 2nd Qtr. 2nd Qtr.
CLOSINGS 2004 2003 2004 2003
------------------------- --------- --------- --------- --------
Northeast
(CT, MA, NH, NJ, NY, RI) 216 164 124.8 96.0
Mid-Atlantic
(DE, MD, PA, VA) 534 389 274.1 189.3
Mid-West (IL, MI, OH) 99 79 58.6 42.8
Southeast (FL, NC, SC, TN) 192 182 91.5 76.6
Southwest (AZ, CO, NV, TX) 190 170 107.4 86.4
West Coast (CA) 232 125 157.9 109.9
--- --- ----- -----
Total 1,463 1,109 814.3 601.0
CONTRACTS (1)
-------------------------
Northeast
(CT, MA, NH, NJ, NY, RI) 282 316 162.5 176.1
Mid-Atlantic
(DE, MD, PA, VA) 911 648 515.8 314.9
Mid-West (IL, MI, OH) 192 126 113.9 66.6
Southeast (FL, NC, SC, TN) 268 159 131.3 83.8
Southwest (AZ, CO, NV, TX) 425 204 248.3 125.1
West Coast (CA) 522 214 429.8 160.0
--- --- ----- -----
Total 2,600 1,667 1,601.6 926.5
BACKLOG (1)
---------------------------
Northeast
(CT, MA, NH, NJ, NY, RI) 1,037 785 590.4 454.5
Mid-Atlantic
(DE, MD, PA, VA) 2,173 1,449 1,161.2 709.9
Mid-West (IL, MI, OH) 444 327 252.2 177.5
Southeast (FL, NC, SC, TN) 540 313 289.9 194.1
Southwest (AZ, CO, NV, TX) 1,028 618 599.5 336.5
West Coast (CA) 1,003 445 842.2 342.3
----- ----- ----- -----
Total 6,225 3,937 3,735.4 2,214.8
PERIOD ENDING APRIL 30:
UNITS $ (MILL)
6 Months 6 Months 6 Months 6 Months
CLOSINGS 2004 2003 2004 2003
-------------------------- -------- -------- --------- ---------
Northeast
(CT, MA, NH, NJ, NY, RI) 399 332 229.4 195.2
Mid-Atlantic
(PA, DE, MD, VA) 939 768 475.5 371.8
Mid-West (IL, MI, OH) 171 166 99.6 86.3
Southeast (FL, NC, SC, TN) 313 345 145.1 149.9
Southwest (AZ, CO, NV, TX) 339 300 189.2 153.8
West Coast (CA) 387 234 265.1 201.9
----- ----- ------- -------
Total 2,548 2,145 1,403.9 1,158.9
CONTRACTS (1)
--------------------------
Northeast
(CT, MA, NH, NJ, NY, RI) 504 457 300.3 265.0
Mid-Atlantic
(PA, DE, MD, VA) 1,438 1,083 799.6 534.3
Mid-West (IL, MI, OH) 317 220 187.2 116.4
Southeast (FL, NC, SC, TN) 442 274 216.8 139.5
Southwest (AZ, CO, NV, TX) 658 382 391.8 221.7
West Coast (CA) 758 317 610.3 235.8
----- ----- ------- -------
Total 4,117 2,733 2,506.0 1,512.7
(1)Contracts for the three-month and six-month periods ended April 30,
2004 included $1.6 million (5 homes) and $3.2 million (10 homes),
respectively, from an unconsolidated 50% owned joint venture.
Contracts for the three-month and six-month periods ended April 30,
2003 included $2.4 million (8 homes) and $5.5 million (18 homes),
respectively, from this joint venture. Backlog as of April 30, 2004
and 2003 included $4.5 million (14 homes) and $7.7 million (25 homes),
respectively, from this joint venture.