Delaware | 001-09186 | 23-2416878 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
250 Gibraltar Road, Horsham, PA | 19044 | |||
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
99.1* | Press release of Toll Brothers, Inc. dated September 3, 2014 announcing its financial results for the nine-month and three-month periods ended July 31, 2014. |
TOLL BROTHERS, INC. | ||||||
Dated: | September 3, 2014 | By: | /s/ Joseph R. Sicree | |||
Joseph R. Sicree | ||||||
Senior Vice President, | ||||||
Chief Accounting Officer |
FOR IMMEDIATE RELEASE | CONTACT: Frederick N. Cooper (215) 938-8312 |
September 3, 2014 | fcooper@tollbrothersinc.com |
• | In FY 2014’s third quarter, net income rose 110% to $97.7 million, or $0.53 per share diluted, compared to $46.6 million, or $0.26 per share diluted, in FY 2013’s third quarter. Pre-tax income rose 122% to $151.3 million, compared to $68.3 million in FY 2013’s third quarter. |
• | Revenues of $1.06 billion and homebuilding deliveries of 1,444 units rose 53% in dollars and 36% in units, compared to FY 2013’s third-quarter totals of $689.2 million and 1,059 units. The average price of homes delivered was $732,000, compared to $651,000 in FY 2013’s third quarter. |
• | Net signed contracts of $949.1 million and 1,324 units decreased 4% in dollars and 6% in units, compared to FY 2013’s third-quarter totals of $992.6 million and 1,405 units. The average price of net signed contracts was $717,000, compared to $707,000 in FY 2013’s third quarter. On a per-community basis, FY 2014’s third-quarter net signed contracts were 5.25 units, compared to 6.24 units in FY 2013’s third quarter. Although this was a year-over-year decline, it was the second highest per-community third quarter total since FY 2006. |
• | Backlog of $3.1 billion and 4,204 units rose 9% in dollars and 5% in units, compared to FY 2013’s third-quarter-end backlog of $2.8 billion and 4,001 units. At third-quarter end, the average price of homes in backlog was $737,000, compared to $709,000 at FY 2013’s third-quarter end. |
• | In FY 2014’s third quarter, the Company’s gross margin, excluding interest and write-downs, was 26.8%, compared to 23.6% in FY 2014’s second quarter and 25.1% in FY 2013’s third quarter. |
• | SG&A as a percentage of revenue improved to 10.4% in FY 2014’s third quarter, compared to 11.5% in FY 2014’s second quarter (excluding $5.1 million of costs related to the acquisition of Shapell Homes, which closed on February 4, 2014) and 12.9% in FY 2013’s third quarter. |
• | Third quarter operating margin improved to 12.3% from 7.9% in FY 2014’s second quarter and 8.0% in FY 2013’s third quarter. |
• | The Company ended its third quarter with 256 selling communities, compared to 252 at FY 2014’s second-quarter end and 225 at FY 2013’s third-quarter end. Eight of the selling communities were acquired in the Company’s purchase of Shapell Homes in February 2014. |
• | The Company ended FY 2014’s third quarter with a net debt-to-capital ratio(1) of 43.3%, compared to approximately 47.0% (pro forma) upon closing the acquisition of Shapell Homes, and 45.1% at FY 2014’s second-quarter end. |
• | In addition to approximately $386.7 million of cash and marketable securities, the Company ended its third quarter with $1.44 billion available under its various credit facilities. |
▪ | FY 2014’s third-quarter total revenues of $1.06 billion and 1,444 units increased 53% in dollars and 36% in units compared to FY 2013’s third-quarter total revenues of $689.2 million and 1,059 units. The average price of homes delivered was $732,000, compared to $706,000 in FY 2014’s second quarter and $651,000 in FY 2013’s third quarter. |
▪ | In addition, in FY 2014’s third quarter, unconsolidated home building joint ventures in which the Company is a 50% partner delivered 21 units totaling $16.4 million of revenues, compared to FY 2013’s third-quarter deliveries of 11 units totaling $8.8 million of revenues. The income from these joint ventures was reported in “Income from Unconsolidated Entities” on the Company’s Statement of Operations. |
