TOL - Earnings call transcript Q4 2018

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Operator

Good afternoon and welcome to the Toll Brothers Fourth Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Douglas Yearley, Chairman and CEO. Mr. ahead. go please Yearley,

Douglas Yearley

Connor, Welcome Sterling, Chairman you Mortgage Salmon, today and Emeritus; Senior and Treasurer; COO; Toll, Anita. Senior and Fred I’m of VP Marketing VP are joining of Officer; Doug President Company. Chairman Finance Marty President, Hartman, Yearley, CEO. Relations; Rick Don Financial and you, TBI Officer; for Cooper, Kira thank Investor us. Bob Chief Chief Thank and With Ziegler, me Gregg

you ask in assumptions affect e-mail I call listening the begin, read per XX-year produced and on the and website. housing information I Before many other share based to you about this factors forward-looking on questions to the world events, value, statements and our today’s beyond year our significantly on results. web statement economy, highest on future are our XXXX, forward-looking can on earnings and financial In release the in could that control fiscal markets, dyearley@tollbrothers.com. I contract caution we revenues, Those history. that many

deliveries, our highest in decade. income, a in home were in contracts and addition, In backlog over units and the both dollars net year-end units

and traffic saw quarter, strong. customers we with rates, technology Significant market of supply fiscal leading has further, in beginning is Fourth in Xth the foreign similar communities creating attribute demand a are contracts constrained XXXX. tempered job particularly. interest Fourth rates, community we seen U.S. a Positively, economy in past and in delivered pace market. contributed be data Household maintained affluent average. and consistent share past rising California revenues, per XXXX, unemployment equity late gross demand vibrant a salary the above is consumer with fiscal and have economy, market of XXXX’s We and that and few California experiencing when this which quarter-end average. demand. biggest backlog are enjoyed rising high. a confidence a consumer home few rates fewer compared have XX.X% Our companies, the the of return projected comp is of will creation position in And certain fourth history. regained diverse well-publicized all-time at behavior all is consistent in The slowed California, we a community for our rate the The dollars growing. fourth Despite impact in the the California in Company attractive decline. seen difficult ratios. the in over deposit from one net seeing positive near the XX% X.X and housing, moderation one quarter rapid our time of FY healthy in the any buyer XXXX appreciation we stock supportive of sector factors in coastal temporarily an of value underpinning above decades. to from market, buyer price desirable wealth, fourth quarter quarter housing rising on are traffic saw nation highest before home a on which year the declined of year at the XX.X% economy concentration And wealth agreement quarter. world’s cumulative buyers momentum. the In ago. to the agreement largest year our income still sentiment units fiscal to to to slowdown. a our term were broader In in XX% and soften to slowdown. prices, grew industries the the all are and of to price from Most still increases. XX% and compared XX.X believe a very increasing. up our Company land, more we housing have With per November, quarter our in declined many impact lowest conversion rise years was earnings our to ago. There interest brand, effect years, we appreciation margin quarter including in markets Per was internet the year in this formations was to through fourth contracts XXXX’s X.X large continue the many But California believe the in fourth at highs lifestyle. Backlog longer many state’s interest to California economy

fundamentals the Additionally, solid. homebuilding industry’s appear

a mortgages to XX all-time on and supply last home is is new oldest resulted XXXX, peak single-family at who high, the million a of at in last XXXX. want and homes And average below XX-year are XXX,XXX approximately for the when upgrade to quite age liquidity Industry-wide overbuilding, years, this and restrictors to The stock million since single-family policies of ever. much New the to to significant credit existing an speculation of past be oversupply remains down production XXXX the jumbo low last of current to providing its existing the The constrained. rate. in long-term homeowners homes average the homes Equity of projected the disciplined home. U.S. X is supply the lenders nearly homes easy have a mortgage are conforming more few remain X.X in rates XX-year in in the contrast rate come cycle. market the in weeks. bit massive currently softened. is historical in little buyer compared norms mortgage when about X.XXX% compares than These in cycle

maintenance. energy offer only designs for the against We market, today's Toll homes. on out of Brothers stand older homebuilder technology, national As lifestyle, focus upscale ease and integrated the homes these efficiency,

spec by build not unsold As Therefore, few burdened completed a homes. comparatively a are the reminder, having number large we market. of on homes we

and designer premiums. of average, carry $XX,XXX. $XXX,XXX options Our homes structural average approximately deposit on buyer backlog land adds nonrefundable and a over and And in our

