Record 3rd Qtr EPS Increases 46% to $1.31 Per Share
Record 3rd Qtr Revenues Grow 46% To $1.0 Billion
Record 3rd Qtr Contracts Rise 69% To $1.6 Billion
Record 3rd Qtr-End Backlog Is Up 75% To $4.3 Billion
HUNTINGDON VALLEY, Pa., Aug. 25, 2004 (PRIMEZONE) -- Toll Brothers, Inc., (NYSE:TOL) (www.tollbrothers.com), the nation's leading builder of luxury homes, today reported that its third quarter ended July 31, 2004 was the best quarter in its history for net income, earnings per share, revenues, contracts and backlog. In addition, unconsolidated joint ventures in which the Company had an interest signed contracts of $79.1 million in the third quarter of FY 2004.
Robert I. Toll, chairman and chief executive officer, stated: "Buyer appetite for new luxury homes has remained tremendous throughout 2004 and we are enjoying very strong demand across all our product lines. Therefore, we believe that FY 2004 will be our twelfth consecutive year of record earnings.
"Based on our current backlog, which affords revenue visibility over the next nine to twelve months, and the pace of current demand, we project FY 2005 deliveries of between 7,700 and 8,000 homes with an average delivered price in excess of $600,000. Therefore, we believe we'll achieve at least 30% net income growth (25% earnings per share growth) in FY 2005. Based on our projections of community growth in the coming year, assuming continuing strong demand, we believe that 20% revenue and net income growth should be achievable in FY 2006.
"We continue to demonstrate our ability to grow dramatically in a very difficult economy: Since 2000, despite an economic recession, dramatic job losses, a severe stock market slump and global political turmoil, we have doubled our revenues and net income. While much of this can be attributed to the tremendous hard work of our associates, we also believe it reflects the strength of the luxury market, the brand name we have built, the growing number of affluent U.S. households and the industry's environment of greater stability and reduced cyclicality.
"Geographic and product diversification, access to lower-cost capital, a versatile and abundant home mortgage market and improving demographics are promoting strong and steady demand across many price points for those builders who can control land and persevere through the increasingly difficult regulatory approval process. This evolution in our industry favors the large, publicly traded home building companies with the capital and expertise to control sites and gain market share. This helps explain the growth of many of the public home building companies during these difficult economic times.
"Two recent studies, one from Harvard University and the other from the Homeownership Alliance, project that demand for new housing should range from 1.85 million up to 2.17 million new single and multi-family units annually over the next ten years. Yet our industry's average annual production peaked in the 1970's at 1.77 million units and has never reached that sustained pace again because of increasing regulatory land approval constraints that restrict supply. In this environment, we envision a growing shortage of home sites as demand increases. In anticipation, we now control more than 61,000 home sites in affluent lot constrained urban and suburban markets. With this supply, we believe we are well positioned for continued growth in the coming years."
Toll Brothers' financial highlights for the period ended July 31, 2004 (unaudited):
-- FY 2004's third-quarter net income of $106.0 million ($1.31 per
share diluted) grew 56% versus FY 2003's third-quarter net income
of $68.2 million ($0.90 per share diluted), the previous third-
quarter record. FY 2004's nine-month net income of $228.5 million
($2.82 per share diluted) grew 37% versus FY 2003's record nine-
month net income of $166.4 million ($2.23 per share diluted).
-- FY 2004 third-quarter revenues of $1.01 billion increased 46%
over FY 2003's third-quarter revenues of $693.7 million, the
previous third-quarter record. Record third quarter home building
revenues of $991.31 million (1,684 homes) increased 46% over FY
2003's third-quarter home building revenues of $678.5 million
(1,188 homes), the previous third-quarter record. Revenues from
land sales totaled $12.9 million for FY 2004's third quarter,
compared to $7.6 million in FY 2003's third quarter.
-- FY 2004 nine-month revenues of $2.43 billion increased 30% over
FY 2003's nine-month revenues of $1.87 billion, the previous
record. Record nine-month home building revenues of $2.40 billion
(4,232 homes) increased 30% over FY 2003's nine-month home
building revenues of $1.84 billion (3,333 homes), the previous
record. FY 2004 revenues from land sales for the nine-month
period totaled $20.9 million compared to $21.0 million in the
same period in FY 2003.
