Toll Brothers, Inc. · NYSE:TOL
Toll Brothers — Q1 2023 Earnings Presentation
61 slides from Toll Brothers's earnings presentation, April 2023
Slide 1: Toll Brothers at Bella Collina, Orlando, FL
“TOLL BROTHERS AT BELLA COWLINA | ORLANDO, FL
Slide 2: Forward-looking statements
Information presented herein for the first quarter ended January 31, 2023 is subject to finalization of the Company's regulatory filings, related financial and accounting reporting procedures and external auditor procedures. This release contains or may contain forward-looking statements within the
Slide 3: Executive Summary / Table of Contents
EXECUTIVE SUMMARY 1 RwWN Company Overview Forward-looking Statement Table of Contents America’s Luxury Home Builder Toll Brothers Differentiators Quarter and FY Results Key Financial Metrics Quarterly Results Factors Driving Demand . National Footprint . Geographically Diversified Portfolio . Builde
Slide 4: Toll Brothers is America's Luxury Home Builder
TOLL BROTHERS IS AMERICA’S LUXURY HOME BUILDER LEGACY & LEADERSHIP Founded in 1967, NYSE-listed (TOL) in 1986 5th Largest U.S. homebuilder by revenues A Fortune 500 builder in 24 states & 60+ markets - 11 new markets since 2019 Greatest product diversification in the industry Leadership in Luxury ma
Slide 5: The Dominant Player With Few Competitors In The Luxury Home Market
The Dominant Player With Few Competitors In The Luxury Home Market * Nationally-recognized, award-winning brand * Our build-to-order model meets the needs of buyers who have the desire & means to personalize their homes + Luxury communities in desirable locations in both high-growth & high barrier-t
Slide 6: Fourth quarter and fiscal year results
3 Months Ended October 31, Fiscal Year Ended October 31, 2023 2022 % Change 2022 2021 % Change Contracts Units 1,461 2,929 (50%) 8,255 12,472 (34%) Dollars $1.454 $2,993 (51%) $9,067 $11,540 (21%) Backlog Units 7,733 11,302 (32%) 8,098 10,302 (21%) Dollars $8,585 $10,805 (21%) $8,874 $9,499 (7%) Del
Slide 7: Key financial metrics
Full historical data from 1986, when Toll Brothers became a listed company on the NYSE, can be found using this link - https://investors.tollbrothers.com/~/media/Files/T/TollBrothers-IR/documents/historical/tol- financial historical-foldout-749700.pdf FY 2018 FY 2019 FY 2020 FY 2021 FY 202: QIFY 202
Slide 8: Q1 FY 2023 Results
QI FY 2023 RESULTS Earnings per share up 37% vs Q1 FY 2022 Settlements up 4% in dollars, & down 5% in units Contracts down 51% in dollars, & down 50% in units Backlog down 21% in dollars, & down 32% in units Expect 10% community count growth in FY 2023 to approx. 385 Expect to deliver 8,000 - 9,000
Slide 9: Factors Impacting Demand
FACTORS IMPACTING DEMAND + Affordability challenges from rapid rise in interest rates & in home prices had sidelined many potential buyers but demand has improved markedly since January 2023 * Constrained supply of new & resale homes on the market * Home price appreciation in existing homes for our
Slide 10: National Footprint Positions Toll Brothers for Growth
NATIONAL FOOTPRINT POSITIONS 24 STATES TOLL BROTHERS FOR GROWTH 60+ MARKETS n Je r ng Islan rk Cit n iImington collins in Wf DC springs Raleigh Los Angeles '@) Q n Di © Myrtle Beach oe fe Charleston Hilton Head fe, Jacksonville Total: 328 Note: Data as of January 31, 2023,
Slide 11: Geographically Diversified Portfolio
