Toll Brothers, Inc., Horsham, Pennsylvania (NYSE:TOL) on Tuesday after market close reported net income and earnings per share of $146.3 million and $1.00 per diluted share for its third quarter ended July 31, 2019. The gain compares to net income of $193.3 million and $1.26 per share diluted in FY 2018’s third quarter, but it beat analyst expectations of a gain of $0.83 per share.
Among the results:
• Pre-tax income was $186.9 million, compared to $253.1 million in FY 2018’s third quarter.• Impairments were $4.7 million, compared to $11.1 million in FY 2018’s third quarter.
• Home sales revenues were $1.76 billion, down 8%; home building deliveries were 1,994, down 11%.
• Net signed contract value was $1.87 billion, down 8%; contract units were 2,241, down 3%.
• Backlog value at third-quarter end was $5.84 billion, down 10%; units in backlog totaled 6,839, down 4%. The average price of homes in backlog was $854,500, compared to $912,600 at FY 2018’s third-quarter-end.
• Home sales gross margin was 20.2%; Adjusted Home Sales Gross Margin, which excludes interest and inventory write-downs, was 23.1%.
• SG&A, as a percentage of home sales revenues, was 10.6%.
• Income from operations was 9.7% of total revenues.
• Other income, income from unconsolidated entities, and Land sales gross profit was $18.4 million.
• The company repurchased approximately 3.98 million shares of its common stock during the quarter at an average price of $35.74 per share for an aggregate purchase price of approximately $142.2 million.
• The company ended FY 2019’s third quarter with approximately 57,400 lots owned and optioned, compared to 54,500 one quarter earlier, and 53,600 one year earlier. Approximately 34,600 of these lots were owned, of which approximately 16,400 lots, including those in backlog, were substantially improved.
• In the third quarter of FY 2019, the company spent approximately $287.3 million on land to purchase approximately 3,400 lots.
• The company ended FY 2019’s third quarter with 322 selling communities, compared to 311 at FY 2019’s second-quarter-end and 301 at FY 2018’s third-quarter-end.
• The company ended its FY 2019 third quarter with $836.3 million in cash and cash equivalents, compared to $924.4 million at FY 2019’s second-quarter end, and $522.2 million at FY 2018’s third-quarter end. At FY 2019’s third-quarter end, the company also had $1.10 billion available under its $1.295 billion, 20-bank revolving credit facility, which matures in May 2021.
• The company ended its FY 2019 third quarter with a debt-to-capital ratio of 43.2%, compared to 42.5% at FY 2019’s second-quarter-end and 44.5% at FY 2018’s third-quarter-end.
Douglas C. Yearley, Jr., Toll Brothers’ chairman and CEO, stated: “In our third quarter, we had strong revenues, gross margin, and earnings. While our third quarter contracts were down modestly, we are off to a good start in our fourth quarter. Low mortgage rates, a limited supply of new and existing homes, and a strong employment picture are providing tailwinds.
“We are focused on measured growth through geographic, product and price point diversification, and capital-efficient land acquisitions. We continue to expand the buyer segments that we serve with homes now ranging in price from $275,000 to over $3 million. Our balance sheet remains strong and our book value continues to grow. With ample liquidity, moderate leverage, and limited near-term debt maturities, we have the flexibility to execute on our balanced capital allocation strategy.”
