TOL - NYSE

Toll Brothers, Inc.

Toll Brothers, Inc.

TOL·NYSE

$137.38

-1.5%
Consumer CyclicalResidential Construction

Toll Brothers, Inc., together with its subsidiaries, designs, builds, markets, sells, and arranges finance for a range of detached and attached homes in luxury residential communities in the United States. The company operates in two segments, Traditional Home Building and City Living. It also designs, builds, markets, and sells condominiums through Toll Brothers City Living. In addition, the company develops, owns, and operates golf courses and country clubs; develops and sells land; and develops, operates, and rents apartments, as well as provides various interior fit-out options, such as flooring, wall tile, plumbing, cabinets, fixtures, appliances, lighting, and home-automation and security technologies. Further, it owns and operates architectural, engineering, mortgage, title, insurance, smart home technology, landscaping, lumber distribution, house component assembly, and manufacturing operations. The company serves move-up, empty-nester, active-adult, and second-home buyers. It has a strategic partnership with Equity Residential to develop new rental apartment communities in the United States markets. The company was founded in 1967 and is headquartered in Fort Washington, Pennsylvania.

StatementsValue Model

At a Glance

Live Snapshot
Market Cap$12.84B
EPS13.6000
P/E Ratio10.10
Earnings Date08/18/2026

Earnings Call Transcript

TOL • 2023 • Q2

Operator
[Operator Instructions]. Our first question today comes from John Lovallo from UBS. Please go ahead with your question.
Operator
Our next question comes from Michael Rehaut from J.P. Morgan. Please go ahead with your question.
Martin P. Connor
I don't have much to add to that, Doug. I think I would just emphasize that we didn't chase the market nine months ago then some of these gross margins that we have just reported and that we are projecting are reflective of that.
Michael Rehaut
Right. That makes sense. I appreciate that. I guess just shifting to the balance sheet and the share repurchase activity, just wanted to confirm, number one, that the share count guidance, and correct me if I'm wrong, I believe it had originally assumed $100 million of repurchase per quarter each quarter for this year, I wanted to know if that's still the case? And secondly, given the strength of the balance sheet, and you've been kind of on a pretty consistent share repurchase cadence for the last few years. If we could expect, if it's reasonable to expect something similar, if not even maybe slightly bigger, just given the strength in the balance sheet and the consistency here of growth potentially?
Martin P. Connor
Sure. Mike, we're about $100 million into share repurchases for this year. And while we said $100 million a quarter, our real target is around $400 million for the year. Our cash flow is generally better in the back end of the year. And remember, we had $400 million of debt that we -- an eyeball to pay off here in April. So cash flow and cash usage is going to be a little bit more free in the back half of this year. So we're still at $400 million, which is $300 million over the next two quarters. As it relates to beyond that, I don't think we're going to get a very specific but repurchases and return on equity and equity management are all part of the capital allocation strategy.
Operator
Our next question comes from Stephen Kim from Evercore ISI. Please go ahead with your question.
Martin P. Connor
Alright. I think between the growth in community count and the spec strategy, that will offset about equally the cash flow from quick returns. So I think I'd consider that a neutral, Stephen.
Stephen Kim
Yes. I really appreciate that. I do think that's going to be a very important emerging trend this year and into next year. Lastly, I'm just going to touch on the SG&A comment. I think you had indicated that marketing costs were a little higher during the back half of last year, and those are going to be delivered in the back half of this year. Mike already touched on the gross margin. But on the SG&A and the marketing costs, I believe you put agent or agent bonuses and stuff like that into your marketing costs. Is it reasonable to think that these bonuses or whatever your overall external agent commissions went up during that ugly period and are trending back down now? And if you could give us some sense of maybe how much we should think that dynamic has -- how big that dynamic is?
Martin P. Connor
I think at this point, Stephen, the agent cost definitely did go up during that time. They haven't quite come down yet. I think the marketing spend has moderated a bit from what it was then. And I think the guidance we've given for the back end of the year, we're very comfortable with, and we'll leave it at that and see where the market goes from there.
Operator
Our next question comes from Rafe Jadrosich from Bank of America. Please go ahead with your question.
Operator
Our next question comes from Alex Barron from Housing Research Center. Please go ahead with your question.
Martin P. Connor
Yeah. And as it relates to kind of the one off pieces of land that those builders may choose to sell, it is certainly in our eyesight's that deals that they take to market that can drive deliveries for us in 2024 are that much more attractive.
Operator
Our next question comes from Alan Ratner from
Alan Ratner
So to clarify that on that Marty, so the 200 basis points spread today, given that timing nuance, if you were comparing apples to apples and homes sold today spec versus BTO, it sounds like it would be greater than that? [Multiple Speakers]
Martin P. Connor
200 basis points.
Martin P. Connor
Alan, for the deliveries this quarter, our option upgrades which includes a lot premiums, were $212,000. And remember, 25% of those deliveries were specs.
Operator
And our next question comes from Mike Dahl from RBC Capital Market. Please go ahead with your question.
Martin P. Connor
Thanks, Mike.
Transcript from May 24, 2023

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