FYE 2022 FYE 2022 LOTS CONTROLLED REVENUE (TOTAL = 79,049) (TOTAL = $9.712BN) 12% North Mid-Atlantic South Mountain Pacific ENCLAVE AT BOXBOR WESTBOROUGH, MA
Slide 12: Builder Acquisitions
IN ADDITION TO STARTING MULTIPLE DE NOVO DIVISIONS, WE HAVE ACCELERATED OUR EXPANSION THROUGH ACQUISITIONS. Rialto Homes San Antonio, Texas 2022 StoryBook Homes Las Vegas, Nevada 2021 Keller Homes Colorado Springs, Colorado 2020 Thrive Residential Nashville, Tennessee & Atlanta, Georgia 2020 Sabal H
Slide 13: Land Acquisition and Development
LAND ACQUISITION * Control 71,258 home sites * Reduced land owned vs optioned; From 62/38% at FYE 2019 to 52/48% at QIFY 2023 + Use land banking, JVs, staged/structural takedowns & seller financing + We operate in the most difficult land approval markets in U.S. - once you get it approved, it’s gold
Slide 14: Growing Percentage of Lots Optioned vs. Owned
GROWING PERCENTAGE OF LOTS OPTIONED VS. OWNED (AT FYE) 80,867 76,049 71,258 59,230 48,628 47,167 48,837 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 QI 2023 Mm Owned mmm Optioned Avg. Owned
Slide 15: Strong Buyer Profile
STRONG BUYER PROFILE Toll Brothers MORTGAGE COMPANY IN Q1 2023, 46% OF BUYERS CHOSE TOLL BROTHERS MORTGAGE COMPANY, IN-HOUSE LENDER EXCLUSIVE TO TOLL BROTHERS CUSTOMERS, OFFERING EXCEPTIONAL EXPERIENCE & OPERATIONAL BENEFITS IN MANAGING BACKLOG THROUGH CLOSING. 23% Q1FY 2023 Cash Buyers 6 of Total S
Slide 16: Greatest Product Diversification in the Industry
GREATEST PRODUCT DIVERSIFICATION IN THE INDUSTRY + Entry-Level ° Affordable Luxury * Luxury Move-Up * Active Adult * Urban Infill * Urban Redevelopment * Large-Scale Master Plans * High-Rise Urban Condos * Suburban High-Density + Urban & Suburban Rental * Student Housing Rental * Single-Family Renta
Slide 17: Leadership in the Luxury Market
LEADERSHIP IN THE LUXURY MARKET TOLL BROTHERS IS THE ONLY NATIONAL HOMEBUILDER FOCUSED ON THE LUXURY MARKET. OUR MAIN COMPETITORS ARE SMALL PRIVATE BUILDERS, NOT THE LARGER PUBLIC HOMEBUILDERS. AVERAGE DELIVERED PRICE $479 $481 $487 $501 $513 $440 $454 $415 $385 sl $924 $624 $639 $542 Ll HOMES DR HO
Slide 18: Luxury
IN
Slide 19: Westcliffe at Porter Ranch
Slide 20: Coastal Oaks at Nocatee, St. Johns, FL
oa, Bae : We Ree ~ a <. Toll Brothers: ; COASTAL OAKS AT NOCATEE | ST. JOHNS, FL pete alte x : att
Slide 21: Chester Springs Crossing
Slide 22: Increased Focus on Affordable Luxury
INCREASED FOCUS ON AFFORDABLE LUXURY TOLL BROTHERS COMMUNITY COUNT BY BUYER SEGMENT 48% 44% 43% 42% 39%, 40% 40% 39% 9/ 35% 37% : 17% 18% 19% 19% | L L ; Affordable Luxury Luxury Age Targeted / Empty Nester FY 2019 mFY2020 mFY2021 mFY2022 mQIFY 2023
Slide 23: Carriage Hill West, Nampa, ID
CARRIAGE HILL WEST | NAMPA, ID
Slide 24: Cantaro at Rancharrah
Slide 25: Montebello, Alpharetta, GA
Slide 26: Active Adult
i) (iia BROTHERS Al
Slide 27: Regency by Toll Brothers: 55+ Active Adult Market
* National Regency brand name in 55+ Active Adult/Empty Nester Market * Established presence in 18 states & growing R E G E N CY * — Control -15,300 (7,100 owned / 8,200 optioned) lots for Active BY TOLL BROTHERS Adult/Empty Nester communities * Baby Boomers making their next home move Note: Data as
Slide 28: Regency at Folsom Ranch
REGENCY AT FOLSOM RANCH} FOLSOM,
Slide 29: Ramella Ranch, Reno, NV
RAMELLA RANCH | RENO, NV
Slide 30: Regency at Kimberton
Slide 31: Regency at Avenir
Slide 32: Suburban High-Density
