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Toll Brothers Reports FY 2013 1st Qtr Results



Toll Brothers Reports FY 2013 1st Qtr Results

HORSHAM, Pa., Feb. 20, 2013 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL)
(www.tollbrothers.com), the nation's leading builder of luxury homes, today
announced results for its first quarter ended January 31, 2013.

Front Entrance EPR

First Quarter Financial Highlights:

  * FY 2013's first quarter net income was $4.4 million, or $0.03 per share,
    compared to a net loss of $2.8 million, or $0.02 per share, in FY 2012's
    first quarter.
  * Net income included pre-tax inventory write-downs of $0.7 million,
    compared to pre-tax inventory write-downs of $8.1 million in FY 2012's
    first quarter.
  * Pre-tax income was $8.3 million, compared to a pre-tax loss of $6.4
    million in FY 2012's first quarter.
  * Revenues of $424.6 million and homebuilding deliveries of 746 units rose
    32% in both dollars and units, compared to FY 2012's first quarter.
  * The average price of homes delivered was $569,000, compared to $582,000 in
    FY 2012's fourth quarter and $571,000 in FY 2012's first quarter. The
    decline was due primarily to the mix of deliveries.
  * Backlog of $1.86 billion and 2,796 units rose 66% in dollars and 57% in
    units, compared to FY 2012's first-quarter-end backlog. The average price
    of homes in backlog was $665,000 compared to $626,000 at FY 2012's first-
    quarter end.
  * Net signed contracts of $614.4 million and 973 units rose 38% in dollars
    and 49% in units, compared to FY 2012's first quarter. On a per-community
    basis, FY 2013's first-quarter net signed contracts rose 52% to 4.34 units
    per community, the highest for any first quarter since FY 2006.
  * The average price of net signed contracts was $631,000, compared to
    $682,000 in FY 2012's first quarter. The average price of FY 2012's
    first-quarter net contracts was positively impacted by The Touraine on
    Manhattan's Upper East Side, where the value of the 16 contracts signed
    was $65.5 million - an average of approximately $4.1 million per unit.
  * Gross margin, excluding interest and write-downs, was 23.4%, compared to
    23.2% in FY 2012's first quarter.
  * SG&A as a percentage of revenue improved to 18.4%, compared to 21.6% in FY
    2012's first quarter, due primarily to increased revenue volume.
  * The Company ended its first quarter with 225 selling communities, compared
    to 224 at FYE 2012, and 228 at FY 2012's first-quarter end.
  * At FY 2013's first-quarter end, the Company had approximately 43,700 lots
    owned and optioned, compared to approximately 40,400 at FYE 2012 and
    approximately 39,700 one year ago.

Douglas C. Yearley, Jr., Toll Brothers' chief executive officer, stated:
"Demand has increased. With our first quarter contracts up 49%, and contracts
for the first three weeks of our second quarter up 40% versus comparable
periods in FY 2012, it appears that momentum is building.

"We are continuing to gain market share and see little competition from local
private builders. As the Spring selling season kicks off, we are also enjoying
increasing pricing power due to the release of pent-up demand colliding with
limited supply in the affluent markets where we operate.

"In FY 2013's first quarter, we invested over $330 million in what we believe
are very well-located land deals spread across many of our most profitable
markets. While many of these new deals will not open for sale until FY 2014 or
later, we are projecting to open approximately 70 new communities in the
second, third and fourth quarters of FY 2013. Adjusting for communities which
we expect will sell out in the next three quarters, we project ending FY 2013
with between 225 and 255 selling communities. With our current land holdings,
our new land deals, recent price increases and planned high-rise deliveries,
we are optimistic about community count growth and increasing profitability in
FY 2014 and beyond.

"We are developing other income streams to supplement our expanding home
building operations. Building on our land acquisition/development, and
construction expertise and our nationally recognized brand, we have assembled
a pipeline of sites we control for new rental apartment projects totaling
approximately 4,000 units. We also control sites for two high-quality student
housing projects totaling approximately 890 units (3,095 beds). These
projects, which are located in the metro Boston to Washington, DC corridor and
which we expect to develop in partnership structures over the next several
years, should start generating income beginning in FY 2015. They will augment
the approximately 1,500 apartment units we've developed and currently operate
and own in partnership structures.

"Gibraltar Capital and Asset Management LLC, our wholly owned subsidiary
formed to acquire and work out distressed real estate and loans, generated
pre-tax profits of $2.1 million this quarter. In addition, Gibraltar has
invested $33 million in four separate loan and loan portfolio acquisitions
since the start of FY 2013."