-- In addition, in the Company's fiscal 2004 third-quarter and nine-
month periods, unconsolidated joint ventures in which the Company
had an interest delivered $12.1 million (30 homes) and $15.5
million (41 homes), respectively, compared to $2.9 million (9
homes) and $8.2 million (26 homes), respectively, in the same
periods of fiscal 2003. 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 FY 2004 third-quarter contracts of $1.6 billion
(2,329 homes) grew by 69% over FY 2003's third-quarter contracts
of $951.6 million (1,668 homes), the previous third-quarter
record. In addition, in third-quarter 2004, unconsolidated joint
ventures in which the Company had an interest signed contracts of
$79.1 million (188 homes).
-- FY 2004's nine-month contracts of $4.1 billion (6,436 homes),
grew by 67% over FY 2003's nine-month total of $2.46 billion
(4,383 homes), the previous record. In addition, in the nine-
month FY 2004 period, unconsolidated joint ventures in which
the Company had an interest signed contracts of $82.2 million
(198 homes).
-- FY 2004 third-quarter-end backlog of $4.3 billion (6,856 homes),
the highest backlog in the Company's history, increased 75% over
FY 2003's record third-quarter-end backlog of $2.48 billion
(4,392 homes). In addition, in third- quarter FY 2004,
unconsolidated joint ventures in which the Company had an
interest had a cumulative backlog of $71.4 million (172 homes).
As previously announced, 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, 2004, to discuss these results and our outlook for fiscal 2004 and 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 2004 and Fiscal 2005, 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, 2004.
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, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Texas and Virginia.
Toll Brothers builds luxury single-family 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 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)
July 31, October 31,
2004 2003
----------- -----------
ASSETS (Unaudited)
Cash and cash equivalents $ 197,914 $ 425,251
Inventory 3,888,738 3,080,349
Property, construction and
office equipment, net 48,494 43,711
Receivables, prepaid
expenses and other assets 155,699 113,633
Mortgage loans receivable 90,929 57,500
Customer deposits held in
escrow 55,042 31,547
Investments in and advances
to unconsolidated entities 83,332 35,400
----------- -----------
$ 4,520,148 $ 3,787,391
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Loans payable $ 344,548 $ 281,697
Senior notes 845,540 546,669
Subordinated notes 450,000 620,000
Mortgage company warehouse
loan 82,061 49,939
Customer deposits 287,708 176,710
Accounts payable 177,910 151,730
Accrued expenses 438,426 346,944
Income taxes payable 163,624 137,074
----------- -----------
Total liabilities 2,789,817 2,310,763
----------- -----------
Stockholders' equity:
Preferred stock, none issued
Common stock 770 770
Additional paid-in capital 203,863 190,596
Retained earnings 1,590,156 1,361,619
Treasury stock (64,458) (76,357)
----------- -----------
Total stockholders'equity 1,730,331 1,476,628
----------- -----------
$ 4,520,148 $ 3,787,391
=========== ===========
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,
---------- ---------- ---------- ----------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Revenues:
Home sales $2,395,150 $1,837,386 $ 991,264 $ 678,523
Land sales 20,938 21,027 12,940 7,640
Equity earnings in
unconsolidated
entities 6,945 700 5,551 555
Interest and other 7,483 12,764 3,364 6,967
---------- ---------- ---------- ----------
2,430,516 1,871,877 1,013,119 693,685
---------- ---------- ---------- ----------
Costs and expenses:
Home sales 1,716,535 1,334,645 709,484 492,239
Land sales 14,315 13,462 7,509 2,745
Selling, general and
administrative
expenses 270,155 206,354 103,608 73,216
Interest 59,970 50,135 24,216 17,630
Expenses related to
early retirement
of debt 8,229 3,890 481
---------- ---------- ---------- ----------
2,069,204 1,608,486 845,298 585,830
---------- ---------- ---------- ----------
Income before income
taxes 361,312 263,391 167,821 107,855
Income taxes 132,775 96,953 61,806 39,696
---------- ---------- ---------- ----------
Net income $ 228,537 $ 166,438 $ 106,015 $ 68,159
========== ========== ========== ==========
Earnings per share:
Basic $ 3.08 $ 2.38 $ 1.43 $ 0.98
Diluted $ 2.82 $ 2.23 $ 1.31 $ 0.90
Weighted average
number of shares:
Basic 74,199 70,038 74,352 69,848
Diluted 81,055 74,481 80,920 75,534
Additional information:
Interest incurred $ 85,137 $ 76,831 $ 28,632 $ 25,800
Depreciation and
amortization $ 11,231 $ 8,841 $ 3,895 $ 2,913
PERIOD ENDED July 31:
UNITS $ (MILL)
3rd Qtr. 3rd Qtr. 3rd Qtr. 3rd Qtr.
