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 February 24, 2015 announcing its financial results for the three-month period ended January 31, 2015. |
TOLL BROTHERS, INC. | ||||||
Dated: | February 24, 2015 | By: | /s/ Joseph R. Sicree | |||
Joseph R. Sicree | ||||||
Senior Vice President, | ||||||
Chief Accounting Officer |
FOR IMMEDIATE RELEASE | CONTACT: Frederick N. Cooper (215) 938-8312 |
February 24, 2015 | fcooper@tollbrothersinc.com |
• | FY 2015’s first quarter net income was $81.3 million, or $0.44 per share, compared to net income of $45.6 million, or $0.25 per share, in FY 2014’s first quarter. |
• | Pre-tax income was $124.0 million, compared to pre-tax income of $71.2 million in FY 2014’s first quarter. |
• | Revenues of $853.5 million and home building deliveries of 1,091 units rose 33% in dollars and 18% in units, compared to FY 2014’s first quarter. The average price of homes delivered was $782,300, compared to $693,600 in FY 2014’s first quarter. |
• | Net signed contracts of $873.2 million and 1,063 units rose 24% in dollars and 16% in units, compared to FY 2014’s first quarter. The average price of net signed contracts was $821,500, compared to $766,100 in FY 2014’s first quarter. |
• | Backlog of $2.74 billion and 3,651 units rose 2% in dollars and was approximately flat in units, compared to FY 2014’s first-quarter-end backlog. The average price of homes in backlog was $750,300, compared to $732,900 at FY 2014’s first-quarter end. At FY 2015’s first-quarter end, the Company also had a backlog of $295.8 million and 128 units in unconsolidated home building joint ventures in which the Company is a 50% partner. |
• | Gross margin, excluding interest and write-downs, improved to 27.3%, compared to 24.4% in FY 2014’s first quarter. |
• | SG&A leverage (SG&A as a percentage of revenue) improved to 12.5%, compared to 15.2% in FY 2014’s first quarter. |
• | Income from operations improved to 11.4% of revenue, compared to 4.9% of revenue in FY 2014’s first quarter. |
• | Other income and Income from unconsolidated entities totaled $26.9 million, compared to $39.5 million in FY 2014’s first quarter. |
• | The Company ended its first quarter with 258 selling communities, compared to 263 at FYE 2014, and 238 at FY 2014’s first-quarter end. The Company still projects to end FY 2015 with between 270 and 310 selling communities. |
• | At FY 2015’s first-quarter end, the Company had approximately 45,300 lots owned and optioned, compared to approximately 47,200 at FYE 2014 and approximately 51,200 one year ago. |
• | In updating its guidance, the Company now expects to deliver between 5,200 and 6,000 homes in FY 2015 at an average price of $725,000 to $760,000, compared to previous guidance of 5,000 to 6,000 homes at an average price of $710,000 to $760,000. This compares to 5,397 deliveries in FY 2014 at an average price of $725,000. |
• | The Company, as per prior guidance, projects full FY 2015 gross margins (pre-interest and pre-impairments) of approximately 26%, which is consistent with FY 2014. |
▪ | FY 2015’s first-quarter net income was $81.3 million, or $0.44 per share diluted, compared to FY 2014’s first-quarter net income of $45.6 million, or $0.25 per share diluted. |
▪ | FY 2015’s first-quarter pre-tax income was $124.0 million, compared to FY 2014 first-quarter pre-tax income of $71.2 million. FY 2015’s first-quarter results included pre-tax inventory write-downs totaling $1.1 million ($0.9 million attributable to operating communities and $0.2 million attributable to future communities). FY 2014’s first-quarter results included pre-tax inventory write-downs of $2.0 million ($1.3 million attributable to an operating community and $0.7 million attributable to future communities). |
▪ | FY 2015’s first-quarter total revenues of $853.5 million and 1,091 units increased 33% in dollars and 18% in units from FY 2014’s first-quarter total revenues of $643.7 million and 928 units. |