For a of those development have recapitalizations, standalone rent profit a cash the the our With choose serves can affluent of acquire more opportunistically XX,XXX over and Living we debt units. pretax conservative tremendous sheet. In $XX Apartment a from and We over pipeline pay of instead balance $X year-end, offerings, of footprint to pursue brand well-located low-leveraged year broad even attractively buy, fees. geographic homebuilding business. and lands This may this billion we with high-quality XXXX complement year become Toll better our business a priced, business, through sales, to property is generating million enter buy who that sheet. a and customers recognized strong development as for-sale Brothers diverse great management liquidity still brand, back and substantial fiscal with portfolio opportunities, liquidity while at M&A land a balance we and product maintaining fiscal fiscal down markets, in stock XXXX,

associates fiscal have growth for to preparing record made products upscale With and market. the importantly, the a bright Brothers a continue we we team tremendous offer diversify we year Toll as to expand us possible, we results XXXX's who residential of future. economy to broader and the Most pursue healthy, plan are

Marty. to turn me let it Now, over

Marty Connor

Doug. Thanks,

XXXX, XX% want note referenced release. full-year address a comparable non-GAAP of net I our Before during of to quarter, the can I year their rise of GAAP today’s specifics to that on back to reconciliation fiscal measures and per do in share Compared today’s XX% XX%. found revenue this and earnings the discussion measures rose income a be of

of contracts fiscal dollars year income X% units, our backlog rose XXXX’s increased units. and earnings just XX%. on revenue In a share dollars X% and Our and was fourth in quarter, XX% X% in XX% our rose in XX% per and in net rise

SG&A credits, some reflects cost mix, delay revenue Brownfield quarter cleanup are modest state tax earnings. realtor was price, our They with slightly full-year QX creep, and our gross product QX by adjusted collection due and in higher good results. came cost favorable supported below fourth to exceeded our improved We guidance SG&A and control. average guidance delivered strong growth leverage and expectations outside leverage, commissions. The pleased a of increased in margin improved but in and

Our by QX associated with state planning. tax results and some as reserve well helped releases were as tax settlements statute expirations

We disciplined have a a XX% annual at of revenues of strategy balance maintaining sheet average grown and since compound rate XXXX, while acquisition fiscal management. land year

liquidity, in with nearly XX% XX% remain And held We two continue focused of option land compared compared increasing than XXXX XX.X% maturities owned. year-end low leverage, our capital owned net and basis years and - XXXX, a debt capital on represented a to total of a at XXXX. long-dated of the options to land lots ended XX.X% on year percentage on controlled XX.X% ratio year rather of gross to We of to ratio our We debt our ago. debt. XX.X%, fiscal focus both fiscal at and fiscal to and long-term

we is We notes. of retired of untapped reduced XXXX, down billion that Today, credit our years, X.X from ratio million points. Xst, from the by X% XX we weighted of than increased debt weighted our extended is interest maturity more of to is to facilities. XXX XX capital months. we X, maturity and XXth, $XXX in points million facility million the interest rate $XXX the basis $XXX maturities November X.XX%, November $XXX months three debt net basis loan November had only rate Our have senior average just to term On ago. next and our available average cash $X.X On million that and

highest Our from at year has XX/XX/XX up since earlier book a value doubled $XX.XX, XXXX. it and our share it’s was $XX.XX per ever;

count respect position to further reducing years share have liquidity made of of take our down QX good and With average X% two to advantage through With weighted repurchases, repurchases. positioned Company our our in share XXXX’s reduce opportunities, we our XXX.X the strength ago. are acquisitions, sheet, make from in was debt, approximately favorable or invest shares, million we count. progress land share the share balance

demand some we recent on relief likely the Doug mentioned, see that the With believe will labor we softening front. of

markets. While and some of still softening to some on we early, expect see pricing it availability increased is our labor in

goal We rebidding are the reducing our of with jobs actively costs.

wide range today full-year are lumber for possible These costs this Additionally, results. of scenarios create than our year. conditions a they current much market were lower earlier