▪ | FY 2014’s third-quarter gross margin, excluding interest and write-downs, improved to 26.8%, compared to 23.6% in FY 2014’s second quarter and 25.1% in FY 2013’s third quarter. |
▪ | Interest included in cost of sales decreased to 3.5% of revenues in FY 2014’s third quarter from 4.2% of revenues in FY 2013’s third quarter. |
▪ | SG&A as a percentage of revenue improved to 10.4%, compared to 11.5% in FY 2014’s second quarter (excluding $5.1 million of Shapell acquisition costs) and 12.9% in FY 2013’s third quarter. |
▪ | Third quarter Income from Operations of $129.6 million represented 12.3% of revenues in FY 2014’s third quarter, compared to $55.2 million and 8% of revenues in FY 2013's third quarter. |
▪ | Other Income and Income from Unconsolidated Entities totaled $21.7 million for FY 2014’s third quarter, compared to $13.1 million in FY 2013’s same quarter. |
▪ | FY 2014’s third-quarter pre-tax income was $151.3 million, compared to FY 2013’s third-quarter pre-tax income of $68.3 million. FY 2014’s third-quarter pre-tax income included inventory write-downs of $6.0 million: $4.8 million of the inventory write-downs was attributable to one operating community and $1.2 million to land controlled for future communities. FY 2013’s third quarter included pre-tax write-downs of 0.2 million. |
▪ | FY 2014’s third-quarter net income was $97.7 million, or $0.53 per share, compared to FY 2013’s third-quarter net income of $46.6 million, or $0.26 per share. |
▪ | FY 2014’s nine-month total revenues of $2.56 billion and 3,590 units increased 57% in dollars and 33% in units, compared to FY 2013’s nine-month period totals of $1.63 billion and 2,699 units. |
▪ | In addition, in FY 2014’s first nine months, unconsolidated home building joint ventures in which the Company is a 50% partner delivered $39.6 million of homes, compared to $28.7 million in the nine-month period of FY 2013. The income from these joint ventures was reported in “Income from Unconsolidated Entities” on the Company’s Statement of Operations. |
▪ | Nine month Income from Operations of $229.5 million represented 9.0% of revenues in FY 2014, compared to $72.3 million representing 4.4% of revenues in FY 2013. |
▪ | Other Income and Income from Unconsolidated Entities totaled $86.6 million for the first nine months of FY 2014, compared to $45.3 million in FY 2013’s first nine months. |
▪ | FY 2014’s nine-month pre-tax income was $316.0 million, compared to FY 2013’s nine-month pre-tax income of $117.5 million. FY 2014’s nine-month pre-tax income included pre-tax inventory write-downs of $9.9 million: $7.7 million of the inventory write-downs was attributable to operating communities and $2.2 million to land controlled for future communities. FY 2013’s first nine months included pre-tax write-downs of $2.0 million. |
▪ | FY 2014’s nine-month net income was $208.5 million, or $1.13 per share, compared to FY 2013’s nine-month net income of $75.7 million, or $0.43 per share. |
▪ | The Company’s FY 2014 third-quarter net signed contracts of $949.1 million and 1,324 units decreased by 4% in dollars and 6% in units, compared to FY 2013’s third-quarter net signed contracts of $992.6 million and 1,405 units. |
▪ | In FY 2014’s third quarter, unconsolidated home building joint ventures in which the Company is a 50% partner, signed 34 contracts for $75.5 million of homes, compared to 22 agreements for $17.7 million in the third quarter of FY 2013. |
▪ | On a per-community basis, FY 2014’s third-quarter net signed contracts were 5.25, compared to third quarter totals of 6.24 in FY 2013, 4.87 in FY 2012, 3.51 in FY 2011, and 3.69 in 2010. |
▪ | The average price per unit of net contracts signed in FY 2014’s third quarter was $717,000, compared to $729,000 in FY 2014’s second quarter and $707,000 in FY 2013’s third quarter. |
