Toll Brothers Reports FY 2021 4th Quarter Results

Toll Brothers, Inc. (the “Company”), the nation’s leading builder of luxury homes, today announced results for its fourth quarter and fiscal year ended October 31, 2021.

FY 2021’s Fourth Quarter Financial Highlights (Compared to FY 2020’s Fourth Quarter)

Net income and earnings per share were $374.3 million and $3.02 per share diluted, compared to net income of $199.3 million and $1.55 per share diluted in FY 2020’s fourth quarter.

Pre-tax income was $499.7 million, compared to $267.0 million in FY 2020’s fourth quarter.

Home sales revenues were $2.95 billion, up 18% compared to FY 2020’s fourth quarter; delivered homes were 3,341, up 14%.

Net signed contract value was $3.00 billion, up 10% compared to FY 2020’s fourth quarter; contracted homes were 2,957, down 13%.

Backlog value was $9.50 billion at fourth quarter end, up 49% compared to FY 2020’s fourth quarter; homes in backlog were 10,302, up 32%.

Home sales gross margin was 23.5%, compared to FY 2020’s fourth quarter home sales gross margin of 20.1%.

Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 25.9%, compared to FY 2020’s fourth quarter adjusted home sales gross margin of 24.0%.

SG&A, as a percentage of home sales revenues, was 8.8%, compared to 9.9% in FY 2020’s fourth quarter.

Income from operations was $440.7 million.

Other income, income from unconsolidated entities, and gross margin from land sales and other was $63.5 million.

The Company repurchased approximately 1.73 million shares at an average price of $59.49 per share for a total purchase price of approximately $103.2 million.

Full FY 2021 Financial Highlights (Compared to Full FY 2020)

Net income was $833.6 million, and earnings per share were $6.63 diluted, compared to net income of $446.6 million and $3.40 per share diluted in FY 2020.

Pre-tax income was $1.10 billion, compared to $586.9 million in FY 2020.

Home sales revenues were $8.43 billion, up 22% compared to FY 2020; delivered homes were 9,986, up 18%.

Net signed contract value was $11.54 billion, up 44% compared to FY 2020; contracted homes were 12,472, up 26%.

Home sales gross margin was 22.5%, compared to FY 2020’s home sales gross margin of 20.2%.

Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 25.0%, compared to FY 2020’s adjusted home sales gross margin of 23.5%.

SG&A, as a percentage of home sales revenues, was 10.9%, compared to 12.5% in FY 2020.

Income from operations was $1.02 billion.

Other income, income from unconsolidated entities, and gross margin from land sales and other was $164.3 million.

The Company repurchased approximately 7.42 million shares at an average price of $50.97 per share for a total purchase price of approximately $378.3 million.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “We are very pleased with our fourth quarter results, which cap an extraordinary year of record revenues, earnings, contracts and backlog value for Toll Brothers. In the fourth quarter, we grew home sales revenues by 18%, achieved an adjusted gross margin of 25.9%, and nearly doubled our pre-tax income and earnings per share from one year ago. In addition, we continued to improve the capital efficiency of our land acquisition strategy, with optioned lots now representing 55% of our 80,900 total lots at quarter end, up from 43% one year ago. Our fourth quarter results, combined with our strategy of driving capital and operating efficiency, contributed to an 830 basis point increase in our full year return on beginning equity to 17.1%.

“Demand remains very strong. The housing market continues to benefit from solid fundamentals, including favorable demographics, pent up demand from over a decade of underproduction of new homes, low mortgage rates, a tight resale market, and permanent changes to the way Americans view life, work and home. We believe these trends will continue to drive strong demand for our first-time, move-up and active adult communities well into the future.

“We, like the rest of the industry, continue to be challenged by significant supply chain and labor constraints that are extending delivery times for our homes. Notwithstanding these issues, which we expect to continue for the foreseeable future, we project 20% revenue growth in FY 2022.

“In a year of record sales, we increased our community count by 7% to 340 communities at fiscal year end. We continue to project 10% community count growth by FYE 2022 and currently own or control enough land for additional meaningful growth in FY 2023. Based on the strong pricing embedded in our all-time record backlog of $9.5 billion, we project a 250 basis point improvement in full year adjusted gross margin, which we expect to be second half weighted as peak lumber prices from the spring of 2020 flow through our first half deliveries. Driven in part by our permanent pivot to a more capital efficient land strategy, we are also projecting a further significant increase in our return on beginning equity to well over 20%.”

Additional Information

The Company ended its FY 2021 fourth quarter with approximately $1.64 billion in cash and cash equivalents, compared to $1.37 billion at FYE 2020 and $946.1 million at FY 2021’s third quarter end. At FY 2021 fourth quarter end, the Company also had $1.81 billion available under its $1.905 billion bank revolving credit facility, substantially all of which is scheduled to mature in November 2026.

On October 22, 2021, the Company paid its quarterly dividend of $0.17 per share to shareholders of record at the close of business on October 8, 2021.

Stockholders’ Equity at FY 2021 fourth quarter end was $5.30 billion, compared to $4.88 billion at FYE 2020.

FY 2021’s fourth quarter-end book value per share was $44.08 per share, compared to $38.53 at FYE 2020.

The Company ended its FY 2021 fourth quarter with a debt-to-capital ratio of 40.2%, compared to 41.6% at FY 2021’s third quarter end and 44.8% at FYE 2020. The Company ended FY 2021’s fourth quarter with a net debt-to-capital ratio(1) of 25.1%, compared to 33.1% at FY 2021’s third quarter end, and 33.3% at FYE 2020.

The Company ended FY 2021’s fourth quarter with approximately 80,900 lots owned and optioned, compared to 79,500 one quarter earlier, and 63,200 one year earlier. Approximately 45% or 36,100, of these lots were owned, of which approximately 17,200 lots, including those in backlog, were substantially improved.

In the fourth quarter of FY 2021, the Company spent approximately $290.7 million on land to purchase approximately 2,537 lots.

The Company ended FY 2021’s fourth quarter with 340 selling communities, compared to 314 at FY 2021’s third quarter end and 317 at FY 2020’s fourth quarter end.

The Company repurchased approximately 1.7 million shares of its common stock during the quarter at an average price of $59.49 per share for an aggregate purchase price of approximately $103.2 million. In the fiscal year ended October 31, 2021, the Company repurchased approximately 7.4 million shares of its common stock at an average price of $50.97 per share for an aggregate purchase price of approximately $378.3 million.

On October 31, 2021 the Company extended the maturity date of $1.78 billion of the $1.905 billion of revolving loans and commitments under its revolving credit facility from November 1, 2025 to November 1, 2026, with the remaining $125 million of revolving loans and commitments expiring on November 1, 2025. Also on October 31, 2021, the Company extended the maturity date of $584.4 million of its outstanding term loans from November 1, 2025 to November 1, 2026, with $101.6 million of term loans remaining due on November 1, 2025. No other provisions of either agreement were modified.

On November 15, 2021, the Company repaid all $410 million of outstanding principal amount of its 5.875% senior notes due in February 2022.

For the full fourth quarter results, click here.

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

About Toll Brothers

Toll Brothers, Inc., A FORTUNE 500 Company, is the nation’s leading builder of luxury homes. The Company was founded over fifty 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 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. 2021 marks the 10th year Toll Brothers has been named to FORTUNE magazine’s World’s Most Admired Companies® list. Toll Brothers has been honored as Builder of the Year by Builder magazine and is the first two-time recipient of Builder of the Year by 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.