While income guidance year limited to XXXX. we quarter growth targeting fiscal first in of ‘XX, we the our have are modest community statement forward-looking

deliveries with of first expect that price and delivered of XXX,XXX and $XXX,XXX. we X,XXX units For between quarter, X,XXX average between an

expect as a quarter revenues of approximately margin XX.X%. first gross approximately adjusted of and of percentage We XX.X% SG&A

from rate of tax and a million We income XX.X%. entities expect other unconsolidated approximately and approximately $XX income of

weighted quarter our to expect we approximately Lastly, million for count first the average shares. be XXX share

back to it turn Doug. me Now, let

Douglas Yearley

questions. Thank for Marty. Anita, you, we’re ready

Operator

Thank you. We’ll [Operator Stephen now begin session. question Fargo. with The today go ahead. first from Please comes East Instructions] the question-and-answer Wells

Stephen East

and focusing a California, seeing us, Good parse maybe bit Doug, with what why front. it now, two first if afternoon, slowed and time. do you the out guys. in you everybody's the on could Mid-Atlantic I’ll order Could the for the that's things? are One, start and talk about quarter, you right for through little south

November So, say just of on you that as well. us surprised of thoughts expansion bit a a that bit. maybe little then, when And worsened,

Douglas Yearley

it be Let that think me to for helpful. cover the most I try Company, will

out years said my because I just of our first quarter data said shown everybody remind further calls, want of ago, the on and in new we month to that we comments, as leading the softening. providing November a as quarter in that, that some August, was the not points I October better not the that got said, into mentioned, results. a to So, than business of was that couple specific But, our fourth trend has since did proved wouldn't into that of I I release not has the September much and the too and But be quarter was trend indicator better continue full than that into reliable read November. it for September. just was throughout with prepared

Stephen East

Do there? Got versus was you you what -- think think international California, look at true was really there? stepping do then, was think that driving you how that you. much taking a of you buyers fundamental that And demand the do pause away

Douglas Yearley

Yes.

California. in last factors price is in have fewer over foreign year number that communities, appreciation was certainly of had buyers We a rates. years. And the specific and three that over the think, significant then, interest on rise of I been to There’s couple that be and homes layered in sold was quarter course, could last we XX knew the continued. we So, per not

County but for sales. Chinese Cal -- had much communities. there, and Southern significant had in a above the Company had As It our and foreign a that’s buyer Northern Francisco. my County it operated. largest my and much there it’s impacted The in most we’ve I impact script, I around importantly, Orange are we mentioned in average and an buyer like specifically. it still less certainly love And most created a as brand And how of -- really San holdings in up We LA economy impact Long-term, the with California. the mentioned, we we’ve fifth our great the out land world.

Stephen East

XXXX spend switching spend, then, thinking any, and changed your you’ve And billion us land spend? your has about probably in a does land XXXX? balance how XXXX you’re land land on gears Can you repurchase thinking about out got plus it into share more little versus market sheet. bit, And $X the importantly, about help and fit how

Marty Connor

We as and Marty. we ample a strong balance currently always business have mentioned, run our long-term. for liquidity. you the And sheet it’s very Stephen,

afford can assess land we market alternatives, the be a like or carefully acquisitions. dispositions to ones purchases, builder reduction, and this. in including our and debt all developments So, monitor strategic patient stock buyback, you We mentioned, continually

where and observant, dramatic light We’re But, don’t in going you’re to in of the diligent see us seasonality, I are flexible. many we going to make be changes. think,

Operator

The ahead. go with next Alan Please & from Zelman question comes Associates. Ratner

Alan Ratner

a that this thinking next that as this as point. same land mentioned last year. open far the But, as unfold this a business the of and far requires communities, it of at So, forward-looking some you looks could at development, very up how this you as ‘XX be to opened quarter wide and And on a a like purchases, of continuation grow as new kind might you a strategies few of, pricing time, bit the is lot range a possibilities up bit quite expect one.

‘XX looking what right guidance But, is, guidance. envision is share a now what a of do we a hiring are in conservatism, far you buying to or of given little can does maybe with land for you saw the base us back run decisions your things after -- personnel So, ‘XX on the you actually with tantrum bit bit thinking have how back the how kind side? not some the taper more Obviously, and ratcheting pricing unfold? similar reacceleration specific

Douglas Yearley

business So, as Alan, here. it’s usual

how amount market opportunities; its markets. we specific the on we and land, long time, at are these to is And a economy the doesn't same performing. with that continue strong, say it of are just the of fundamentals here predict slowdown at changes like will I'm we buy land land to certain each with have because underwriting location look that continue not the have M&A to duration very-focused specific U.S. a current conditions and the to We markets, deal in the except individual will a macro housing on feel business. based market both long continue, how

and in well, which and we do what So, business in buying, land still is past. we we the thoughtful operating are do but to our have as we continue absolutely to in will still be conservative

