EXHIBIT 99.2
FINANCIAL GUIDANCE
In our first quarter 2005 Earnings Conference Call to be held at 2:00 P.M. (EDT)
on February 23, 2005, we will provide the following guidance regarding our
expected results of operations for our fiscal year ending October 31, 2005.
These forecasts are subject to many risks, uncertainties and assumptions and may
vary significantly from the actual results, as further noted below. Information
with respect to quarterly data is subject to even greater fluctuation and risk.
We undertake no obligation to publicly update the information provided due to
changes in economic conditions, future events or otherwise. However, any further
disclosures made on related subjects in our subsequent filings, releases or
presentations should be consulted. We suggest that you listen to the conference
call in its entirety. The conference call in its entirety can be heard via the
Investor Relations portion of our website, www.tollbrothers.com, until May 9,
2005.
For ease of reference, we have included the actual results for fiscal 2004 and
for the quarter ended January 31, 2005. The columns designated as "Low" and
"High" represents the low and high ends of the ranges of unit deliveries,
average price, home building gross margins as a percentage of home building
revenues and selling, general and administrative expenses ("SG&A") as a
percentage of total revenues expected for fiscal 2005. We expect that the actual
results of operations will be somewhere in between the low end and the high end
of the ranges provided.
Unit deliveries of homes and average delivered prices in fiscal 2005 are
expected to be:
Unit Deliveries
2005 Estimated
2004 2005 ------------------------
Actual Actual Low High
-------- -------- -------- --------
Quarter ended January 31 1,085 1,590
Quarter ended April 30 1,463 1,925 2,025
Quarter ended July 31 1,684 2,035 2,160
Quarter ended October 31 2,395 2,500 2,625
Year 6,627 8,050 8,400
Average Price
2005 Estimated
2004 2005 ------------------------
Actual Actual Low High
-------- -------- -------- --------
Quarter ended January 31 $543,389 $622,073
Quarter ended April 30 $556,602 $635,000 $640,000
Quarter ended July 31 $588,637 $645,000 $655,000
Quarter ended October 31 $603,048 $650,000 $660,000
Year $579,365 $640,000 $645,000
Home building gross margins as a percentage of home building revenues in fiscal
2005 are expected to be:
2005 Estimated
2004 2005 ------------------------
Actual Actual Low High
-------- -------- -------- --------
Quarter ended January 31 28.35% 30.70%
Quarter ended April 30 28.21% 30.50% 31.00%
Quarter ended July 31 28.43% 31.50% 32.00%
Quarter ended October 31 28.63% 31.75% 32.25%
Year 28.45% 31.20% 31.60%
Land sales revenues and gross margins for fiscal 2005 are expected to be
approximately:
Revenue
2004 2005 2005
Actual Actual Estimated
--------- --------- -----------
(In thousands)
Quarter ended January 31 $5,987 $1,225
Quarter ended April 30 $2,011 $5,000
Quarter ended July 31 $12,940 $14,000
Quarter ended October 31 $1,553 $1,000
Year $22,491 $21,000
Gross Margin
2004 2005 2005
Actual Actual Estimated
--------- --------- -----------
Quarter ended January 31 11.4% 36.4%
Quarter ended April 30 25.3% 50.0%
Quarter ended July 31 42.0% 30.0%
Quarter ended October 31 6.0% 30.0%
Year 29.9% 35.0%
Other income for fiscal 2005 is expected to be approximately:
2004 2005 2005
Actual Actual Estimated
--------- --------- -----------
(In thousands)
Quarter ended January 31 $1,683 $6,883
Quarter ended April 30 $2,436 $5,000
Quarter ended July 31 $3,364 $7,000
Quarter ended October 31 $7,937 $9,000
Year $15,420 $28,000
Income from unconsolidated entities for fiscal 2005 is expected to be
approximately:
2004 2005 2005
Actual Actual Estimated
--------- --------- -----------
(In thousands)
Quarter ended January 31 $665 $1,935
Quarter ended April 30 $729 $2,000
Quarter ended July 31 $5,551 $3,000
Quarter ended October 31 $8,786 $5,000
Year $15,731 $12,000
Selling, general and administrative expenses as a percentage of total revenues
in fiscal 2005 are expected to be:
2004 2005 2005 Estimated
Actual Actual Low High
-------- -------- -------- -------
Quarter ended January 31 12.82% 10.720%
Quarter ended April 30 10.97% 10.00% 9.75%
Quarter ended July 31 10.23% 9.50% 9.25%
Quarter ended October 31 7.58% 9.00% 8.75%
Year 9.79% 9.70% 9.50%
Interest expense as a percentage of total revenues for fiscal 2004 and for the
quarter ended January 31, 2005 was 2.4% and 2.2%, respectively. Interest expense
as a percentage of total revenues is expected to be approximately 2.3% for the
full fiscal 2005 year.
Our effective income tax rate for fiscal 2004 was 36.8% of income before income
taxes. Our effective income tax rate for the first quarter of fiscal 2005 was
40%. We expect that our effective tax rate for the second, third and fourth
quarters of fiscal 2005 to be approximately 38.5% of income before income taxes.
In-the-money stock options are included in shares outstanding using the
"treasury stock method" for calculating common stock equivalents. Because we
have issued shares under our Cash Bonus Program and assumed that our stock price
will increase during fiscal 2005, and we expect that options will be exercised,
the number of shares used to determine earnings per share will increase in
fiscal 2005 as compared to 2004. We estimate that the share count for
determining diluted earnings per share for fiscal 2005 will be:
2004 2005 2005
Actual Actual Estimated
-------- -------- -----------
(in thousands)
Quarter ended January 31 80,819 83,042
Quarter ended April 30 81,426 84,800
Quarter ended July 31 80,920 85,900
Quarter ended October 31 81,499 86,700
Year 81,166 85,100
FORWARD LOOKING STATEMENT
Certain information included herein and in other Company reports, SEC filings,
statements and presentations is forward-looking within the meaning of the
Private Securities Litigation Reform Act of 1995, including, but not limited to,
statements concerning anticipated operating results, financial resources,
changes in revenues, changes in profitability, interest expense, growth and
expansion, anticipated income from joint ventures and the Toll Brothers Realty
Trusts Group, the ability to acquire land, the ability to secure governmental
approvals and the ability to open new communities, the ability to sell homes and
properties, the ability to deliver homes from backlog, the average delivered
price of homes, the ability to secure materials and subcontractors, the ability
to maintain the liquidity and capital necessary to expand and take advantage of
future opportunities, and stock market valuations. 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 local, regional and
national economic conditions, the demand for homes, domestic and international
political events, uncertainties created by terrorist attacks, the effects of
governmental regulation, the competitive environment in which the Company
operates, fluctuations in interest rates, changes in home prices, the
availability and cost of land for future growth, the availability of capital,
uncertainties and fluctuations in capital and securities markets, changes in tax
laws and their interpretation, legal proceedings, the availability of adequate
insurance at reasonable cost, the ability of customers to finance the purchase
of homes, the availability and cost of labor and materials, and weather
conditions.