▪ | The Company’s FY 2015 first-quarter net signed contracts of $873.2 million and 1,063 units, increased 24% in dollars and 16% in units, compared to FY 2014’s first-quarter net signed contracts of $701.7 million and 916 units. |
▪ | On a per-community basis, FY 2015’s first-quarter net signed contracts was 4.09 units per community, compared to first quarter totals of 3.95 in FY 2014, 4.34 in FY 2013, 2.86 in FY 2012 and 2.81 in FY 2011. |
▪ | In FY 2015, first-quarter-end backlog of $2.74 billion and 3,651 units increased 2% in dollars and was approximately flat in units, compared to FY 2014’s first-quarter-end backlog of $2.69 billion and 3,667 units. |
▪ | Excluding write-downs and interest, FY 2015’s first-quarter gross margin improved to 27.3% from 24.4% in FY 2014’s first quarter. FY 2015’s first-quarter gross margin, including write-downs and interest, improved to 23.8% from 20.1% in FY 2014’s first quarter. |
▪ | Interest included in cost of sales declined to 3.3% of revenue in FY 2015’s first quarter from 4.0% in FY 2014’s first quarter. |
▪ | SG&A as a percentage of revenue improved to 12.5%, compared to 15.2% in FY 2014’s first quarter. |
▪ | Income from operations of $97.1 million represented 11.4% of revenues in FY 2015’s first quarter, compared to $31.8 million and 4.9% of revenues in FY 2014’s first quarter. |
▪ | Other income and Income from unconsolidated entities in FY 2015’s first quarter totaled $26.9 million, including an $8.1 million gain from the sale of home security accounts to a third party by the Company’s wholly-owned Westminster Security Company, compared to $39.5 million in FY 2014’s same quarter, which included $23.5 million related to the sale of two shopping centers in which Toll Brothers was a 50% partner. |
▪ | FY 2015’s first-quarter cancellation rate (current-quarter cancellations divided by current-quarter signed contracts) was 5.6%, compared to 7.0% in FY 2014’s first quarter. As a percentage of beginning-quarter backlog, FY 2015’s first-quarter cancellation rate was 1.7%, compared to 1.9% in FY 2014’s first quarter. |
▪ | In FY 2015’s first quarter, unconsolidated home building joint ventures in which the Company is a 50% partner delivered 27 units totaling $19.3 million of revenues, compared to 15 units totaling $11.6 million of revenues in the first quarter of FY 2014. The Company recorded its share of the results from these entities’ operations in “Income from Unconsolidated Entities” on the Company’s Statements of Operations. |
▪ | In FY 2015’s first quarter, unconsolidated home building joint ventures in which the Company is a 50% partner signed 20 contracts for $30.7 million, compared to 11 contracts for $7.8 million in FY 2014’s first quarter. |
▪ | At January 31, 2015, unconsolidated home building joint ventures in which the Company is a 50% partner had a backlog of $295.8 million and 128 units, compared to $42.4 million and 58 units at January 31, 2014. |
▪ | The Company ended its FY 2015 first quarter with $511 million in cash and marketable securities, compared to $598 million at FYE 2014, and $1.20 billion at FY 2014’s first-quarter end. At FY 2015’s first-quarter end, the Company had $933 million available under its $1.035 billion, 15-bank credit facility, which matures in August 2018. |
▪ | The Company’s Stockholders’ Equity at FY 2015’s first-quarter end increased 9.4% to $3.96 billion, compared to $3.62 billion at FY 2014’s first-quarter end. |
▪ | The Company ended its FY 2015 first quarter with a net debt-to-capital ratio(1) of 41.5%, compared to 41.3% at FYE 2014 and 34.1% at FY 2014’s first-quarter end. After the closing of the Shapell acquisition in early February 2014, the Company had a pro forma net debt-to-capital ratio of approximately 47.0%. |