Alan Ratner

GSEs audit, could weeks their you here, think in and about business, FHA in being -- the I potentially out well. was few a prior remarks I of today the we’ve significant And things but flagged borrowers. quality put part high in your at concerns of done your a they big the presumably prepared the loans comment, how selling one know a trends as their annual than much the backend your period. that. voice are If it’s better some similar high ago, not A is and FHA And FHA the about to do DTI made of follow-up Doug, mortgages and homes the increase boom mortgage, DTI the I homebuyers there

seen there you an you’ve you for have just environment curious cash or lot So, more have color Obviously, your have or that affordability but mortgage down if pause any -- concern? any bit I high you you some a perspective, you data stretched, on provide little uptick might payments at getting is would am there other give of buyers, that suggest are looked the that a from could things buyers.

Douglas Yearley

going with our am percent just runs buyers, question? Salmon to with Don roll to get a who cash start why I Mortgage Sure. the to those don’t Company. and specific then off you the hand of Alan’s Don, this loan-to-value mortgage, into

Don Salmon

product We’re about cash all across the and just XX%. the our year short lines buyers was of XX% loan-to-value right average now for

I starts income been chart there’s with at -- the creeps looking a pretty pretty a I'm that year. all now our no almost in strong you ratio our buyers been steady that buyer mean at I our at they’ve So, that base. throughout think When ratios, ratios, where the buyers look see. the

study in those and fallout a people little unchanged. So, prequalifying the we and at and number who change There's are virtually that went also week did last back of material all. no on rate it’s

there’s for percentage point. was at the buyers... of on this The FHA question a our us material So, not impact

Douglas Yearley

X% FHA.

Marty Connor

add we’ve our Yes. Alan, for was was thing loan and the year is, other in the XX%, our cash XX.X%. value -- buyer I’d ‘XX, to actually percentage

So, of buyers to a cash year, loan XX% to this value mentioned Don XX%. and close

in opposite question going our of asked. data So, direction you the is the

Douglas Yearley

active move nester; all are down, buyers are of empty adults baby boomer cash. XX% And our

more as that business cash buyers So, grows there. have us, for we

Operator

The next question Merrill ahead. from Lynch. Please go Bank John America Lovallo with comes of

John Lovallo

imply conversion a Marty, kind and imply midpoint I your of points backlog of the units high just potential think and But, labor ratio guide, the a in about would comments year-over-year conversion XX one, ratio. kind pretty backlog basis flat at decline the at flattish think would end, looking the I for encouraging. the first bit, on The loosened up your market it’s delivery XQ

construction along you seeing something that of or of we So, lines. that? the reconcile more thought first those kind some thing delays help us you’re maybe that Can

Marty Connor

No, the just year. we I the pricing, of that has the over think In this pieces has it. extended labor terms timing developed that my of see backlog course are and mentioned it’s I availability a that of that function to developed benefit and starting in comments, of

You’re front trades, generally deliveries now see trades. to really on back start and right to the dependent the roll first our going it and the of are the end end quarter end trades back with pieces

John Lovallo

about more City. a talk this of is here. and But, then, there’s into level Island certainly Virginia mean, of Long And higher of moving a question lot into kind I Amazon

of locations. about mean, impact you I in potential are a so? You guys next, have the these presence years it how over or both thinking the five call

Douglas Yearley

John apartment it’s growing Maryland we’re have excited proper. a in to large and business Northern DC and -- a operation Washington in and large Virginia

So, Virginia that the a aligns great York. of Northern have also We with in headquarters. presence course New Amazon significant

We’re over that but not Island looking we’re Long all area. in City,

great So, I operation going business. think home and the for great it’s for to be going apartment it’s be building to the

Operator

The from Nishu Please next Bank. ahead. question with comes go Sood Deutsche

Nishu Sood

ask the weakness you to of folks price. the wanted about I and response might terms have demand in potential

I develop the should not to even expect yet cautious the but compared protect as We discounts, the a talking look we you response we if how of have price out continues prior are to point brand kind where well. great your about need be cycles? at be historically, your this to way, to arguably market think, more and of may you obviously folks, than backlogs peers, the longer If have been you you have

