Toll Brothers Reports FY 2023 3rd Quarter Results

Toll Brothers, Inc., the nation’s leading builder of luxury homes, today announced results for its third quarter ended July 31, 2023.

FY 2023’s Third Quarter Financial Highlights (Compared to FY 2022’s Third Quarter)

• Net income and earnings per share were $414.8 million and $3.73 per share diluted, compared to net income of $273.5 million and $2.35 per share diluted in FY 2022’s third quarter.
• Pre-tax income was $553.0 million, compared to $366.0 million in FY 2022’s third quarter.
• Home sales revenues were $2.7 billion, up 19% compared to FY 2022’s third quarter; delivered homes were 2,524, up 5%.
• Net signed contract value was $2.2 billion, up 30% compared to FY 2022’s third quarter; contracted homes were 2,245, up 77%.
• Backlog value was $7.9 billion at third quarter end, down 30% compared to FY 2022’s third quarter; homes in backlog were 7,295, down 32%.
• Home sales gross margin was 27.8%, compared to FY 2022’s third quarter home sales gross margin of 26.0%.
• Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 29.3%, compared to FY 2022’s third quarter adjusted home sales gross margin of 27.9%.
• SG&A, as a percentage of home sales revenues, was 8.6%, compared to 10.3% in FY 2022’s third quarter.
• Income from operations was $515.1 million.
• Other income, income from unconsolidated entities, and gross margin from land sales and other was $39.4 million.
• The Company repurchased approximately 1.9 million shares at an average price of $76.26 per share for a total amount of approximately $147.3 million.
  

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “We are very pleased with our third quarter results. We beat our guidance for home sales revenues, adjusted gross margin, and SG&A margin, leading to record third quarter earnings of $3.73 per diluted share, up 59% year-over-year. In addition, we signed 2,245 net contracts for $2.2 billion in the quarter, up 77% in units year-over-year. Demand remains solid as we start our fiscal fourth quarter. Based on these results and our expectations for the fourth quarter, we are raising our full year guidance for deliveries, adjusted gross margin and SG&A leverage, and now expect our return on beginning equity for fiscal 2023 to be approximately 22%.

“Our third quarter performance reflects a market for new homes that continues to benefit from historically low levels of resale inventory, favorable long-term demographic trends, and the persistent underproduction of homes for well over a decade. In addition, our strategy of increasing our supply of spec homes in recent quarters has contributed to our success.

“At quarter end, our net debt-to-capital ratio was 20.5% and total liquidity was $2.8 billion. Since the start of the third quarter, we repurchased approximately $162.5 million of our common stock, bringing our year-to-date repurchases to $255.7 million, with an additional $69 million in dividends paid. With no significant debt maturities until November 2025, we have ample flexibility to continue investing in our business while returning cash to stockholders. Our strong financial and operating profile, along with the positive long-term fundamentals underpinning our industry, led Standard & Poor’s to upgrade our credit rating to investment grade in the quarter. We are now rated investment grade by all three major credit rating agencies.

“While rising rates remain a challenge, they further cement the lock-in effect that has kept resale inventory at historically low levels. With our deep and well-located land holdings, industry-leading brand, healthy backlog, more efficient operations and balanced spec strategy, we are well positioned to capitalize on continued solid demand for new homes.”

Additional Information

• The Company ended its FY 2023 third quarter with approximately $1.0 billion in cash and cash equivalents, compared to $1.3 billion at FYE 2022 and $761.9 at FY 2023’s second quarter end. At FY 2023 third quarter end, the Company also had $1.8 billion available under its $1.9 billion revolving credit facility, which is scheduled to mature in February 2028.
• On July 21, 2023, the Company paid its quarterly dividend of $0.21 per share to shareholders of record at the close of business on July 7, 2023.
• Stockholders’ Equity at FY 2023 third quarter end was $6.7 billion, compared to $6.0 billion at FYE 2022.
• FY 2023’s third quarter-end book value per share was $61.95 per share, compared to $54.79 at FYE 2022.
• The Company ended its FY 2023 third quarter with a debt-to-capital ratio of 29.7%, compared to 30.6% at FY 2023’s second quarter end and 35.7% at FYE 2022. The Company ended FY 2023’s third quarter with a net debt-to-capital ratio⁽¹⁾ of 20.5%, compared to 23.5% at FY 2023’s second quarter end, and 23.4% at FYE 2022.
• The Company ended FY 2023’s third quarter with approximately 70,200 lots owned and optioned, compared to 71,300 one quarter earlier, and 82,100 one year earlier. Approximately 50% or 35,200, of these lots were owned, of which approximately 17,400 lots, including those in backlog, were substantially improved.
• In the third quarter of FY 2023, the Company spent approximately $322.0 million on land to purchase approximately 2,600 lots.
• The Company ended FY 2023’s third quarter with 345 selling communities, compared to 350 at FY 2023’s second quarter end and 332 at FY 2022’s third quarter end.
• The Company repurchased approximately 1.9 million shares of its common stock during the quarter at an average price of $76.26 per share for an aggregate amount of approximately $147.3 million.
  

(1)   See “Reconciliation of Non-GAAP Measures” below for more information on the calculation of the Company’s net debt-to-capital ratio.

For the full third quarter results, click here.

About Toll Brothers

Toll Brothers, Inc., A FORTUNE 500 Company, is the nation’s leading builder of luxury homes. The Company was founded 55 years ago 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 first-time, move-up, empty-nester, active-adult, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds in over 60 markets in 24 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Washington, as well as in the District of Columbia. The Company operates its own architectural, engineering, mortgage, title, land development, golf course development, smart home technology, and landscape subsidiaries. The Company also operates its own lumber distribution, house component assembly, and manufacturing operations.

Toll Brothers was named the World’s Most Admired Homebuilder in FORTUNE magazine’s 2022 survey of the World’s Most Admired Companies®, the seventh year it has been so honored. Toll Brothers has also been named Builder of the Year by Builder magazine and is the first two-time recipient of Builder of the Year from Professional Builder magazine. For more information visit TollBrothers.com.

Toll Brothers discloses information about its business and financial performance and other matters, and provides links to its securities filings, notices of investor events, and earnings and other news releases, on the Investor Relations section of its website (investors.TollBrothers.com).

Contact:

Frederick N. Cooper – Media Contact – fcooper@tollbrothers.com – (215) 938-8312

Source: Toll Brothers, Inc.