Martin P. Connor, Toll Brothers' chief financial officer, stated: "The pace of
our sales accelerated throughout FY 2012, so our backlog at fiscal-year-end
2012 was weighted to homes to be delivered in the latter part of FY 2013.
Therefore, we see accelerating deliveries throughout FY 2013. With 2,796 homes
in backlog, up 57% from one year ago, and with production increasing, we now
expect to deliver between 3,750 and 4,300 homes in FY 2013 at an average price
of between $595,000 and $630,000.

"As demand increased in the second half of FY 2012, we began, and continue, to
raise prices. Those price increases should benefit our income statement and
our gross margins in the second half of FY 2013 and beyond.

"Gross margins in the first quarter of FY 2013, excluding interest and
impairments, were 20 basis points better than FY 2012's same period but 120
basis points weaker than FY 2012's fourth quarter margins. The reduction from
the fourth quarter was primarily due to fewer deliveries of high margin
high-rise units in FY 2013's first quarter, as we discussed on our FYE 2012
earnings conference call."

Robert I. Toll, executive chairman, stated: "After seven years of trepidation,
buyers are reentering the housing market and household formations are
increasing. With low inventories of houses for sale and a limited supply of
approved lots, home prices are rising. Buyers who need to sell one home to
move to the next one are more willing and able to make the move. These factors
plus record-low interest rates are boosting the housing market's recovery. As
housing continues to recover and home prices rise, personal and bank balance
sheets get stronger, which should spur additional economic activity and more
housing demand." 

Toll Brothers' financial highlights for the first quarter ended January 31,
2013 (unaudited): 