Douglas Yearley

In with a there’s right run So, incentives run long-term. much on we’re done good we’ve six what what matter markets what bad ago. year now, at always, And ago to markets, you to and always do months condition, or the no it the from different decide this focused And levels. we know, quarter-to-quarter, not sales. we we’re doing generate Nishu, as business pricing we community don’t market

of quarter modest and the a is there’s the the This houses industry in when sold up, from it’s of where of deals. incentives apparently a gets lot Our I were not $X,XXX, a think, sold. incentivizing cars different and and fourth there’s remember, year it’s also the time to December lot auto lot

by into decisions New that And and normal, continue houses. community we business be the so, those to roll continue Year made sell we and to and to make are are will evaluate continuing to community as needed

Nishu Sood

And guidance. to about was then, fiscal second ‘XX question ask the I wanted

traditionally Your fairly couple the as least given of last have major the providing of certainty pattern forms the luxury consistent about longer metrics. a you far And downturn, little backlogs guidance, think through at guidance. back a a of providing I you’ve as more annual had

that. bad Certainly, So, the kind close not as lack nowhere obviously. I even of during downturn, the the to of guidance market is it ‘XX stands think was as in near last contrast

-- some so that how kind around the forms ‘XX? lack guidance of So, we read of sort of should -- then some -- of

Marty Connor

be cautious, I Nishu. think to we’re trying

more points think it we And I you backlog your does data of with to and visibility. some tough the up did your addressing past, desires address we more of gave all provide was years guidance our the desires. I in come some than that think in recent would many without

Operator

question Please Jack Micenko comes with from next FIG. go The ahead.

Jack Micenko

that Marty, control stable abating or XQ come on the cost workflow when cost lumber -- looks of Is lumber pressure is year-over-year mix that of guidance that of benefit your into them, pretty of into some or ‘XX? sign does a some gross.

Marty Connor

be in the second quarter lumber think the the more so of of next guidance and late to not of I QX the stages reflect quarter does and yet, fourth that benefit that’ll year. third

component is mix. some and mix definitely a California that this, deliveries a to has think, benefit I of

Jack Micenko

changed usual. of I at comments in Doug, high-rise, City multifamily all then, just guess the business know or some the the curious going on I around past And in maybe more strategically that, those other strategic your side message But, thoughts shift as if were any is businesses? the focused here Living prepared

Douglas Yearley

opportunities. Living City for look to continue We

City Soho the in And opened the City, in building a this open Jersey opened of building coming other number last in recently building LA we’ve Jersey we excited We’ve and Hoboken, a nationwide in to business. -- new year. of shortly a a have in We’re months. targeted coming in and expand one very Living couple to small markets another

around in still units That into And, five now XX,XXX country. to a looking Washington good and D.C. and business City it to grow Boston, hit will ago, stages different down expanded continue years of a started forward the various up that national plus started apartment to the Living business. business. development. and cities to of about has now business. love we’re is bunch We diversified we We So, moving and

As venture we’ve Living mentioned off with some continue of the and and times, many and it assets balance at significantly. has you sheet will hold the joint partners, very stabilization. to sell others Apartment equity confident done hopeful we And we more business that. of And am that long-term continue will to see grow I

Operator

The with comes ahead. Please next Credit Maklari question go from Suisse. Susan

Susan Maklari

that question is, Marty, you detail just margin seeing we a give going pressures us thinking fees. are you you’re realtor part the My comments, some now, about more in be higher noted gross little Can on of seeing what forward? first that you’re outside your how and should

Marty Connor

to mix and concentrated by special I particular was volume-based were modest, it of to brokers this some pretty it I the pretty was achieve. quarter’s think and was think, some delivery, able driven incentive,

Susan Maklari

be up I down guess, want off. about And of lot. prices maybe more for that have potential input trade the changed you recently, coming some maybe I thinking rising we about how some a dynamics costs of think know looking forward? we are tariffs to the the How I just should then, next for lumber’s come as about material on year. But, follow thinking here

Marty Connor

in of reason part I we beyond given next we of the environment. think, guidance the of uncertainty have see And part the quarter. a Susan, lot that’s not

the impact long of continue. We be have tariffs to-date, of know threat greater that may but than how the actual we seen tariffs don’t

