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 May 27, 2015 announcing its financial results for the six-month and three-month periods ended April 30, 2015. |
TOLL BROTHERS, INC. | ||||||
Dated: | May 27, 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 |
May 27, 2015 | fcooper@tollbrothersinc.com |
• | FY 2015’s second-quarter net income was $67.9 million, or $0.37 per share diluted, compared to net income of $65.2 million, or $0.35 per share diluted, in FY 2014’s second quarter. |
• | Pre-tax income was $86.5 million, compared to pre-tax income of $93.5 million in FY 2014’s second quarter. Second quarter FY 2015 included write-downs of $12.2 million, compared to $1.9 million in FY 2014’s second quarter. Excluding write-downs, second-quarter pre-tax income was $98.7 million in FY 2015, compared to $95.4 million in FY 2014. |
• | The effective tax rate in FY 2015’s second quarter was 21.5% due to the positive resolution (a $13.7 million reversal of tax reserves) of a state tax matter, compared to 30.2% in FY 2014’s second quarter. |
• | Revenues of $852.6 million and home building deliveries of 1,195 units declined 1% in dollars and 2% in units, compared to FY 2014’s second quarter. The average price of homes delivered was $713,000, compared to $706,000 in FY 2014’s second quarter. |
• | Net signed contracts of $1.60 billion and 1,931 units rose 25% in dollars and 10% in units, compared to FY 2014’s second quarter. The average price of net signed contracts was $826,000, compared to $729,000 in FY 2014’s second quarter. |
• | Backlog of $3.48 billion and 4,387 units rose 9% in dollars and 1% in units, compared to FY 2014’s second-quarter-end backlog. At second-quarter end, the average price of homes in backlog was $794,000, compared to $742,000 at FY 2014’s second-quarter end. |
• | Gross margin, excluding interest and write-downs, was 25.3%, compared to 23.7% in FY 2014’s second quarter. |
• | SG&A as a percentage of revenue was 12.6%, compared to 12.1% in FY 2014’s second quarter. FY 2014’s second quarter included $5.1 million of Shapell acquisition costs. |
• | Income from operations was 7.8% of revenue, compared to 7.9% of revenue in FY 2014’s second quarter. |
• | Other income and Income from unconsolidated entities totaled $20.1 million, compared to $25.4 million in FY 2014’s second quarter. |
• | The Company ended its second quarter with 269 selling communities, compared to 258 at FY 2015’s first-quarter end, and 252 at FY 2014’s second-quarter end. |
• | At FY 2015’s second-quarter end, the Company had approximately 45,000 lots owned and optioned, compared to approximately 45,300 one quarter earlier and 50,400 one year ago. |
▪ | FY 2015’s second-quarter net income was $67.9 million, or $0.37 per share diluted, compared to FY 2014’s second-quarter net income of $65.2 million, or $0.35 per share diluted. |
▪ | FY 2015’s second-quarter pre-tax income was $86.5 million, compared to FY 2014’s second-quarter pre-tax income of $93.5 million. FY 2015’s second-quarter results included pre-tax inventory write-downs totaling $12.2 million ($11.1 million attributable to an operating community and $1.1 million attributable to future communities). FY 2014’s second-quarter results included pre-tax inventory write-downs of $1.9 million ($1.6 million attributable to an operating community and $0.3 million attributable to future communities). |
▪ | In the second quarter of FY 2015, the Company reversed tax reserves of $13.7 million as the result of a favorable settlement of a state tax liability. |
▪ | FY 2015’s six-month net income was $149.3 million, or $0.81 per share diluted, compared to FY 2014’s six-month net income of $110.8 million, or $0.60 per share diluted. |
▪ | FY 2015’s six-month pre-tax income was $210.6 million, compared to FY 2014’s six-month pre-tax income of $164.7 million. |