  * FY 2013's first-quarter net income was $4.4 million, or $0.03 per share
    diluted, compared to FY 2012's first-quarter net loss of $2.8 million, or
    $0.02 per share diluted.
  * FY 2013's first quarter included a tax provision of $3.9 million, compared
    to a $3.6 million tax benefit in FY 2012's first quarter.
  * FY 2013's first-quarter pre-tax income was $8.3 million, compared to a FY
    2012 first-quarter pre-tax loss of $6.4 million. FY 2013's first-quarter
    results included pre-tax inventory write-downs attributable to operating
    communities of $0.7 million. FY 2012's first-quarter results included
    pre-tax inventory write-downs totaling $8.1 million.
  * Excluding write-downs, FY 2013's first-quarter pre-tax income was $9.0
    million, compared to FY 2012's first-quarter pre-tax income of $1.7
    million.
  * FY 2013's first-quarter gross margin improved to 18.5% from 15.6% in FY
    2012's first quarter. Excluding write-downs and interest, FY 2013's
    first-quarter gross margin improved to 23.4% from 23.2% in FY 2012's first
    quarter.
  * Interest included in cost of sales declined to 4.7% of revenue in FY
    2013's first quarter from 5.1% in FY 2012's first quarter.  
  * FY 2013's first-quarter total revenues of $424.6 million and 746 units
    increased 32% in both dollars and units from FY 2012's first-quarter total
    revenues of $322.0 million and 564 units. The average price of homes
    delivered was $569,000, compared to $582,000 in FY 2012's fourth quarter
    and $571,000 in FY 2012's first quarter.
  * In FY 2013, first-quarter gross signed contracts of $659.7 million and
    1,037 units rose 40% in dollars and 49% in units from FY 2012's
    first-quarter totals of $470.3 million and 695 gross signed contracts.
  * FY 2013's first-quarter cancellation rate (current-quarter cancellations
    divided by current-quarter signed contracts) was 6.2%, compared to 6.2% in
    FY 2012's first quarter. As a percentage of beginning-quarter backlog, FY
    2013's first-quarter cancellation rate was 2.5%, compared to 2.6% in FY
    2012's first quarter.
  * The Company's FY 2013 first-quarter net signed contracts of $614.4 million
    and 973 units, increased by 38% and 49%, respectively, compared to FY
    2012's first-quarter net signed contracts of $444.7 million and 652 units.
  * On a per-community basis, FY 2013's first-quarter net signed contracts of
    4.34 units per community were 52% greater than FY 2012's first-quarter
    total of 2.86; 54% greater than FY 2011's first-quarter total of 2.81; 65%
    greater than FY 2010's first-quarter total of 2.63; and 338% greater than
    FY 2009's first-quarter total of 0.99. However, they were still below the
    Company's historical first-quarter average of 4.80 units, dating back to
    1987, the first full fiscal year in which the Company was public.
  * The average price of net signed contracts in FY 2013's first quarter was
    $631,000 compared to $623,000 in FY 2012's fourth quarter and $682,000 in
    FY 2012's first quarter.
  * The average price of the Company's FY 2012 first-quarter net signed
    contracts was positively impacted by The Touraine, the Company's 22-unit
    boutique condo building under construction at 65^th Street and Lexington
    Avenue in Manhattan, where the value of the 16 contracts signed that
    quarter was $65.5 million, or an average of approximately $4.1 million per
    unit. The Touraine will deliver units in the back half of FY 2013.
    Excluding the Touraine, the average price of FY 2012 first-quarter net
    signed contracts was $596,000.
  * In FY 2013, first-quarter-end backlog of $1.86 billion and 2,796 units
    increased 66% and 57%, respectively, from FY 2012's first-quarter-end
    backlog of $1.12 billion and 1,784 units.
  * SG&A as a percentage of revenue improved to 18.4%, compared to 21.6% in FY
    2012's first quarter, due primarily to higher revenues offset by cost
    increases associated with the Company's growth.
  * In FY 2013's first quarter, unconsolidated entities in which the Company
    had an interest delivered $8.9 million of homes, compared to $23.4 million
    in the first quarter of FY 2012. 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 2013's first quarter, unconsolidated entities in which the Company
    had an interest signed contracts of $6.2 million, compared to $21.4
    million in FY 2012's first quarter. At January 31, 2013, unconsolidated
    entities in which the Company had an interest had a backlog of $24.4
    million, compared to $19.0 million at January 31, 2012.
  * The Company ended its FY 2013 first quarter with $793.6 million in cash
    and marketable securities compared to $1.22 billion at FYE 2012, and
    $719.4 million at FY 2012's first-quarter end. At FY 2013's first-quarter
    end, the Company had $819 million available under its $885 million,
    12-bank credit facility, which matures in October 2014.
  * The Company's Stockholders' Equity at FY 2013's first-quarter end
    increased 21% to $3.13 billion, compared to $2.60 billion at FY 2012's
    first-quarter end.
  * The Company ended its FY 2013 first quarter with a net debt-to-capital
    ratio^(1) of 29.7%, compared to 23.6% at FYE 2012 and 25.0% at FY 2012's
    first-quarter end.
  * The Company ended FY 2013's first quarter with approximately 43,700 lots
    owned and optioned, compared to 40,400 one quarter earlier, 39,700 one
    year earlier and 91,200 at its peak at FY 2006's second-quarter end.
    Approximately 33,500 of these 43,700 lots were owned, of which
    approximately 12,000 lots, including those in backlog, were substantially
    improved.
  * In the first quarter of FY 2013, the Company purchased 3,000 lots for
    approximately $332.9 million.
  * The Company ended FY 2013's first quarter with 225 selling communities,
    compared to 224 at FYE 2012 and 228 at FY 2012's first-quarter end. The
    Company expects to end FY 2013 with between 225 and 255 selling
    communities.
  * Based on FY 2013's first-quarter-end backlog and the pace of activity at
    its communities, the Company currently estimates it will deliver between
    3,750 and 4,300 homes in FY 2013. It believes the average delivered price
    for FY 2013 will be between $595,000 and $630,000 per home.
  * In FY 2013's first quarter, the Company's Gibraltar Capital and Asset
    Management subsidiary reported pre-tax income, including its share of
    income from a structured asset joint venture in which it has an interest,
    of $2.1 million, compared to $1.7 million of income in FY 2012's first
    quarter.

  (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.

Toll Brothers will be broadcasting live via the Investor Relations section of
its website, www.tollbrothers.com, a conference call hosted by CEO Douglas C.
Yearley, Jr. at 2:00 p.m. (EST) today, February 20, 2013, to discuss these
results and its outlook for FY 2013. To access the call, enter the Toll
Brothers website, click on the Investor Relations page, and select "Conference
Calls." Participants are encouraged to log on at least fifteen minutes prior
to the start of the presentation to register and download any necessary
software.

The call can be heard live with an online replay which will follow. Podcast
(iTunes required) and MP3 format replays will be available approximately 48
hours after the conference call via the "Conference Calls" section of the
Investor Relations portion of the Toll Brothers website.