▪ | During the first quarter of FY 2015, the Company repurchased approximately 201,000 shares of its common stock at an average price of $31.08 for a total purchase price of $6.2 million. |
▪ | The Company ended FY 2015’s first quarter with approximately 45,300 lots owned and optioned, compared to 47,200 one quarter earlier, 51,200 one year earlier and 91,200 at its peak at FY 2006’s second-quarter end. Approximately 36,100 of these 45,300 lots were owned, of which approximately 15,600 lots, including those in backlog, were substantially improved. |
▪ | In the first quarter of FY 2015, the Company purchased 1,352 lots for $233.9 million. |
▪ | The Company ended FY 2015’s first quarter on January 31, 2015, with 258 selling communities, compared to 263 at FYE 2014 and 238 at FY 2014’s first-quarter end. The Company still expects to end FY 2015 with between 270 and 310 selling communities. |
▪ | Based on FY 2015’s first-quarter-end backlog and the pace of activity at its communities, the Company now estimates it will deliver between 5,200 and 6,000 homes in FY 2015, compared to previous guidance of 5,000 to 6,000 units. It believes the average delivered price for FY 2015 will be $725,000 to $760,000 per home, compared to the previous guidance of $710,000 to $760,000. |
▪ | In the second quarter of FY 2015, the Company projects delivering approximately 32% of units from its first-quarter-end backlog at an average price of $720,000 to $740,000. |
▪ | The Company projects full FY 2015 gross margins (pre-interest and pre-impairments) of approximately 26%, which is consistent with FY 2014 results, excluding charges. |
▪ | In FY 2015’s first quarter, Gibraltar Capital and Asset Management, the Company’s wholly owned subsidiary that invests in distressed loans and real estate, reported pre-tax income of $1.0 million, compared to $3.3 million of income in FY 2014’s first quarter. |
▪ | At FY 2015’s first-quarter end, the Company had five rental apartment projects under construction totaling approximately 1,900 units through joint ventures in which the Company’s ownership ranges from 25% to 50%. The Company has begun leasing units in two of these projects. |
(1) | Net debt-to-capital 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. |
January 31, 2015 | October 31, 2014 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 500,900 | $ | 586,315 | |||
Marketable securities | 10,022 | 12,026 | |||||
Restricted cash | 17,462 | 18,342 | |||||
Inventory | 6,627,481 | 6,490,321 | |||||
Property, construction and office equipment, net | 142,096 | 143,010 | |||||
Receivables, prepaid expenses and other assets | 250,349 | 251,572 | |||||
Mortgage loans held for sale | 55,945 | 101,944 | |||||
Customer deposits held in escrow | 30,679 | 42,073 | |||||
Investments in and advances to unconsolidated entities | 463,578 | 447,078 | |||||
Investments in distressed loans and foreclosed real estate | 70,935 | 73,800 | |||||
Deferred tax assets, net of valuation allowances | 252,172 | 250,421 | |||||
$ | 8,421,619 | $ | 8,416,902 | ||||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Loans payable | $ | 665,652 | $ | 654,261 | |||
Senior notes | 2,655,421 | 2,655,044 | |||||
Mortgage company warehouse loan | 46,559 | 90,281 | |||||
Customer deposits | 226,444 | 223,799 | |||||
Accounts payable | 222,061 | 225,347 | |||||
Accrued expenses | 577,070 | 581,477 | |||||
Income taxes payable | 65,768 | 125,996 | |||||
Total liabilities | 4,458,975 | 4,556,205 | |||||
Equity: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,779 | 1,779 | |||||
Additional paid-in capital | 718,195 | 712,162 | |||||
Retained earnings | 3,313,360 | 3,232,035 | |||||
Treasury stock, at cost | (74,058 | ) | (88,762 | ) | |||
Accumulated other comprehensive loss | (3,021 | ) | (2,838 | ) | |||
Total stockholders' equity | 3,956,255 | 3,854,376 | |||||
Noncontrolling interest | 6,389 | 6,321 | |||||