▪ | FY 2015’s six-month pre-tax income results included pre-tax inventory write-downs totaling $13.3 million ($12.0 million attributable to operating communities and $1.3 million attributable to future communities). FY 2014’s six-month results included pre-tax inventory write-downs of $3.9 million ($2.9 million attributable to operating communities and $1.0 million attributable to future communities). |
▪ | FY 2015’s second-quarter total revenues of $852.6 million and 1,195 units decreased 1% in dollars and 2% in units, compared to FY 2014’s second-quarter total revenues of $860.4 million and 1,218 units. |
▪ | FY 2015’s six-month total revenues of $1.71 billion and 2,286 units rose 13% in dollars and 7% in units, compared to FY 2014’s same period totals of $1.50 billion and 2,146 units. |
• | The Company’s FY 2015 second-quarter net contracts of $1.60 billion and 1,931 units rose by 25% in dollars and 10% in units, compared to FY 2014’s second-quarter net contracts of $1.27 billion and 1,749 units. |
▪ | On a per-community basis, FY 2015’s second-quarter net signed contracts were up 4% to 7.43 units, compared to second- quarter totals of 7.14 units in FY 2014, 7.79 in FY 2013 and 5.61 in FY 2012. |
▪ | The Company’s FY 2015 six-month net contracts of $2.47 billion and 2,994 units increased 25% in dollars and 12% in units, compared to net contracts of $1.98 billion and 2,665 units in FY 2014’s six-month period. |
▪ | FY 2015’s second-quarter cancellation rate (current-quarter cancellations divided by current-quarter signed contracts) was 3.1%, compared to 3.7% in FY 2014’s second quarter. As a percentage of beginning-quarter backlog, FY 2015’s second-quarter cancellation rate was 1.7%, compared to 1.9% in FY 2014’s second quarter. |
▪ | In FY 2015, second-quarter-end backlog of $3.48 billion and 4,387 units increased 9% in dollars and 1% in units, compared to FY 2014’s second-quarter-end backlog of $3.21 billion and 4,324 units. |
▪ | FY 2015’s second-quarter gross margin, excluding interest and write-downs, was 25.3%, compared to 23.6% in FY 2014’s second quarter. |
▪ | Interest included in cost of sales was 3.5% of revenues in FY 2015’s second quarter, compared to 3.4% of revenues in FY 2014’s second quarter. |
▪ | Reflecting the continued growth in community count and contracts, SG&A as a percentage of revenue was 12.6% in FY 2015’s second quarter, compared to 12.1%, which included $5.1 million of Shapell acquisition costs, in FY 2014’s second quarter. |
▪ | Income from operations of $66.4 million represented 7.8% of revenues in FY 2015’s second quarter, compared to $68.1 million and 7.9% of revenues in FY 2014’s second quarter. |
▪ | Income from operations of $163.5 million represented 9.6% of revenues in FY 2015’s six-month period, compared to $99.8 million and 6.6% of revenues in FY 2014’s six-month period. |
▪ | Other income and Income from unconsolidated entities in FY 2015’s second quarter totaled $20.1 million, compared to $25.4 million in FY 2014’s same quarter, which included a $12.0 million gain associated with the refinancing of a stabilized, mature apartment community. |
▪ | Other income and Income from unconsolidated entities in FY 2015’s six-month period totaled $47.1 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 $64.9 million in FY 2014’s same period, which included a $12.0 million gain associated with the refinancing of a stabilized, mature apartment community and $23.5 million related to the sale of two shopping centers in which Toll Brothers was a 50% partner. |
▪ | In FY 2015’s second quarter, unconsolidated entities in which the Company had an interest delivered $17.0 million of homes, compared to $11.6 million in the second quarter of FY 2014. In FY 2015’s first six months, unconsolidated entities in which the Company had an interest delivered $36.3 million of homes, compared to $23.2 million in the same six-month period of FY 2014. The Company recorded its share of the results from these entities’ operations in “Income from Unconsolidated Entities” on the Company’s Statement of Operations. |