▪ | In FY 2014’s third quarter, the average price of contracts signed in unconsolidated home building joint ventures in which the Company is a 50% partner was $2,221,000 in FY 2014’s third quarter, compared to $2,105,000 in FY 2014’s second quarter and $805,000 in FY 2013’s third quarter. The growth in average price in second- and third-quarter FY 2014 joint venture contracts was primarily attributable to Pierhouse at Brooklyn Bridge Park, the Company’s 50%-50% joint venture with Starwood Capital in which the average price of contracts signed was $3,533,000 in the second quarter and $5,473,000 in the third quarter of FY 2014. |
▪ | FY 2014 nine-month net signed contracts of $2.93 billion and 3,989 units increased 5% in dollars and decreased 3% in units, compared to net signed contracts of $2.80 billion and 4,131 units in FY 2013’s nine-month period. |
▪ | In FY 2014’s first nine months, unconsolidated home building joint ventures in which the Company is a 50% partner signed net contracts of $243.2 million and 121 units, compared to net signed contracts of $39.9 million and 54 units in FY 2013’s same nine-month period. |
▪ | FY 2014’s third-quarter cancellation rate (current-quarter cancellations divided by current-quarter signed contracts) was 6.6%, compared to 4.6% in FY 2013’s third quarter. As a percentage of beginning-quarter backlog, FY 2014’s third-quarter cancellation rate was 2.2%, compared to 1.9% in FY 2013’s third quarter. |
▪ | In FY 2014, third-quarter-end backlog of $3.1 billion and 4,204 units increased 9% in dollars and 5% in units, compared to FY 2013’s third-quarter end backlog of $2.8 billion and 4,001 units. |
▪ | At July 31, 2014, unconsolidated home building joint ventures in which the Company is a 50% partner had a backlog of 134 units and $249.9 million, compared to 54 units and $38.4 million at July 31, 2013. |
▪ | The average price of units in FY 2014’s third-quarter end backlog was $737,000, compared to $742,000 at FY 2014’s second-quarter end and $709,000 at FY 2013’s third-quarter end. |
▪ | For unconsolidated home building joint ventures in which the Company is a 50% partner, the average price of units in FY 2014’s third-quarter-end backlog was $1,865,000, compared to $711,000 in FY 2013’s third quarter. |
▪ | In FY 2014’s third quarter and first nine months, the Company’s Gibraltar Capital and Asset Management subsidiary reported pre-tax income, including income from a joint venture in which it has an interest, of $5.1 million and $11.0 million respectively, compared to FY 2013’s third quarter and first nine month results of $4.6 million and $8.8 million. |
▪ | The Company ended its FY 2014 third quarter with $386.7 million in cash and marketable securities, compared to $364.8 million at 2014’s second-quarter end and $1.02 billion at 2013’s third-quarter end. At FY 2014’s third-quarter end, the Company had $940.3 million available under its $1.035 billion, 15-bank, five-year credit facility, which matures in August 2018 and $500 million under its 364-day credit facility which matures in February 2015. |
▪ | The Company’s Stockholders’ Equity at FY 2014’s third-quarter end was $3.80 billion, compared to $3.33 billion at FYE 2013. |
▪ | The Company ended FY 2014’s third quarter with a net debt-to-capital ratio(1) of 43.3%, compared to 45.1% at FY 2014’s second-quarter end, and 31.9% at FY 2013’s third-quarter end. |
▪ | The Company ended FY 2014’s third quarter with approximately 49,000 lots owned and optioned, compared to approximately 50,400 one quarter earlier, approximately 47,200 one year earlier, and approximately 91,200 at its peak at FY 2006’s second-quarter end. At 2014’s third-quarter end, approximately 38,300 of these lots were owned, of which approximately 14,600 lots, including those in backlog, were substantially improved. |
▪ | The Company ended FY 2014’S third quarter with 256 selling communities, compared to 252 at FY 2014’s second-quarter end and 225 at FY 2013’s third-quarter end. The Company expects to end FY 2014 with between 255 and 275 selling communities. |