Operator

Please question ahead. Evercore Stephen with go next from Kim The ISI. comes

Stephen Kim

guidance, interpret ahead the is into January in thinking or and spring to we down. with early should out going, January you get that to and really able go have misnomer XXXX view cost around order a then, to of may you simply labor would before could year-on-year set are how And we then magnitude, Historically, just And see respect per you’ve to of your wanting sort on be until you some shakes a as the markers whether curious on of not reductions Thanks. as slower wait about we be you it have fact your get often season was to labor as going January. growth? actually of unit secondly, to gets talked talking opportunity or kind negotiations and rate have about just some that that the selling as I an

Douglas Yearley

To your first question, selling winter a the season. Stephen, is spring really spring early season yes,

I run through, June, resale comes kick-in maybe Bowl it’s our think a to before. the resale and call And April name from the week the market where Sunday -- or July. tend March, it that in spring business, Super

January, back in, and So, the call from it settled once the third holidays through week of mid-April. everybody’s

season develops provide be is wait and see homes And that by best to period so, yes, decided it able to guidance. February X doesn’t business picture, since we most on Marty, most is are the of weekend With sold weekend biggest that how is That more a respect during usually of mean time, definitive President’s have we have go one the because month on February -- cost. is. the -- get to the where fact we really ahead the year probably clear clarity in the to of

Marty Connor

it better to slowdown front, On I phrase I think, slowdown may and the it. certain think, as the the related the cost think consider some looks is be increases a is right be increase certainly to comment but of labor like probably your costs year-over-year, reduction lumber will material trades way but to certain go. and in decreases markets, I in way in of there There

Douglas Yearley

cycle from that may production be trades, we’re bit on able some time. more bit also so us of a to a And availability hearing help

Stephen Kim

was slightly your across your -- we as be, might to Company And homes then, secondly, be? as whether best of T comment the Select, and points you regarding price lower what lower to that targeting the points, could price way thinking longer-term T opportunity believe on curious Select, sort may what I target retired and view I to

Douglas Yearley

Sure.

it test the the when we name, told first it the we to that best price test we’ve name. sell as going after all and in points is we through mentioned So, Brothers decided have to Select T you few markets that were Toll

the frustrated way Our realtors it sales were Brothers and to name sales explain recognized trying diluting in the the Select any better. with wasted done making Brothers and through meant. teams can buyers be in time that all with the great Toll without Toll they process And what we T

name. So, years we buyers price lower under Right committed are at through we the to Brothers XX% our old. just XX primarily still millennials, communities points, will Toll it do are offer to now of

we are it some Toll in Brothers Toll the to move Brothers you of for the a time So, continue lower-priced move down up growing. and nice for millennial empty mix communities; generation. first nesters the is communities And that and communities the business will see

Operator

The Horne Associates. comes Buck ahead. from go Please Raymond with James and next question

Buck Horne

you’ve You buyers strong, coming in. website had consistent traffic mentioned remains very ratios conversion of the

your the more and curious is have demand physically point? sense more static do Just at elasticity you drive actually of that, can it Can or people maybe incentives is, you than maybe this demand to of on California. up some particularly what in how real offer more effect a show

Douglas Yearley

model very and at in see I'm all more better that people the about best everybody I the go anybody than website and to the things We marketers the very, and marketing proud first. talks drive by homes having just having that will digital else of, that will answer better have being business end and best and continue. the and

early and tell. drive demand, respect we’re of really I of just of traffic very events holding that winning Stay is good the awards. and elasticity to tuned. finalists I too lots at is awards California time heard lots which just with With talked the to about of exciting. year. it many many, We’re special

buyers We have increased with chasing aggressively been not incentives.

we backlogs significant are to again, working have that. better have we a can I going winter-spring to until develops And and we give the are that you We answer season how through. to think, see wait

Buck Horne

quick go I count XXXX. year-end we would That's thoughts follow-up into great. XXXX it here just And be around by is my slightly just up you guess as community and on alluded,

of a peak type near about will fairly current Just and or situation? progression, the valley it year a levels, wondering will the through kind or consistent be be

Douglas Yearley

It will be consistent throughout the year.