Toll Brothers, Inc. is the nation's leading builder of luxury homes. The
Company began business in 1967 and became a public company in 1986. Its common
stock is listed on the New York Stock Exchange under the symbol "TOL." The
Company serves move-up, empty-nester, active-adult, and second-home buyers and
operates in 19 states: Arizona, California, Colorado, Connecticut, Delaware,
Florida, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New
Jersey, New York, North Carolina, Pennsylvania, Texas, Virginia, and
Washington.

Toll Brothers builds an array of luxury residential communities, principally
on land it develops and improves: single-family detached and attached home
communities, master planned resort-style golf communities, and urban low-,
mid- and high-rise communities. The Company operates its own architectural,
engineering, mortgage, title, land development and land sale, golf course
development and management, home security, and landscape subsidiaries. The
Company also operates its own lumber distribution, house component assembly,
and manufacturing operations. The Company acquires and develops commercial
properties through Toll Commercial and its affiliate, Toll Brothers Realty
Trust, and purchases distressed loan and real estate asset portfolios through
its wholly owned subsidiary, Gibraltar Capital and Asset Management.

Toll Brothers is honored to have won the three most coveted awards in the
homebuilding industry: America's Best Builder from the National Association of
Home Builders, the National Housing Quality Award and Builder of the
Year. Toll Brothers was awarded Builder of the Year for 2012 and is the only
two-time recipient. Toll Brothers proudly supports the communities in which it
builds; among other philanthropic pursuits, the Company sponsors the Toll
Brothers Metropolitan Opera International Radio Network, bringing opera to
neighborhoods throughout the world. For more information, visit
www.tollbrothers.com.

Information presented herein for the first quarter ended January 31, 2013 is
subject to finalization of the Company's regulatory filings, related financial
and accounting reporting procedures and external auditor procedures.

Certain information included in this release is forward-looking within the
meaning of the Private Securities Litigation Reform Act of 1995, including,
but not limited to, information related to: anticipated operating results;
anticipated financial performance, resources and condition; selling
communities; home deliveries; average home prices; consumer demand and
confidence; contract pricing; business and investment opportunities; and
market and industry trends. 

Such forward-looking information involves important risks and uncertainties
that could significantly affect actual results and cause them to differ
materially from expectations expressed herein and in other Company reports,
SEC filings, statements and presentations. These risks and uncertainties
include, among others: local, regional, national and international economic
conditions; fluctuating consumer demand and confidence; interest and
unemployment rates; changes in sales conditions, including home prices, in the
markets where we build homes; conditions in our newly entered markets and
newly acquired operations; the competitive environment in which we operate;
the availability and cost of land for future growth; conditions that could
result in inventory write-downs or write-downs associated with investments in
unconsolidated entities; the ability to recover our deferred tax assets; the
availability of capital; uncertainties in the capital and securities markets;
liquidity in the credit markets; changes in tax laws and their interpretation;
effects of governmental legislation and regulation; the outcome of various
legal proceedings; the availability of adequate insurance at reasonable cost;
the impact of construction defect, product liability and home warranty claims,
including the adequacy of self-insurance accruals, and the applicability and
sufficiency of our insurance coverage; the ability of customers to obtain
financing for the purchase of homes; the ability of home buyers to sell their
existing homes; the ability of the participants in various joint ventures to
honor their commitments; the availability and cost of labor and building and
construction materials; the cost of raw materials; construction delays;
domestic and international political events; and weather conditions. For a
more detailed discussion of these factors, see the information under the
captions "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in our most recent annual report on Form
10-K and our subsequent quarterly reports on Form 10-Q filed with the
Securities and Exchange Commission.

Any or all of the forward-looking statements included in this release are not
guarantees of future performance and may turn out to be inaccurate.
Forward-looking statements speak only as of the date they are made. The
Company undertakes no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or
otherwise.

TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
                                                                    
                                                       January 31, October 31,
                                                       2013        2012
                                                       (Unaudited)  
ASSETS                                                              
Cash and cash equivalents                              $368,756    $778,824
Marketable securities                                  424,819     439,068
Restricted cash                                        33,757      47,276
Inventory                                              4,155,047   3,761,187
Property, construction and office equipment, net       112,877     106,214
Receivables, prepaid expenses and other assets         152,881     148,315
Mortgage loans receivable                              49,400      86,386
Customer deposits held in escrow                       31,301      29,579
Investments in and advances to unconsolidated entities 321,851     330,617
Investment in distressed loans                         42,832      37,169
Investment in foreclosed real estate                   68,764      58,353
Deferred tax assets, net of valuation allowances       355,966     358,056
                                                       $6,118,251  $6,181,044
                                                                    