Slide 33: Toll Brothers City Living
ROC K WEL” | NIM my URUK en, 2 Le C= —) SE2222/ a 2S aa= SUCCESSFUL URBAN TRACK RECORD * Formed in 2003 to leverage luxury brand in urban market * Completed construction on 45 buildings totaling ~7,200 units BRAND EXPERIENCE * Currently selling communities in New York City and New Jersey’s Gold Coas
Slide 34: others
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Slide 36: Toll Brothers Apartment Living
HENRILPPHOENIX, AZ COMPLEMENTS FOR-SALE BUSINESS Building on Toll Brothers brand name Income generated from operations, fees, gains on sale or refinancing Combine premier locations with luxury, for-sale finishes, services, & amenities in urban & suburban markets BROAD EXPERIENCE Named 11th largest M
Slide 37: yf op Be UF
yf op Be UF Ch. i —~ 7 — ASIRREREREE \ SEEee aren \ = LLL / UPEIPL PTD 7
Slide 38: Toll Brothers Apartment Living Pipeline
TOLL BROTHERS APARTMENT LIVING PIPELINE 27,048 TOTAL UNITS IN 8 1 Denver Santa Fe, 245 Units PROPERTIES ‘Southern California Cameo, 262 Units The Lindley, 363 Units Rafferty, 218 Units Victoria Bivd, 349 Units Oceanside NCTD, 547 Units ‘Warner Center, 341 Units Van Buren'GermanTown, 302 Uni Metro Bo
Slide 39: The Toll Brothers Advantage
UNRIVALED CHOICE * Highly personalized & hands-on Design Studio experience guided by a professional design consultant * Selections from premium products, state-of-the-art appliances, & luxury fixtures & finishes PRESTIGIOUS LOCATIONS * Toll Brothers builds communities in the heart of where people wa
Slide 40: Toll Brothers Design Studios
= = TOLL BROTHERS DESIGN STUDI ~— DANBURY, CT Build-to-Order model provides unrivaled choice for our home buyers Goal: 80% of homes pre-sold build-to-order, 20% spec We operate 33 Toll Brothers Design Studios, a retail-like space where buyers choose both structural & finishing options Our buyers inc
Slide 41: What Buyers Want Today
Slide 42: Highest Ranking Selling Communities in Submarket Desirability Index
HIGHEST RANKING SELLING COMMUNITIES IN ‘SUBMARKET DESIRABILITY INDEX’ 3.06 2.83 276 a 6g 259 257 254 252 2.32. 2.29. 218 214 208 1.96 1.50 TOL MHO TMHC PHM LEN TPH HOV MTH KBH ZH CCS DHI MDC NVR LGIH mmm Score Average The weighted average Submarket Desirability Index is the proprietary measurement J
Slide 43: Toll Integrated Systems Panel & Truss Plant
TOLL INTEGRATED SYSTEMS PANEL & TRUSS PLANT + Manufactures & distributes panels, trusses, trim, doors, millwork, & windows + — Provides Turnkey Framing Services to 10 states (9 Divisions) * — Supplied components for 29% of our homes in FY 2022 + — Improves timeline & quality; reduces costs, waste, &
Slide 44: Environmental, Social and Governance
* — Inaugural report released April 19, 2021 * Metrics updated in FY 2022 for FY 2021 * Utilizes industry-specific standards from the Sustainability Accounting Standards Board (SASB) * Benchmarks efforts on a range of environmental, social & governance matters * — Visit the report at TollBrothers.co
Slide 45: Where Is the Market Now
WHERE IS THE MARKET NOW DEMAND EQUATION Continued population growth Household formations are strong From 2010 to 2020, new-home construction fell 6.8 million units short of what was needed to meet household- formation growth and replace obsolete units (WSJ) Homeownership rate rising, but still below
Slide 46: Key Market Trends