▪ | In FY 2015’s second quarter, unconsolidated entities in which the Company had an interest signed contracts for $82.5 million of homes, compared to $160.0 million in the second quarter of FY 2014. In FY 2015’s first six months, unconsolidated entities in which the Company had an interest signed contracts for $113.2 million of homes, compared to $167.7 million in the same six-month period of FY 2014. |
▪ | At April 30, 2015, unconsolidated entities in which the Company had an interest had a backlog of $361.4 million, compared to $190.7 million at April 30, 2014. In the second quarter of FY 2015, the Company acquired ownership of its portion of 400 Park Avenue South, a high-rise tower under construction in New York City. Therefore, its investment of $128.0 million was reclassified from a joint venture (Investments in unconsolidated entities) on its balance sheet to Inventory. Contracts at 400 Park Avenue South have always been reported as if the project was wholly owned. |
▪ | In FY 2015’s second quarter and first six months, the Company’s Gibraltar Capital and Asset Management subsidiary reported pre-tax income of $4.5 million and $5.5 million respectively, compared to FY 2014’s second quarter and first six-month results of $2.6 million and $5.9 million. |
▪ | The Company ended its FY 2015 second quarter with $542.2 million in cash and marketable securities, compared to $510.9 million at 2015’s first-quarter end and $364.8 million at FY 2014's second-quarter end. At FY 2015’s second-quarter end, it had $937.2 million available under its $1.035 billion 15-bank credit facility, which matures in August 2018. |
▪ | On May 15, 2015, the Company retired its $300 million, 5.15% 10 year bonds using $50 million of cash and $250 million drawn from its $1.035 billion, 15-bank credit facility. Since the Company currently capitalizes all of its interest incurred, the benefit of this retirement of debt will be realized in Income Statements in FY 2016 and beyond. |
▪ | The Company’s Stockholders’ Equity at FY 2015’s second-quarter end was $4.05 billion, compared to $3.70 billion at FY 2014’s second-quarter end. |
▪ | The Company ended FY 2015’s second quarter with a net debt-to-capital ratio(1) of 40.8%, compared to 41.5% at FY 2015’s first-quarter end, 45.1% at FY 2014’s second-quarter end, and approximately 47.0% immediately after the Shapell acquisition in February 2014. |
▪ | The Company ended FY 2015’s second quarter with approximately 45,000 lots owned and optioned, compared to 45,300 one quarter earlier, 50,400 one year earlier and 91,200 at its peak at FY 2006’s second-quarter end. At 2015’s second-quarter end, approximately 36,400 of these lots were owned, of which approximately 16,100 lots, including those in backlog, were substantially improved. |
▪ | In the second quarter of FY 2015, the Company spent approximately $116.7 million on land to purchase 1,192 lots. |
▪ | The Company ended FY 2015’s second quarter with 269 selling communities, compared to 258 at FY 2015’s first-quarter end and 252 at FY 2014’s second-quarter end. The Company still expects to end FY 2015 with between 270 and 310 selling communities. |
▪ | Based on FY 2015’s second-quarter-end backlog and the pace of activity at its communities, the Company narrowed its expectation to deliver between 5,300 and 5,900 homes in FY 2015 from 5,200 to 6,000 homes previously. It now believes the average delivered price for FY 2015’s full year will be between $730,000 and $760,000 per home. Unit backlog conversion for the third quarter is estimated at 32%. |
▪ | The Company expects a pre-interest, pre-impairment gross margin in the third quarter of FY 2015 similar to that of the second quarter of FY 2015, and full FY 2015 pre-interest, pre-impairment gross margin of approximately 26%, which is similar to FY 2014’s results. |
(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. |
April 30, 2015 | October 31, 2014 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 532,157 | $ | 586,315 | |||
Marketable securities | 10,015 | 12,026 | |||||
Restricted cash | 17,962 | 18,342 | |||||
Inventory | 6,852,388 | 6,490,321 | |||||
