FORT WASHINGTON, PA — Toll Brothers, Inc. (NYSE: TOL) this week announced results for its first quarter ended January 31, 2023.
FY 2023’s First Quarter Financial Highlights (Compared to FY 2022‘s First Quarter):
- Net income and earnings per share were $191.5 million and $1.70 per share diluted, compared to net income of $151.9 million and $1.24 per share diluted in FY 2022’s first quarter.
- Pre-tax income was $253.8 million, compared to $200.8 million in FY 2022’s first quarter.
- Home sales revenues were $1.7 billion, up 4% compared to FY 2022’s first quarter; delivered homes were 1,826, down 5%.
- Net signed contract value was $1.5 billion, down 51% compared to FY 2022’s first quarter; contracted homes were 1,461, down 50%.
- Backlog value was $8.6 billion at first quarter end, down 21% compared to FY 2022’s first quarter; homes in backlog were 7,733, down 32%.
- Home sales gross margin was 25.6%, compared to FY 2022’s first quarter home sales gross margin of 23.6%.
- Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 27.5%, compared to FY 2022’s first quarter adjusted home sales gross margin of 25.6%.
- SG&A, as a percentage of home sales revenues, was 12.1%, compared to 13.4% in FY 2022’s first quarter.
- Income from operations was $225.3 million.
- Other income, income from unconsolidated entities, and gross margin from land sales and other was $16.8 million.
- The Company repurchased approximately 187,300 shares at an average price of $49.95 per share for a total purchase price of approximately $9.4 million.
Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “We are very pleased with our strong first quarter results, as we exceeded the midpoint of our guidance on all key metrics. We delivered 1,826 homes and generated $1.75 billion in home building revenue, increased our adjusted gross margin by 190 basis points year-over-year to 27.5%, and decreased our SG&A expense, as a percentage of revenue, by 130 basis points compared to last year’s first quarter. As a result, we grew pre-tax income by 26% year-over-year and earnings per share by 37%. With a quarter-end backlog of $8.6 billion and 7,733 homes, we continue to project solid results in FY 2023. We are therefore reaffirming our full FY 2023 guidance of an adjusted gross margin of 27.0% and $8.00 to $9.00 of earnings per share.
“Since the start of the calendar year, we have seen a marked increase in demand beyond normal seasonality as buyer confidence appears to be improving. We believe the recent pick-up in demand is a sign that the long-term fundamentals underpinning the housing market remain intact. These include favorable demographic and migration trends, a very tight resale market, and growing pent-up demand resulting from over a decade of underproduction. Notwithstanding near-term uncertainty in the economy, we expect these factors will continue to support the housing market well into the future.
“Importantly, we continue to have sufficient land under control to increase community count in FY 2023 and beyond. Our balance sheet is solid, we have ample liquidity, and we expect to generate significant cash flow from operations in FY 2023. This should enable us to continue reducing debt and returning cash to stockholders throughout the year.
“This month, we were again named the World’s Most Admired Home Building Company by Fortune magazine. This is the eighth year we have been so honored. It is a recognition not only of the quality of our homes and our brand, but of the tremendous talent and hard work of our Toll Brothers associates.”
|Second Quarter and FY 2023 Financial Guidance:|
|Second Quarter||Full Fiscal Year 2023|
|Deliveries||2,050 – 2,150 units||8,000 – 9,000 units|
|Average Delivered Price per Home||$980,000 – $1,000,000||$965,000 – $985,000|
|Adjusted Home Sales Gross Margin||27.0%||27.0%|
|SG&A, as a Percentage of Home Sales Revenues||11.2%||11.0%|
|Period-End Community Count||360||385|
|Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other||$—||$125 million|
|Financial Highlights for the three months ended January 31, 2023 and 2022 (unaudited):|
|Net Income||$191.5 million, or $1.70 per share diluted||$151.9 million, or $1.24 per share diluted|
|Pre-Tax Income||$253.8 million||$200.8 million|
|Pre-Tax Inventory Impairments included in Cost of Home Sales||$8.0 million||$2.2 million|
|Home Sales Revenues||$1.75 billion and 1,826 units||$1.69 billion and 1,929 units|
|Net Signed Contracts||$1.45 billion and 1,461 units||$2.99 billion and 2,929 units|
|Net Signed Contracts per Community||4.3 units||8.8 units|
|Quarter-End Backlog||$8.58 billion and 7,733 units||$10.80 billion and 11,302 units|
|Average Price per Home in Backlog||$1,110,200||$956,000|
|Home Sales Gross Margin||25.6%||23.6%|
|Adjusted Home Sales Gross Margin||27.5%||25.6%|
|Interest Included in Home Sales Cost of Revenues, as a percentage of Home Sales Revenues||1.4%||1.9%|
|SG&A, as a percentage of Home Sales Revenues||12.1%||13.4%|
|Income from Operations||$225.3 million, or 12.7% of total revenues||$175.1 million, or 9.8% of total revenues|
|Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other||$16.8 million||$29.9 million|
|Pre-Tax Land Impairments included in Cost of Land Sales and Other||$13.0 million||$—|
|Quarterly Cancellations as a Percentage of Beginning-Quarter Backlog||3.0%||1.4%|
|Quarterly Cancellations as a Percentage of Signed Contracts in Quarter||14.3%||4.8%|
- The Company ended its FY 2023 first quarter with approximately $791.6 million in cash and cash equivalents, compared to $1.3 billion at FYE 2022 and $671.4 million at FY 2022’s first quarter end. At FY 2023 first 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 January 20, 2023, the Company paid its quarterly dividend of $0.20 per share to shareholders of record at the close of business on January 6, 2023.
- Stockholders’ Equity at FY 2023 first quarter end was $6.2 billion, compared to $6.0 billion at FYE 2022.
- FY 2023’s first quarter-end book value per share was $55.98 per share, compared to $54.79 at FYE 2022.
- The Company ended its FY 2023 first quarter with a debt-to-capital ratio of 34.1%, compared to 35.7% at FY 2022’s fourth quarter end and 38.1% at FY 2022 first quarter end. The Company ended FY 2023’s first quarter with a net debt-to-capital ratio(1) of 27.5%, compared to 23.4% at FY 2022’s fourth quarter end, and 31.9% at FY 2022 first quarter end.
- The Company ended FY 2023’s first quarter with approximately 71,300 lots owned and optioned, compared to 76,000 one quarter earlier, and 86,500 one year earlier. Approximately 52% or 36,900, of these lots were owned, of which approximately 17,400 lots, including those in backlog, were substantially improved.
- In the first quarter of FY 2023, the Company spent approximately $262.0 million on land to purchase approximately 1,700 lots.
- The Company ended FY 2023’s first quarter with 328 selling communities, compared to 348 at FY 2022’s fourth quarter end and 325 at FY 2022’s first quarter end.
- The Company repurchased approximately 187,300 shares of its common stock during the quarter at an average price of $49.95 per share for an aggregate purchase price of approximately $9.4 million.
- On February 14, 2023, the Company entered into a new $1.905 billion senior unsecured revolving credit facility that matures on February 14, 2028. In addition, the Company extended the maturity of $487.5 million of its $650 million term loan to February 14, 2028, with $60.9 million due on November 1, 2026, and the remaining $101.6 million due on November 1, 2025.
(1) See “Reconciliation of Non-GAAP Measures” in the Company’s original release for more information on the calculation of the Company’s net debt-to-capital ratio.
For additional details, visit investors.TollBrothers.com.
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