▪ | Based on FY 2013’s third-quarter-end backlog and the pace of activity at its communities, the Company currently estimates that it will deliver between 1,710 and 1,910 homes in its fourth quarter. The Company believes its average delivered price for the full FY 2014 will be between $710,000 and $725,000 per home. This would produce total home sale revenues for FY 2014 of between $3.76 billion and $3.99 billion and total home deliveries for FY 2014 of between 5,300 and 5,500. This compares to $2.67 billion and 4,184 homes in FY 2013. |
(1) | Net debt-to-capital ratio is calculated as total debt minus mortgage warehouse loans minus cash and marketable securities, divided by total debt minus mortgage warehouse loans minus cash and marketable securities plus stockholders' equity. |
July 31, 2014 | October 31, 2013 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 374,649 | $ | 772,972 | |||
Marketable securities | 12,006 | 52,508 | |||||
Restricted cash | 22,401 | 32,036 | |||||
Inventory | 6,593,804 | 4,650,412 | |||||
Property, construction and office equipment, net | 131,509 | 131,320 | |||||
Receivables, prepaid expenses and other assets | 252,516 | 229,295 | |||||
Mortgage loans held for sale | 98,535 | 113,517 | |||||
Customer deposits held in escrow | 55,820 | 46,888 | |||||
Investments in and advances to unconsolidated entities | 443,285 | 403,133 | |||||
Investment in distressed loans | 4,251 | 36,374 | |||||
Investment in foreclosed real estate | 79,319 | 72,972 | |||||
Deferred tax assets, net of valuation allowances | 263,821 | 286,032 | |||||
$ | 8,331,916 | $ | 6,827,459 | ||||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Loans payable | $ | 636,126 | $ | 107,222 | |||
Senior notes | 2,654,666 | 2,321,442 | |||||
Mortgage company warehouse loan | 87,830 | 75,000 | |||||
Customer deposits | 254,187 | 212,669 | |||||
Accounts payable | 226,734 | 167,787 | |||||
Accrued expenses | 536,670 | 522,987 | |||||
Income taxes payable | 128,881 | 81,188 | |||||
Total liabilities | 4,525,094 | 3,488,295 | |||||
Equity: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,779 | 1,694 | |||||
Additional paid-in capital | 700,337 | 441,677 | |||||
Retained earnings | 3,100,511 | 2,892,003 | |||||
Treasury stock, at cost | (2 | ) | — | ||||
Accumulated other comprehensive loss | (2,050 | ) | (2,387 | ) | |||
Total stockholders' equity | 3,800,575 | 3,332,987 | |||||
Noncontrolling interest | 6,247 | 6,177 | |||||
Total equity | 3,806,822 | 3,339,164 | |||||
$ | 8,331,916 | $ | 6,827,459 |
Nine Months Ended July 31, | Three Months Ended July 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Revenues | $ | 2,560,912 | $ | 1,629,765 | $ | 1,056,857 | $ | 689,160 | |||||||
Cost of revenues | 2,019,262 | 1,311,039 | 817,232 | 545,089 | |||||||||||
Selling, general and administrative expenses | 312,171 | 246,467 | 109,981 | 88,870 | |||||||||||
2,331,433 | 1,557,506 | 927,213 | 633,959 | ||||||||||||
Income from operations | 229,479 | 72,259 | 129,644 | 55,201 | |||||||||||
Other: | |||||||||||||||
Income from unconsolidated entities | 38,192 | 8,844 | 950 | 768 | |||||||||||
Other income - net | 48,373 | 36,444 | 20,731 | 12,284 | |||||||||||
Income before income taxes | 316,044 | 117,547 | 151,325 | 68,253 | |||||||||||
Income tax provision | 107,536 | 41,846 | 53,618 | 21,658 | |||||||||||
Net income | $ | 208,508 | $ | 75,701 | $ | 97,707 | $ | 46,595 | |||||||
Income per share: | |||||||||||||||
Basic | $ | 1.17 | $ | 0.45 | $ | 0.55 | $ | 0.28 | |||||||
Diluted | $ | 1.13 | $ | 0.43 | $ | 0.53 | $ | 0.26 | |||||||
Weighted-average number of shares: | |||||||||||||||
Basic | 177,591 | 169,237 | 178,217 | 169,268 | |||||||||||
Diluted | 185,944 | 177,966 | 186,501 | 178,001 |
Nine Months Ended July 31, | Three Months Ended July 31, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Impairment charges recognized: | |||||||||||||||