LIABILITIES AND EQUITY                                              
Liabilities:                                                        
Loans payable                                          $93,314     $99,817
Senior notes                                           2,021,897   2,080,463
Mortgage company warehouse loan                        43,464      72,664
Customer deposits                                      156,758     142,977
Accounts payable                                       110,791     99,911
Accrued expenses                                       467,652     476,350
Income taxes payable                                   83,265      80,991
Total liabilities                                      2,977,141   3,053,173
                                                                    
Equity:                                                             
Stockholders' Equity                                                
Common stock                                           1,692       1,687
Additional paid-in capital                             412,242     404,418
Retained earnings                                      2,725,829   2,721,397
Treasury stock, at cost                                (38)        (983)
Accumulated other comprehensive loss                   (4,803)     (4,819)
Total stockholders' equity                             3,134,922   3,121,700
Noncontrolling interest                                6,188       6,171
Total equity                                           3,141,110   3,127,871
                                                       $6,118,251  $6,181,044

 
TOLL BROTHERS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
                                                        
                                             Three months ended
                                             January 31, 
                                             2013      2012
                                                        
Revenues                                     $424,601  $321,955
                                                        
Cost of revenues                             345,937   271,608
Selling, general and administrative expenses 78,047    69,637
                                             423,984   341,245
                                                        
Income (loss) from operations                617       (19,290)
Other:                                                  
Income from unconsolidated entities          3,083     6,687
Other income - net                           4,626     6,195
Income (loss) before income taxes            8,326     (6,408)
Income tax provision (benefit)               3,894     (3,622)
Net income (loss)                            $4,432    $(2,786)
                                                        
Income (loss) per share:                                
Basic                                        $0.03     $(0.02)
Diluted                                      $0.03     $(0.02)
                                                        
Weighted-average number of shares:                      
 Basic                                       169,064   166,311
 Diluted                                     177,761   166,311

 
TOLL BROTHERS, INC. AND SUBSIDIARIES
SUPPLEMENTAL DATA
($ Amounts in thousands)
(unaudited)
                                                                       
                                                            Three months ended
                                                            January 31,
                                                            2013      2012
Impairment charges recognized in cost of sales              $709      $8,120
                                                                       
Depreciation and amortization                               $6,525    $5,229
Interest incurred                                           $31,748   $28,899
Interest expense:                                                      
Charged to cost of sales                                    $19,974   $16,321
Charged to other income - net                               88         
Capitalized interest on investments in unconsolidated       1,363      
entities
Total                                                       $21,425   $16,321
                                                                       
Home sites controlled:                                                 
Owned                                                       33,526    32,352
Optioned                                                    10,169    7,302
                                                            43,695    39,654

               
              Toll Brothers operates in four geographic segments:
               
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        Three Months Ended 
                            January 31,               January 31,
                            Units                     $ (Millions)
HOME BUILDING REVENUES      2013         2012         2013         2012
                                                                    
North                       161          137          $92.7        $75.6
Mid-Atlantic                242          179          132.1        100.8
South                       143          135          87.2         76.5
West                        200          113          112.6        69.1
Total consolidated          746          564          $424.6       $322.0
                                                                    
CONTRACTS                                                           
                                                                    
North                       252          201          $144.9       $178.5
Mid-Atlantic                277          182          154.1        104.2
South                       203          159          137.5        96.3
West                        241          110          177.9        65.7
Total consolidated          973          652          $614.4       $444.7
                                                                    
BACKLOG                                                             
                                                                    
North                       746          617          $501.5       $410.3
Mid-Atlantic                693          490          408.1        292.4
South                       809          466          533.8        283.0
West                        548          211          416.3        131.8
Total consolidated          2,796        1,784        $1,859.7     $1,117.5
                                                                    
Unconsolidated entities:                                            
Information related to revenues and contracts of entities in which we have an
interest for the three-month periods ended January 31, 2013 and 2012, and for
backlog at January 31, 2013 and 2012 is as follows:
                            2013         2012         2013         2012
                            Units        Units        $(Mill)      $(Mill)
Three months ended January                                          
31,
Revenues                    10           28           $8.9         $23.4
Contracts                   10           25           $6.2         $21.4
                                                                    
Backlog at January 31,      36           23           $24.4        $19.0

CONTACT: Frederick N. Cooper (215) 938-8312
         fcooper@tollbrothersinc.com
         Joseph R. Sicree (215) 938-8045
         jsicree@tollbrothersinc.com

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