EXHIBIT 99.2
FINANCIAL GUIDANCE
In our third quarter 2005 Earnings Conference Call to be held at 2:00 P.M. (EDT)
on August 25, 2005, we will provide the following guidance regarding our
expected results of operations for our fourth quarter and fiscal year ending
October 31, 2005 and an overview of fiscal 2006 expectations. 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
approximately October 31, 2005.
For ease of reference, we have included the actual results for each of the four
fiscal quarters and for the full fiscal year of 2004 and for the quarters ended
January 31, 2005, April 30, 2005 and July 31, 2005. The columns designated as
"Low" and "High" represents the low and high ends of the ranges of the estimated
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
results of operations will be somewhere in between the low end and the high end
of the ranges provided.
UNIT DELIVERIES OF HOMES AND THE 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 1,912
Quarter ended July 31 1,684 2,310
Quarter ended October 31 2,395 2,750 2,850
Year 6,627 8,562 8,662
Average Price
-------------------------------------------------------------
2005 Estimated
2004 2005 ------------------------------
Actual Actual Low High
-------------- -------------- -------------- --------------
Quarter ended January 31 $543,389 $622,074
Quarter ended April 30 $556,602 $641,212
Quarter ended July 31 $588,637 $665,151
Quarter ended October 31 $603,048 $675,000 $685,000
Year $579,365 $655,000 $658,500
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% 32.25%
Quarter ended July 31 28.43% 33.37%
Quarter ended October 31 28.63% 31.75% 32.00%
Year 28.45% 32.10% 32.20%
LAND SALES REVENUES AND GROSS MARGINS for fiscal 2005 are expected to be
approximately:
2004 2005 2005
Actual Actual Estimated
---------------- ---------------- ----------------
(In thousands)
Revenue
- -------------------------------------------------
Quarter ended January 31 $5,987 $1,225
Quarter ended April 30 $2,011 $9,800
Quarter ended July 31 $12,940 $10,583
Quarter ended October 31 $1,553 $10,000
Year $22,491 $31,600
2004 2005 2005
Actual Actual Estimated
---------------- ---------------- ----------------
Gross Margin
- -------------------------------------------------
Quarter ended January 31 11.42% 36.41%
Quarter ended April 30 25.26% 45.76%
Quarter ended July 31 41.97% 9.18%
Quarter ended October 31 5.99% 20.00%
Year 29.86% 25.00%
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 $3,373
Quarter ended July 31 $5,551 $4,231
Quarter ended October 31 $8,786 $10,000
Year $15,731 $19,500
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 $9,109
Quarter ended July 31 $3,364 $10,583
Quarter ended October 31 $7,937 $9,000
Year $15,420 $35,600
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES as a percentage of total revenues
in fiscal 2005 are expected to be:
2005 Estimated
2004 2005 ----------------------------------
Actual Actual Low High
---------------- ----------------- --------------- ---------------
Quarter ended January 31 12.82% 10.72%
Quarter ended April 30 10.97% 9.32%
Quarter ended July 31 10.23% 8.09%
Quarter ended October 31 7.58% 7.75% 7.50%
Year 9.79% 8.70% 8.60%
INTEREST EXPENSE as a percentage of total revenues for fiscal 2005 is expected
to be:
2004 2005 2005
Actual Actual Estimated
------------ ------------ ------------
Quarter ended January 31 2.43% 2.18%
Quarter ended April 30 2.59% 2.25%
Quarter ended July 31 2.39% 2.28%
Quarter ended October 31 2.28% 2.30%
Year 2.40% 2.25%
In the quarter ended July 31, 2005, the Company redeemed all of its $100 million
of 8% Senior Subordinated Notes due 2009 and repaid all of its $222.5 million
bank term loan due July 2005. The Company incurred a pre-tax charge of
approximately $4.1 million in the quarter ended July 31, 2005.
Our effective income tax rate as a percentage of income before taxes for fiscal
2005 is expected to be:
2004 2005 2005
Actual Actual Estimated
------------ ------------ --------------
Quarter ended January 31 36.58% 40.11%
Quarter ended April 30 36.75% 36.48%
Quarter ended July 31 36.83% 40.56%
Quarter ended October 31 36.89% 39.00%
Year 36.81% 39.10%
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In-the-money stock options are included in shares outstanding using the
"treasury stock method" for calculating common stock equivalents. Because we
will issue shares under our Cash Bonus Program, assumed that our stock price
will increase during fiscal 2005, and expect that options will be exercised, we
expect that the number of shares used to determine earnings per share will
increase in fiscal 2005 as compared to 2004. The shares stated below have been
adjusted to reflect a two-for-one stock split distributed in the form of a stock
dividend on July 8, 2005. We estimate the share count for determining diluted
earnings per share for the quarter ending October 31, 2005 and for the fiscal
year ending October 31, 2005 to be:
2004 2005 2005
Actual Actual Estimated
--------------- --------------- ------------
(in thousands)
Quarter ended January 31 161,637 166,084
Quarter ended April 30 162,853 169,352
Quarter ended July 31 161,841 169,843
Quarter ended October 31 162,998 171,000
Year 162,332 169,100
OVERVIEW OF FISCAL 2006
In fiscal 2006, we expect unit deliveries to be between 10,200 and 10,600 homes
and the average delivered price will be approximately $665,000. For the quarter
ending January 31, 2006, deliveries are expected to be between 1,900 and 2,100
homes with an average delivered price of approximately $640,000. In addition, we
expect net income to grow approximately 20% in fiscal 2006 as compared to fiscal
2005.
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.
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