Cost of sales - land controlled for future communities | $ | 2,198 | $ | 837 | $ | 1,192 | $ | 139 | |||||||
Cost of sales - operating communities | 7,700 | 1,140 | 4,800 | 100 | |||||||||||
$ | 9,898 | $ | 1,977 | $ | 5,992 | $ | 239 | ||||||||
Depreciation and amortization | $ | 16,690 | $ | 19,137 | $ | 5,594 | $ | 6,370 | |||||||
Interest incurred | $ | 123,267 | $ | 100,066 | $ | 40,638 | $ | 36,015 | |||||||
Interest expense: | |||||||||||||||
Charged to cost of sales | $ | 91,766 | $ | 71,905 | $ | 37,181 | $ | 28,915 | |||||||
Charged to other income - net | 1,876 | 2,045 | 836 | 824 | |||||||||||
$ | 93,642 | $ | 73,950 | $ | 38,017 | $ | 29,739 | ||||||||
Home sites controlled: | |||||||||||||||
Owned | 38,320 | 33,367 | |||||||||||||
Optioned | 10,717 | 13,814 | |||||||||||||
49,037 | 47,181 |
North: | Connecticut, Illinois, Massachusetts, Michigan, Minnesota, New Jersey and New York |
Mid-Atlantic: | Delaware, Maryland, Pennsylvania and Virginia |
South: | Florida, North Carolina and Texas |
West: | Arizona, California, Colorado, Nevada, and Washington |
Three Months Ended July 31, | Three Months Ended July 31, | ||||||||||||
Units | $ (Millions) | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
HOME BUILDING REVENUES | |||||||||||||
North | 270 | 208 | $ | 163.5 | $ | 113.5 | |||||||
Mid-Atlantic | 319 | 279 | 202.8 | 155.8 | |||||||||
South | 331 | 293 | 239.9 | 189.2 | |||||||||
West | 444 | 217 | 381.7 | 144.5 | |||||||||
Traditional Home Building | 1,364 | 997 | 987.9 | 603.0 | |||||||||
City Living | 80 | 62 | 69.0 | 86.2 | |||||||||
Total consolidated | 1,444 | 1,059 | $ | 1,056.9 | $ | 689.2 | |||||||
CONTRACTS | |||||||||||||
North | 270 | 298 | $ | 173.0 | $ | 174.1 | |||||||
Mid-Atlantic | 303 | 396 | 187.6 | 246.9 | |||||||||
South | 322 | 364 | 238.1 | 248.5 | |||||||||
West | 386 | 291 | 298.6 | 244.7 | |||||||||
Traditional Home Building | 1,281 | 1,349 | 897.3 | 914.2 | |||||||||
City Living | 43 | 56 | 51.8 | 78.4 | |||||||||
Total consolidated | 1,324 | 1,405 | $ | 949.1 | $ | 992.6 | |||||||
BACKLOG | |||||||||||||
North | 984 | 952 | $ | 624.9 | $ | 545.9 | |||||||
Mid-Atlantic | 970 | 996 | 598.7 | 624.0 | |||||||||
South | 1,033 | 1,033 | 759.6 | 710.5 | |||||||||
West | 998 | 834 | 814.9 | 727.7 | |||||||||
Traditional Home Building | 3,985 | 3,815 | 2,798.1 | 2,608.1 | |||||||||
City Living | 219 | 186 | 301.5 | 226.9 | |||||||||
Total consolidated | 4,204 | 4,001 | $ | 3,099.6 | $ | 2,835.0 |
Nine Months Ended July 31, | Nine Months Ended July 31, | ||||||||||||
Units | $ (Millions) | ||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||
HOME BUILDING REVENUES | |||||||||||||
North | 718 | 529 | $ | 428.4 | $ | 288.0 | |||||||
Mid-Atlantic | 865 | 774 | 552.3 | 425.9 | |||||||||
South | 841 | 660 | 576.6 | 411.9 | |||||||||
West | 1,025 | 624 | 889.5 | 385.8 | |||||||||
Traditional Home Building | 3,449 | 2,587 | 2,446.8 | 1,511.6 | |||||||||
City Living | 141 | 112 | 114.1 | 118.2 | |||||||||
Total consolidated | 3,590 | 2,699 | $ | 2,560.9 | $ | 1,629.8 | |||||||
CONTRACTS | |||||||||||||
North | 754 | 856 | $ | 490.8 | $ | 483.9 | |||||||
Mid-Atlantic | 933 | 1,136 | 578.1 | 675.5 | |||||||||
South | 918 | 944 | 662.7 | 639.0 | |||||||||
West | 1,222 | 951 | 1,005.9 | 762.4 | |||||||||
Traditional Home Building | 3,827 | 3,887 | 2,737.5 | 2,560.8 | |||||||||
City Living | 162 | 244 | 188.2 | 234.2 | |||||||||
Total consolidated | 3,989 | 4,131 | $ | 2,925.7 | $ | 2,795.0 |
2014 | 2013 | 2014 | 2013 | ||||||||||
Units | Units | $(Mill) | $(Mill) | ||||||||||
Three months ended July 31, | |||||||||||||
Revenues | 21 | 11 | $ | 16.4 | $ | 8.8 | |||||||
Contracts | 34 | 22 | $ | 75.5 | $ | 17.7 | |||||||
Nine months ended July 31, | |||||||||||||
Revenues | 49 | 36 | $ | 39.6 | $ | 28.7 | |||||||
Contracts | 121 | 54 | $ | 243.2 | $ | 39.9 | |||||||
Backlog at July 31, | 134 | 54 | $ | 249.9 | $ | 38.4 |