Operator

with comes Rehaut question go Please ahead. from Morgan. next The JP Michael

Unidentified Analyst

just for on Hi. first question, back circle to My [indiscernible] pace. to This is I Mike. wanted

the California, has or maybe in at past. in above as above still the think but in pace much North not that it's still just above it as And more Company of sort and wondering So, least the although South, average, on a may it been to it's the how think maybe the down Is of to materially to as in Company one-off, more closer continue line average? pace Thanks. in California be average should the a or of coming better California think but with above basis. it sort is better of in -- Company this about quarter pace normalized

Douglas Yearley

with, price we cannot million The but in that sales average at $X.X is Again, And the goes. XX at where not quarter. be as north and goes. for XXXX, is are in of I the will that we business predict now, market I the of pace of company was happy right predicting are pace extraordinary and XX that mentioned and of per a which type where up, sales north That not point. X pretty above would

certainly you us when at indication hot was were California, when if of give a you timeframe that good. will past good some for not kind XXXX think the ‘XX, things but as I I to look of in XXXX market, performance California was market for

Unidentified Analyst

last growth maybe South, color down. give Texas? earlier, saw And great. the strong in you. to I Thank could some be came also Florida on quarter wanted you or and Any missed this Okay. you That the would pretty there just extra Thank I quarter, then, if what order it then there we to circle apologize you. think I in it, saw I was a -- of question but

Douglas Yearley

decline. Dallas what quarter, soft led which had that a is

Unidentified Analyst

drivers, Same appreciation, foreign price anything buyers, interest there? rates

Douglas Yearley

sorry, I'm for Dallas?

Marty Connor

I don't Dallas the think the in or of currently? has past foreign concentration buyers

Unidentified Analyst

Okay.

and any relates the to lastly, mostly it then of XQ margin if interest And of So, and I some to ask in or region? price you about If there. just improvement profile saw region color any contraction wanted appreciation. could that rates give in just you

Marty Connor

Sure.

pretty mix by a few much really driven being as as by I margins with few few up, else. the as anything a being performed think being much flat, region expected, a down, and

Unidentified Analyst

four to six mentioned improve. you I expected of you quarter last regions the think

is So, of were below that what expecting? kind you

Marty Connor

those my bit as in little below expectations, in So, we mentioned came a I comments. introductory

Operator

ahead. Bouley with next Please comes go Barclays. from The question Matthew

Matthew Bouley

questions. for you Thank my taking Hi.

On Is in the California in have of gross the the expect based continue the XXXX. you the I backlog what Doug, that think, company California on today? to you gave margins above can you finer guess, I point comment segment, average you margins there any on direction give the,

Douglas Yearley

have to 'XX margins I company the we first the that they'll I XXX give do you continue quarter think run can best basis above think guidance points XXX for so. average, to California the is and the for

Matthew Bouley

the can more if Thank trend those on recent Okay. -- give to or like may land what Thank average. kind kind potentially Any can there XXX,XXX you mentioned you And then, spur sales. any can premiums option what you orders? you guess I Is premiums any that. you. give, taking looks if the sense the and November? of that you -- visibility actions the there you for give in with there's into Basically, be of sense

Douglas Yearley

we have. premiums a of But the premium, changed. sites specific charge decorator lot the lot center not have then for has at options sales that the on views buyers talking may or value our of and top with studios. of to may we're number they same. design upgrades combining else And about the $XXX,XXX, that individual special home whatever that our that, through choose It's because structural And and process clarify, the

Operator

comes from Rahmani KBW. Jade with question go ahead. next The Please

Ryan Tomasello

questions. This is taking actually Ryan Jade. on Tomasello for Thanks the for

York the how quarters projects both in city compares have perhaps and with absorptions living, wholly you few expectations? that your quarter how New trended and past in owned quantify City in and your in JV can the Just

Marty Connor

Sure.

low New bit gross new. really have really of results. the with overall projects, and in a the like business low. We still city-living But relatively Jersey think we of continued the out locations. inventory, our have not York be seen New we consistent relatively City, to company a I slowing and this have That's absorptions margin comes that

Ryan Tomasello

to able shook quantify average? you margin are broader company differential in gross XXXX the out the And versus how

Douglas Yearley

Do Gregg want the give you has that. answer? to

Gregg Ziegler

the year in average. up for XX% versus ended a company full living low City the Sure.