KEY MARKET TRENDS MARKET TRENDS Millennials are now buying their first homes Baby Boomers consider their next move: the home they want to retire in, asecond home, or a multi-generational living option Economy & population growth in the Southeast, Texas, Mountain States, West; Jobs in the South & Wes
Slide 47: Median Age of Owner-Occupied Housing
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2021
Slide 48: Industry Is Undersupplied as Households Increase
Households (000) INDUSTRY IS UNDERSUPPLIED AS HOUSEHOLDS INCREASE HOUSING STARTS HAVE NOT KEPT PACE WITH HOUSEHOLD GROWTH 125,000 100,000 75,000 50,000 1970-1979 1980-1989 1990-1999 2000-2007 Average Annual Average Annual Average Annual Average Annual Housing Starts Housing Starts Housing Starts Hou
Slide 49: Mortgage Originations by Credit Score
Mortgage Originations by Credit Score* • • • •
Slide 50: Increased Focus on Capital Efficiency & Return on Equity
LAND PURCHASING: REDUCE OWNED LAND Structuring land acquisitions more efficiently Option more land as a % of total Increased use of staged/structured takedowns, as well as seller financing Use third-party land banking & JVs Controlling more land with fewer dollars leads to higher returns OPERATIONS
Slide 51: Debt Maturity Profile
As of January 31, 2023 Cash & Equivalents Revolver Availability TOTAL LIQUIDITY $400 FYE 2023 2024 $O $0.79BN $1.78BN $2.58BN SO 2025 Fitch Inc. Moody’s Standard & Poor’s BBB- (Positive) Baa3_ (Stable) BB+ (Positive) $400MM fixed at 1.5% $O 2029 2026 2027 2028 m Public Debt (Senior) = Bank Debt* “Ba
Slide 52: Strong Bank and Capital Market Relationships
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Slide 53: Book Value Per Share
$15.36 $15.61 $18.51 $19.68 $22.02 $24.15 $26.14 $28.82 $32.57 $35.99 $38.53 $44.08 $54.79 $55.98
Slide 54: Balance Sheet Protection: Revenues
$2 $2 $2 $3 $4 $6 $6 $5 $3 $2 $2 $2 $2 $3 $4 $4 $5 $6 $7 $7 $7 $8 $10 Revenues (BNs)
Slide 55: Stock Repurchase Summary
Q12023 2022 2021 2020 2019 2018 2017 2016 TOTAL 184,625 10,997,564 7,421,423 15,951,855 6,619,345 12,108,158 7,693,630 13,652,384 74,628,984 $9MM $543MM $378MM $634MM $234MM $503MM $291MM $393MM $2,975MM $22MM/$0.20 $89MM/$0.20* $77MM/$0.17 $57MM/$0.11 $64MM/$0.11 $62MM/$0.11 $39MM/$0.08 $410MM Note
Slide 56: Adjusted Gross Margin & EBITDA
ADJUSTED GROSS MARGIN & EBITDA 201 2016 2017 2018 2019 20: 2021 2022 QI 2023 Revenues - home sales 4,171,248 5,169,508. 5,815,058. 7,143,258 7,080,379 6,937,357 8,431,746 9,711,170 1,749,422 Cost of Revenues 3,190,957 4,047,615 4,448,452 5,536,812 5,534,217 5,534,103 6,528,454 7,237,409 1,300,923 Gr
Slide 57: Net Debt-to-Capital
NET DEBT-TO-CAPITAL Loans payable 472,854 94,491__ 106,556 99,817 107,222 652,619 1,000,439 __ 871,079 __637,416 __ 686,801 __1,111.449 1,147,955 1,011,534 __185,275 1,145,656 Senior notes 1578212 1,536,005 1,484,204 2,065,334 2,305,765 2,638,241 __2,689.801__ 2,694,372 2,462,463 2861375 2,659,898 2
Slide 58: Median Age of Owner-Occupied Housing by Build Year
Built 1969 or earlier Built 1970 to 1979 Built 1980 to 1989 Yt Built 1990 to 1999 Built 2000 to 2009 Built 2010 or later WEST CLIFIE AT PORTER RANCH | < LOS ANGE LES, CA Note: 2021 Fear ACS Estimates
Slide 59: 9 or less 10 to 19 20 to 29
9 or less 10 to 19 20 to 29 30 to 39 40 to 49 50 or more 2009 2019
Slide 60: Book Value Per Share
$19.68 $22.02 $24.15 $26.14 $28.82 $32.57 $35.99 $38.53 $44.08 $54.79
Slide 61: Dividends Per Share
$0.32 $0.44 $0.44 $0.44 $0.68 $0.77