Toll Brothers, Inc. · NYSE:TOL
Toll Brothers — Q3 2024 Earnings Presentation
25 slides from Toll Brothers's earnings presentation, October 2024
Slide 1: Third Quarter 2024 Company Overview
3 = “ATES | SCOITSD/ S$ | SCOTTSDALE THIRD QUARTER 2024 COMPANY OVERVIEW Toll Brothers AMERICA'S LUXURY HOME BUILDER
Slide 2: Forward-looking statements disclaimer
Information presented herein for the third quarter ended July 31, 2024 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 mea
Slide 3: Factors Supporting Demand
FACTORS SUPPORTING DEMAND aa * Constrained supply of new & resale homes on the market * Buyers have benefited from a decade of solid stock market * Millennials in prime home buying years * Boomers making lifestyle changes * Largest ever immigration year * Increased desire for high quality move-in re
Slide 4: Evolution of the Homebuilding Industry
EVOLUTION OF THE HOMEBUILDING INDUSTRY LARGEST PLAYERS ARE TAKING SHARE * Public homebuilders have gone from 27% market share in 2012 to ~53% in June 2024* *Source: Zonda BETTER BUSINESS MODEL * Greater access to capital & labor + Higher bargaining power with suppliers FOCUSED ON CAPITAL EFFICIENCY
Slide 5: Public Builders Are Gaining Market Share
PUBLIC BUILDERS ARE GAINING MARKET SHARE PUBLIC BUILDERS HAVE TAKEN SHARE FROM THE PRIVATE BUILDERS AND IN 2023 REPRESENTED GREATER THAN 50% OF NEW HOME SETTLEMENTS PUBLIC AND PRIVATE HOMEBUILDER CLOSINGS AND PUBLIC HOMEBUILDER SHARE 2005 - June 2024 1,400,000 53% 50% 1,200,000 1,000,000 38% 1% 35%
Slide 6: Industry Is Undersupplied as Households Increase
INDUSTRY IS UNDERSUPPLIED AS HOUSEHOLDS INCREASE HOUSING STARTS HAVE NOT KEPT PACE WITH HOUSEHOLD GROWTH 1970-1979 1980-1989 1990-1999 2000-2007 2008-2023 Average Annual Average Annual Average Annual Average Annual Average Annual Housing Starts Housing Starts Housing Starts Housing Starts Housing St
Slide 7: New Home Premium
NEW HOME PREMIUM THE NEW HOME PREMIUM HAS COMPRESSED FROM HISTORICAL 17% TO 5% TODAY, MAKING THE VALUE PROPOSITION OF A NEW HOME COMPELLING COMPARED TO A USED HOME 40% 35% 30% 25% “I 20% 15% 10% 5% 0% 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 VIEWPOINT AT METRO HEIGH
Slide 8: Existing Housing Stock Is Aging
EXISTING HOUSING STOCK IS AGING THE MEDIAN AGE OF OWNER-OCCUPIED U.S. HOMES IS 43 YEARS, ACCORDING TO THE LATEST DATA, COMPARED TO A MEDIAN AGE OF 32 YEARS IN 2005. MEDIAN AGE OF OWNER-OCCUPIED HOUSING (IN YEARS) 43 42 42 2005 2007 2009 201 2013 2015 2017 2019 2021 2022 2023 TOLL BROTHERS AT ROLLING
Slide 9: National Footprint Positions Toll Brothers for Growth
NATIONAL FOOTPRINT POSITIONS TOLL BROTHERS FOR GROWTH 2A. states 60+ markets Portiand A @ Boise Sacramento Ye) e Pacific san Franco @) emmy San Jose 11% of Communities 13% of Lots Controlled 24% of Revenue Los Angeles. @) Phoenix e Community Count Lot Count Regions Mountain 30% of Communities 28% of
Slide 10: Prestigious Locations, Distinctive Architecture, Unrivaled Choice
10 A VY a PRESTIGIOUS DISTINCTIVE UNRIVALED EXTRAORDINARY CUSTOMER LOCATIONS ARCHITECTURE CHOICE EXPERIENCE
Slide 11: Strategy Focused on Driving Shareholder Returns
STRATEGY FOCUSED ON DRIVING SHAREHOLDER RETURNS LAND ACQUISITION Focus on increasing optioned land Using land banking, JVs, rolling takedowns, & seller financing where feasible Operate in some of the most difficult land approval markets in U.S.- once you get it approved, it’s gold! BUYBACKS & DIVIDE
Slide 12: Book Value Per Share
BOOK VALUE PER SHARE $76.50 $73.46 — $32.57 $28.82 $26.14 $24.15 22.02 = sio.68 ° (- F 2013. «2014 «2015. 2016) 2017-2018 = 2019. 2020. 2021:»=«- 2022)» 2023: Q3 2024 2024P NOTE: 2024P is based on the midpoint of Toll Brothers’ guidance 12