Total equity | 3,962,644 | 3,860,697 | |||||
$ | 8,421,619 | $ | 8,416,902 |
Three Months Ended January 31, | |||||||
2015 | 2014 | ||||||
Revenues | $ | 853,452 | $ | 643,681 | |||
Cost of revenues | 650,032 | 514,032 | |||||
Selling, general and administrative expenses | 106,314 | 97,870 | |||||
756,346 | 611,902 | ||||||
Income from operations | 97,106 | 31,779 | |||||
Other: | |||||||
Income from unconsolidated entities | 4,901 | 22,915 | |||||
Other income - net | 22,016 | 16,541 | |||||
Income before income taxes | 124,023 | 71,235 | |||||
Income tax provision | 42,698 | 25,655 | |||||
Net income | $ | 81,325 | $ | 45,580 | |||
Income per share: | |||||||
Basic | $ | 0.46 | $ | 0.26 | |||
Diluted | $ | 0.44 | $ | 0.25 | |||
Weighted-average number of shares: | |||||||
Basic | 176,076 | 176,474 | |||||
Diluted | 184,107 | 184,888 |
Three Months Ended January 31, | |||||||
2015 | 2014 | ||||||
Impairment charges recognized: | |||||||
Cost of sales - land controlled for future communities | $ | 244 | $ | 682 | |||
Cost of sales - operating communities | 900 | 1,300 | |||||
$ | 1,144 | $ | 1,982 | ||||
Depreciation and amortization | $ | 5,809 | $ | 5,289 | |||
Interest incurred | $ | 40,504 | $ | 39,944 | |||
Interest expense: | |||||||
Charged to cost of sales | $ | 28,377 | $ | 25,440 | |||
Charged to other income - net | 1,328 | 317 | |||||
$ | 29,705 | $ | 25,757 | ||||
Home sites controlled: | |||||||
Owned | 36,142 | 34,108 | |||||
Optioned | 9,158 | 17,127 | |||||
45,300 | 51,235 |
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 January 31, | |||||||||||||||||||||
Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
HOME BUILDING REVENUES | |||||||||||||||||||||
North | 210 | 209 | $ | 132.4 | $ | 127.6 | $ | 630,600 | $ | 610,700 | |||||||||||
Mid-Atlantic | 262 | 273 | 163.4 | 169.1 | 623,600 | 619,400 | |||||||||||||||
South | 236 | 225 | 161.9 | 150.6 | 685,900 | 669,100 | |||||||||||||||
West | 335 | 204 | 288.0 | 186.2 | 859,500 | 912,900 | |||||||||||||||
Traditional Home Building | 1,043 | 911 | 745.7 | 633.5 | 714,900 | 695,400 | |||||||||||||||
City Living | 48 | 17 | 107.8 | 10.2 | 2,246,200 | 597,400 | |||||||||||||||
Total consolidated | 1,091 | 928 | $ | 853.5 | $ | 643.7 | $ | 782,300 | $ | 693,600 | |||||||||||
CONTRACTS | |||||||||||||||||||||
North | 177 | 181 | $ | 110.6 | $ | 118.2 | $ | 625,100 | $ | 652,900 | |||||||||||
Mid-Atlantic | 224 | 263 | 147.7 | 163.8 | 659,500 | 623,100 | |||||||||||||||
South | 199 | 222 | 169.3 | 168.3 | 850,700 | 758,100 | |||||||||||||||
West | 444 | 199 | 401.9 | 187.9 | 905,100 | 944,100 | |||||||||||||||
Traditional Home Building | 1,044 | 865 | 829.5 | 638.2 | 794,600 | 737,800 | |||||||||||||||
City Living | 19 | 51 | 43.7 | 63.5 | 2,301,900 | 1,245,700 | |||||||||||||||
Total consolidated | 1,063 | 916 | $ | 873.2 | $ | 701.7 | $ | 821,500 | $ | 766,100 | |||||||||||
BACKLOG | |||||||||||||||||||||
North | 845 | 920 | $ | 542.8 | $ | 553.1 | $ | 642,400 | $ | 601,100 | |||||||||||
Mid-Atlantic | 792 | 892 | 503.9 | 567.7 | 636,200 | 636,500 | |||||||||||||||
South | 926 | 953 | 730.6 | 691.2 | 789,000 | 725,300 | |||||||||||||||
West | 973 | 670 | 811.1 | 594.8 | 833,600 | 887,800 | |||||||||||||||
Traditional Home Building | 3,536 | 3,435 | 2,588.4 | 2,406.8 | 732,000 | 700,700 | |||||||||||||||
City Living | 115 | 232 | 151.1 | 280.7 | 1,313,700 | 1,209,800 | |||||||||||||||
Total consolidated | 3,651 | 3,667 | $ | 2,739.5 | $ | 2,687.5 | $ | 750,300 | $ | 732,900 |
Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Three months ended January 31, | |||||||||||||||||||||
Revenues | 27 | 15 | $ | 19.3 | $ | 11.6 | $ | 714,600 | $ | 772,100 | |||||||||||
Contracts | 20 | 11 | $ | 30.7 | $ | 7.8 | $ | 1,533,700 | $ | 705,600 | |||||||||||
Backlog at January 31, | 128 | 58 | $ | 295.8 | $ | 42.4 | $ | 2,311,200 | $ | 731,000 |