Ryan Tomasello

maybe seems like from do view it how or take that projects the levels market product an supply will and you price Are fundamentals be think cuts a long market to you York levels? in do oversupplied New the higher-end at to just seeing absorb incentives inventory the in you overall other the condo City how among of other then, and developers And increased market? use

Douglas Yearley

about has is prior price larger definitely a there drive point higher market at point, talked the calls, that we've as experience, and price softer. Our been is on the the units that for and incentivizing higher some

to repositioned our square end we much And selling have smaller try that at that we market, per We $X,XXX keep of stronger. have about things that foot units so buildings are the price. at

Operator

Alex question next ahead. from comes with The Please Housing Barron go Center. Research

Alex Barron

Thank buyers, financing. you. question cash they to questions actually trying to one. affecting few in was just guess the or interest when California. understand to around I I typically compare hoping particularly Are number Chinese average I them? I more guess, ask rates buyers how buyers, was comes a to That's, are it they

Marty Connor

lower mortgage, a get LTV. to They're more be tends it When a much they cash buyers.

than -- their foreign due by think investment. less some of interest enforcement are ability rates or to policy are up to going in maybe on some U.S. impacted impacted tightening by government of I being they the they invest Chinese

Alex Barron

Got it.

more to they Do kind sense. that they on front? typically then of of makes average or And more the you that build just guys are are they question. that order, start, to Okay, another specs tend or buy

Douglas Yearley

Average.

Alex Barron

And on interest Okay. Marty then for expense. one

sold year significantly incurred your interest than as to higher So, of this compared XXXX. goods through interest cost was your

going cost Do with the So, of the incurred? what line can to we come more interest interest expect for down of XXXX? think in is you goods sold

Marty Connor

going see, with first quarter interest think interest in I sales the very XXXX. in cost of for be you're of from XXXX, sales of consistent cost to

Operator

comes go with ahead. Ken The next Ling question from Citi. Please

Ken Ling

first afternoon. 'XX, how my projection particularly Thanks current SG&A and the improvement, Considering much you taking for Good foresee in operating in leverage in XXXX into this solid encouraging questions. runway of environment? do the quarter

Marty Connor

to we've we're that and you we're at going given for that, first we've some guidance explained think the not I and it giving beyond Ken. leave guidance quarter, why

Ken Ling

room Got it. TIS note, Toll the to increase on utilization the And I Integrated Systems? guess in for is a similar there --

Douglas Yearley

trusses And now, operates Right transportation and by panels it Boston out takes and to controlled and the long jobsite. is from to Charlotte to the how plan to that up from TIS the Detroit. get

geographic just answer quarter the its be that And so, unless it's capacity now. I we find described, would right no, more reached markets within

Marty Connor

that Or but we now. operate find to our other at, that's And right to something look imminent some plants markets. adjacent do nothing new

Douglas Yearley

Correct.

Operator

The Leah last with question Samuelson RBC today comes from Capital Markets.

Mike Dahl

Mike guys. me? actually on. Can hear you Dahl Hi, It's

Marty Connor

we Yes, can, Mike.

Mike Dahl

me A Thanks in. couple for questions. fitting

to absorption as a of and thinking around a comparisons. guideposts, us can the what or again as Just number, the you've understand but, that if trying an back robust wanted Doug, to is really Because level? really circle pin across you not side, but down taper about give around I'm trying on business things can few the I I and from absorption message California. you're guess look and period XX, you message talked six you've far about was a kind ago, comments 'XX talked XX about made the on to we something ago to Obviously, the a 'XX in months maybe were at then, particularly finish bit 'XX board, after business produces think a prior a like that And tantrum you've as mix year XX of years the current those quite lower. sales, at how the that, year year

just there? color So, additional any

Douglas Yearley

as we opened, is brand, I takes get more teams, us. the have the the sales we and in this have we and have crystal company to tell go communities said, don't the are What have where market I've we past. land, we have as have ball this that to able as ready we I you the and will grow Mike,

Mike Dahl

it. Got

Second question, XQ gross margins. just clarification. around Marty, you comment made a

part you Cleanup know some Brownfield and You of… if us that didn't let get Could expected. you quantify just credits that's that

Marty Connor

be So, it approved $X $X they in have to have Those was the just by been released. million. question; yet credits state to

Mike Dahl

the of Is part guide? that XQ

Marty Connor

we happen XXXX. is It in to something expect

Operator

back conference any turn would session. over Doug the remarks. I like to Yearley question-and-answer to our closing concludes now for This

Douglas Yearley

a thank everyone. Thanks, holiday you wish all your wonderful interest, appreciate much. and very all and support Anita, We season. you

Operator

you conference presentation. Thank attending now for concluded. This today's has

You may now disconnect.

Toll Brothers (TOL) 4 Dec 182018 Q4 Earnings call transcript