Slide 13: Return on Beginning Equity
RETURN ON BEGINNING EQUITY 24.3% 22.8% 22.5% 13 12.7% 12.4% 10.2% 4% 9.0% 8.8% 5.5% 2013, 2014) «2015. 2016 )= 2017-2018 = 2019-2020. «Ss 2021:»«=- 2022. 2023 2024P TOLL BROTHERS AT edeiO N MEADOWS. ERIE, CO NOTE: 2024P is based on the midpoint of Toll Brothers’ guidance
Slide 14: Earnings Per Share
EARNINGS PER SHARE $14.50 - $14.75 $12.36 $6.63 $4.85 $4.03 $3.17 $3.40 giga $1.97 $2.18 $0.97 2013, 2014) «2015. 2016 )= 2017-2018 = 2019-2020. «Ss 2021:»«=- 2022. 2023 2024P NOTE: 2024P implied EPS is based on Toll Brothers’ range of FY 2024 guidance 14
Slide 15: Total Shareholder Return
TOTAL SHAREHOLDER RETURN 472% 376% 322% 20% 150% 00% 19% 72% 37% 20% 31% 6% | | oe 1-Year 3-Year 5-Year 10-Year mToll Brothers (TOL) | =Home Construction (ITB) = S&P 500 (SPY) SKYLINE | FOLSOM, CA ERVIEW 2024 COMPANY OVE Q3 15 BROTHERS TOLL
Slide 16: Stock Repurchase / Dividend Summary
STOCK REPURCHASE / DIVIDEND SUMMARY 2020 2021 2022 2023 2024P mCash Flow from Operations m Share Repurchases mDividends _ m= Debt Retirement 1,400 1,200 1,000 801 38 Dollars ($MM) 601 3 40 8 201 8 ° REGENCY AT KIMBERTON GLEN | PHOENIXVILLE, PA
Slide 17: Since 2016 We Have Repurchased ~30% of Our Shares
SINCE 2016 WE HAVE REPURCHASED ~30% OF OUR SHARES WHICH IS 86 MILLION SHARES AT A $46 | AVERAGE PRICE. WE HAVE ALSO PAID | | $547 MILLION al DIVIDENDS.
Slide 18: Consistent Growth & Profitability
CONSISTENT GROWTH & PROFITABILITY ‘i FY 20: FY 2021 FY 2022 FY 2023 YTD 2024 a4 2p Revenue - Homes Sales (000s) $6,937,357 $8,431,746 $9,711,170 $9,866,026 $7,303,328 a [Pre-tax Income (000s) $586,901 $1,100,315 $1,703,726 $1,842,371 $1,464,567 INet Income (000s) $446,624 $833,627 $1,286,500 $1,372,
Slide 19: Solid Land Positions Us for Growth
SOLID LAND POSITIONS US FOR GROWTH FOCUSED ON CAPITAL EFFICIENCY IN OUR OWNED PORTFOLIO PERCENTAGE OF LOTS OPTIONED VS. OWNED = n\E i ‘= OOH 76,049 Oone Re 70,664 72,729 63,182 Wile i 59,230 k — or 19 38% 62% 2019 2021 2022 2023 @3 2024 mmm Optioned = + -Avg. Owned a AT FYE ARDEN | GREAT FALLS,.VA
Slide 20: Total Addressable Market (TAM)
TOTAL ADDRESSABLE MARKET (TAM) $200K HOUSEHOLD INCOME ~575K Housing transactions with buyers > $200k ANNUAL TOL HOMES 10,700 TOTAL ADDRESSABLE 575,000 MARKET TOL ANNUALLY REACHES 1.9% of TAM CANYON POINT AT TRAVERSE MOUNTAIN | DRAPER, Ut 20
Slide 21: Debt Maturity Profile
DEBT MATURITY PROFILE AS OF JULY 31, 2024 SUPERIOR ACCESS CAPITAL MARKET Cash & Equivalents $0.89 BN Senior/Corporate Credit Ratings Moody's Baa3 (Positive) Revolver Availability $1.77 BN Standard & Poor’s BBB- (Stable) Fitch inc. BBB (Stable) TOTAL LIQUIDITY $2.67 BN $400M fixed at 1.5% through 10/
Slide 22: Appendix
Slide 23: Toll Brothers Financial Highlights
TOLL BROTHERS FINANCIAL HIGHLIGHTS Units Units 10,515 8255 8,077 7573 9,597 6,039 6942 7.382 = => a -2% 9% 8% 2022 2023 2023 YTD 2024YTD 2022 2023 2023 YTD 2024 YTD Dollars ($MM). Dollars ($MM) 9,067 ase 711 iE 7,908 7413 97 5,893 6914 7.303 ad a “13% 2% 6% 2022 © 2028 2023 YTD 2024 YTD 2022-2028 20
Slide 24: Spec Inventory
SPEC INVENTORY Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Q3 2024 ISpecs: Pre-Footing 812 1,248 1,258 1,574 1,345 1,499 1,656 Under Construction 1,999 1,837 1,951 2,158 2,256 2,342 2,489 Completed AI6 353 474 663 778 671 745 [Total Specs 3,227 3,438 3,683 4,395 4,379 4,512 4,890 Backlog: Pre-fo
Slide 25: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION ADJUSTED GROSS MARGIN & EBITDA 2 2 2022 2023 YTD 2024 Revenues - home sales. 6,937,357 8,431,746 9,711,170 9,866,026 7,303,328 Cost of Revenues 5,534,103 6,538,454 7,237,409 7,207,279 5,339,671 Gross Margin 1,403,254 1,893,292 2,473,761 2,658,747 1,963,657 Add: Interest Recog