Property, construction and office equipment, net | 141,143 | 143,010 | |||||
Receivables, prepaid expenses and other assets | 258,958 | 251,572 | |||||
Mortgage loans held for sale | 80,864 | 101,944 | |||||
Customer deposits held in escrow | 44,399 | 42,073 | |||||
Investments in and advances to unconsolidated entities | 339,214 | 447,078 | |||||
Investments in distressed loans and foreclosed real estate | 65,938 | 73,800 | |||||
Deferred tax assets, net of valuation allowances | 244,643 | 250,421 | |||||
$ | 8,587,681 | $ | 8,416,902 | ||||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Loans payable | $ | 674,817 | $ | 654,261 | |||
Senior notes | 2,655,798 | 2,655,044 | |||||
Mortgage company loan facility | 70,052 | 90,281 | |||||
Customer deposits | 275,347 | 223,799 | |||||
Accounts payable | 233,675 | 225,347 | |||||
Accrued expenses | 586,411 | 581,477 | |||||
Income taxes payable | 37,641 | 125,996 | |||||
Total liabilities | 4,533,741 | 4,556,205 | |||||
Equity: | |||||||
Stockholders’ Equity | |||||||
Common stock | 1,779 | 1,779 | |||||
Additional paid-in capital | 722,303 | 712,162 | |||||
Retained earnings | 3,381,290 | 3,232,035 | |||||
Treasury stock, at cost | (55,980 | ) | (88,762 | ) | |||
Accumulated other comprehensive loss | (3,051 | ) | (2,838 | ) | |||
Total stockholders' equity | 4,046,341 | 3,854,376 | |||||
Noncontrolling interest | 7,599 | 6,321 | |||||
Total equity | 4,053,940 | 3,860,697 | |||||
$ | 8,587,681 | $ | 8,416,902 |
Six Months Ended April 30, | Three Months Ended April 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Revenues | $ | 1,706,035 | $ | 1,504,055 | $ | 852,583 | $ | 860,374 | |||||||
Cost of revenues | 1,328,544 | 1,202,030 | 678,512 | 687,998 | |||||||||||
Selling, general and administrative expenses | 213,999 | 202,190 | 107,685 | 104,320 | |||||||||||
1,542,543 | 1,404,220 | 786,197 | 792,318 | ||||||||||||
Income from operations | 163,492 | 99,835 | 66,386 | 68,056 | |||||||||||
Other: | |||||||||||||||
Income from unconsolidated entities | 11,128 | 37,242 | 6,227 | 14,327 | |||||||||||
Other income - net | 35,935 | 27,642 | 13,919 | 11,101 | |||||||||||
Income before income taxes | 210,555 | 164,719 | 86,532 | 93,484 | |||||||||||
Income tax provision | 61,300 | 53,917 | 18,602 | 28,262 | |||||||||||
Net income | $ | 149,255 | $ | 110,802 | $ | 67,930 | $ | 65,222 | |||||||
Income per share: | |||||||||||||||
Basic | $ | 0.85 | $ | 0.63 | $ | 0.38 | $ | 0.37 | |||||||
Diluted | $ | 0.81 | $ | 0.60 | $ | 0.37 | $ | 0.35 | |||||||
Weighted-average number of shares: | |||||||||||||||
Basic | 176,267 | 177,278 | 176,458 | 178,082 | |||||||||||
Diluted | 184,472 | 185,665 | 184,838 | 186,442 |
Six Months Ended April 30, | Three Months Ended April 30, | ||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||
Impairment charges recognized: | |||||||||||||||
Cost of sales - land owned/controlled for future communities | $ | 1,310 | $ | 1,006 | $ | 1,066 | $ | 324 | |||||||
Cost of sales - operating communities | 12,000 | 2,900 | 11,100 | 1,600 | |||||||||||
$ | 13,310 | $ | 3,906 | $ | 12,166 | $ | 1,924 | ||||||||
Depreciation and amortization | $ | 11,772 | $ | 11,095 | $ | 5,963 | $ | 5,807 | |||||||
Interest incurred | $ | 80,458 | $ | 82,628 | $ | 39,954 | $ | 42,684 | |||||||
Interest expense: | |||||||||||||||
Charged to cost of sales | $ | 57,953 | $ | 54,585 | $ | 29,576 | $ | 29,145 | |||||||
Charged to other income - net | 1,738 | 1,039 | 410 | 722 | |||||||||||
$ | 59,691 | $ | 55,624 | $ | 29,986 | $ | 29,867 | ||||||||
Home sites controlled: | |||||||||||||||
Owned | 36,386 | 37,701 | |||||||||||||
Optioned | 8,609 | 12,657 | |||||||||||||
44,995 | 50,358 |
April 30, 2015 | October 31, 2014 | ||||||
Land and land development costs | $ | 2,746,360 | $ | 2,716,950 | |||
Construction in progress | 3,609,895 | 3,292,056 | |||||
Sample homes | 312,934 | 264,219 | |||||
Land deposits and costs of future development | 164,705 | 200,495 | |||||
Other | 18,494 | 16,601 | |||||