CLOSINGS 2004 2003 2004 2003
--------------------------- ------- ------- ------- -------
Northeast 256 179 149.8 112.6
(CT,MA,NH,NJ,NY,RI)
Mid-Atlantic 616 445 314.4 221.7
(DE,MD,PA,VA)
Mid-West (IL,MI,OH) 136 103 74.4 57.1
Southeast (FL,NC,SC,TN) 205 131 97.9 69.3
Southwest (AZ,CO,NV,TX) 205 212 124.7 114.0
West Coast (CA) 266 118 230.1 103.8
--------------------------- ------- ------- ------- -------
Total consolidated entities 1,684 1,188 991.3 678.5
Unconsolidated entities 30 9 12.1 2.9
--------------------------- ------- ------- ------- -------
Total 1,714 1,197 1,003.4 681.4
======= ======= ======= =======
CONTRACTS
---------------------------
Northeast 270 247 155.4 141.7
(CT,MA,NH,NJ,NY,RI)
Mid-Atlantic 748 643 473.8 322.5
(DE,MD,PA,VA)
Mid-West (IL,MI,OH) 164 133 105.9 73.5
Southeast (FL,NC,SC,TN) 361 154 229.5 77.3
Southwest (AZ,CO,NV,TX) 455 207 300.0 119.1
West Coast (CA) 331 284 341.6 217.5
--------------------------- ------- ------- ------- -------
Total consolidated entities 2,329 1,668 1,606.2 951.6
Unconsolidated entities 188 3 79.1 1.1
--------------------------- ------- ------- ------- -------
Total 2,517 1,671 1,685.3 952.7
======= ======= ======= =======
BACKLOG
---------------------------
Northeast 1,051 853 596.1 483.6
(CT,MA,NH,NJ,NY,RI)
Mid-Atlantic 2,305 1,647 1,320.6 810.8
(DE,MD,PA,VA)
Mid-West (IL,MI,OH) 458 332 279.2 186.3
Southeast (FL,NC,SC,TN) 696 336 421.5 202.0
Southwest (AZ,CO,NV,TX) 1,278 613 774.7 341.6
West Coast (CA) 1,068 611 953.7 456.0
------- ------- ------- -------
Total consolidated entities 6,856 4,392 4,345.8 2,480.3
Unconsolidated entities 172 19 71.4 5.8
--------------------------- ------- ------- ------- -------
Total 7,028 4,411 4,417.2 2,486.1
======= ======= ======= =======
PERIOD ENDED JULY 31:
UNITS $ (MILL)
9 Months 9 Months 9 Months 9 Months
CLOSINGS 2004 2003 2004 2003
---------------------------- ------- ------- ------- -------
Northeast 655 511 379.1 307.8
(CT,MA,NH,NJ,NY,RI)
Mid-Atlantic 1,555 1,213 789.9 593.4
(DE,MD,PA,VA)
Mid-West (IL,MI,OH) 307 269 174.0 143.4
Southeast (FL,NC,SC,TN) 518 476 243.0 219.2
Southwest (AZ,CO,NV,TX) 544 512 313.9 267.8
West Coast (CA) 653 352 495.2 305.8
---------------------------- ------- ------- ------- -------
Total consolidated entities 4,232 3,333 2,395.1 1,837.4
Unconsolidated entities 41 26 15.5 8.2
---------------------------- ------- ------- ------- -------
Total 4,273 3,359 2,410.6 1,845.6
======= ======= ======= =======
CONTRACTS
----------------------------
Northeast 774 704 455.8 406.7
(CT,MA,NH,NJ,NY,RI)
Mid-Atlantic 2,186 1,726 1,273.5 856.8
(DE,MD,PA,VA)
Mid-West (IL,MI,OH) 471 335 289.9 184.6
Southeast (FL,NC,SC,TN) 803 428 446.3 216.8
Southwest (AZ,CO,NV,TX) 1,113 589 691.8 340.7
West Coast (CA) 1,089 601 951.8 453.3
------- ------- ------- -------
Total consolidated entities 6,436 4,383 4,109.1 2,458.9
Unconsolidated entities 198 21 82.2 6.5
---------------------------- ------- ------- ------- -------
Total 6,634 4,404 4,191.3 2,465.4
======= ======= ======= =======