$ | 6,852,388 | $ | 6,490,321 |
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 April 30, | |||||||||||||||||||||
Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
HOME BUILDING REVENUES | |||||||||||||||||||||
North | 238 | 239 | $ | 150.0 | $ | 137.3 | $ | 630,300 | $ | 574,200 | |||||||||||
Mid-Atlantic | 303 | 273 | 187.5 | 180.5 | 618,800 | 661,100 | |||||||||||||||
South | 289 | 285 | 215.9 | 186.1 | 747,100 | 653,100 | |||||||||||||||
West | 351 | 377 | 282.5 | 321.6 | 804,700 | 853,100 | |||||||||||||||
Traditional Home Building | 1,181 | 1,174 | 835.9 | 825.5 | 707,800 | 703,100 | |||||||||||||||
City Living | 14 | 44 | 16.7 | 34.9 | 1,191,300 | 793,600 | |||||||||||||||
Total consolidated | 1,195 | 1,218 | $ | 852.6 | $ | 860.4 | $ | 713,500 | $ | 706,400 | |||||||||||
CONTRACTS | |||||||||||||||||||||
North | 379 | 303 | $ | 236.4 | $ | 199.6 | $ | 623,800 | $ | 658,900 | |||||||||||
Mid-Atlantic | 415 | 367 | 259.0 | 226.6 | 624,000 | 617,500 | |||||||||||||||
South | 356 | 374 | 288.4 | 256.3 | 810,300 | 685,200 | |||||||||||||||
West | 716 | 637 | 723.6 | 519.4 | 1,010,600 | 815,300 | |||||||||||||||
Traditional Home Building | 1,866 | 1,681 | 1,507.4 | 1,201.9 | 807,800 | 715,000 | |||||||||||||||
City Living | 65 | 68 | 88.2 | 73.0 | 1,356,700 | 1,073,000 | |||||||||||||||
Total consolidated | 1,931 | 1,749 | $ | 1,595.6 | $ | 1,274.9 | $ | 826,300 | $ | 728,900 | |||||||||||
BACKLOG | |||||||||||||||||||||
North | 986 | 984 | $ | 629.2 | $ | 615.5 | $ | 638,100 | $ | 625,500 | |||||||||||
Mid-Atlantic | 904 | 986 | 575.3 | 613.9 | 636,400 | 622,600 | |||||||||||||||
South | 993 | 1,042 | 803.2 | 761.4 | 808,800 | 730,700 | |||||||||||||||
West | 1,338 | 1,056 | 1,252.2 | 897.9 | 935,900 | 850,300 | |||||||||||||||
Traditional Home Building | 4,221 | 4,068 | 3,259.9 | 2,888.7 | 772,300 | 710,100 | |||||||||||||||
City Living | 166 | 256 | 222.6 | 318.7 | 1,340,900 | 1,244,900 | |||||||||||||||
Total consolidated | 4,387 | 4,324 | $ | 3,482.5 | $ | 3,207.4 | $ | 793,800 | $ | 741,800 |
Six Months Ended April 30, | |||||||||||||||||||||
Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
HOME BUILDING REVENUES | |||||||||||||||||||||
North | 448 | 448 | $ | 282.4 | $ | 264.9 | $ | 630,400 | $ | 591,300 | |||||||||||
Mid-Atlantic | 565 | 546 | 350.9 | 349.6 | 621,100 | 640,300 | |||||||||||||||
South | 525 | 510 | 377.8 | 336.7 | 719,600 | 660,200 | |||||||||||||||
West | 686 | 581 | 570.4 | 507.8 | 831,500 | 874,000 | |||||||||||||||
Traditional Home Building | 2,224 | 2,085 | 1,581.5 | 1,459.0 | 711,100 | 699,800 | |||||||||||||||
City Living | 62 | 61 | 124.5 | 45.1 | 2,008,100 | 739,300 | |||||||||||||||
Total consolidated | 2,286 | 2,146 | $ | 1,706.0 | $ | 1,504.1 | $ | 746,300 | $ | 700,900 | |||||||||||
CONTRACTS | |||||||||||||||||||||
North | 556 | 484 | $ | 347.0 | $ | 317.8 | $ | 624,100 | $ | 656,600 | |||||||||||
Mid-Atlantic | 639 | 630 | 406.7 | 390.5 | 636,500 | 619,800 | |||||||||||||||
South | 555 | 596 | 457.8 | 424.6 | 824,900 | 712,400 | |||||||||||||||
West | 1,160 | 836 | 1,125.4 | 707.2 | 970,200 | 845,900 | |||||||||||||||
Traditional Home Building | 2,910 | 2,546 | 2,336.9 | 1,840.1 | 803,100 | 722,700 | |||||||||||||||
City Living | 84 | 119 | 131.9 | 136.5 | 1,570,200 | 1,147,100 | |||||||||||||||
Total consolidated | 2,994 | 2,665 | $ | 2,468.8 | $ | 1,976.6 | $ | 824,600 | $ | 741,700 |
Units | $ (Millions) | Average Price Per Unit $ | |||||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
Three months ended April 30, | |||||||||||||||||||||
Revenues | 22 | 13 | $ | 17.0 | $ | 11.6 | $ | 771,100 | $ | 895,900 | |||||||||||
Contracts | 45 | 76 | $ | 82.5 | $ | 160.0 | $ | 1,833,500 | $ | 2,104,700 | |||||||||||
Six months ended April 30, | |||||||||||||||||||||
Revenues | 49 | 28 | $ | 36.3 | $ | 23.2 | $ | 740,000 | $ | 829,600 | |||||||||||
Contracts | 65 | 87 | $ | 113.2 | $ | 167.7 | $ | 1,741,200 | $ | 1,927,800 | |||||||||||
Backlog at April 30, | 151 | 121 | $ | 361.4 | $ | 190.7 | $ | 2,393,200 | $ | 1,576,100 |