TOL - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, and welcome to the Toll Brothers Fourth Quarter and Fiscal Year End 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 today's event is being recorded.

I would now like to turn the conference over to Doug Yearley, Chairman and CEO. sir. ahead go Please

Doug Yearley

our Welcome Senior are you VP and Emeritus, Treasurer. Bob Officer, Relations, West Chief Jim Chief Rocco. Toll Marlett, Officers with and Wendy of East Marty joining Ziegler Finance me Gregg and Financial Toll Boyd, and Parahus today Toll, Fred Rob Officer Chief and you, Senior Operating for overseeing Cooper, thank respectively, us Connor, new VP Thank Marketing Chairman Investor of and

significantly you read I based on web tollbrothers.com. about to on the ask housing that forward-looking many financial I the at factors in and our and are on can on Investor world statements begin release information Those Relations our markets I Before and forward-looking to events, listening this on call future email many affect results. that caution questions the beyond economy, statement assumptions earnings could other our site. control Web you

strong building a Fiscal XXXX year. throughout note on in ended steady buyer the demand a on improvement

year than should year the This quarter. fiscal we've margins of up fiscal contracts Through stronger community in XXXX. impact per seen XX% in over fiscal XXXX's and Our gross compared first demand even XXXX's positively order dollars, quarter, fourth weeks demand and units fourth contracts XX% up growth six of one improving first in year our the XX% to the ago. were quarter were course

of sales $X.XX quarter diluted. and fourth reported per with or revenues income home billion million net adjusted a $XXX.X We margin $X.X XX.X% of gross share

from Difficulty] was billion up units [Technical down in backlog last year-end $X.XX was which fiscal XXXX year. Our X% in units X% and

and new product as ourselves our we positioning luxury lines brand for price to expand We growth points, geographies. are

coming strategy Our and provides in platform supports land this for continued growth we years. a position believe

and InterMetro our acquired operate a points into seven Residential wide Beach range customers. we Carolina. Myrtle their offer to markets. price XX of Greenville Charleston, new We new This Homes the Sharp states in of states Sabal four District and and We Atlanta expanded South Columbia. footprint companies now in and to Both year

in We we also and have luxury We niche. first Florida. remain City, opened in Utah to our committed Portland, Salt contract Oregon. Lake land communities our Tampa, under And

We luxury homebuilder. America's will always be

We and will continue to grow as decade demographic This and market millennials communities mature. and will through buy -- Street of our suggest the our it of studio and design Main their our buyers customers next customize build at strong allow to land end corner the MainStreet unique to homes is over experience.

of We because homes a as affordable growth strategically are on more we points our a of $XXX,XXX This of our price price faster position also and geographies. brand. our We communities. us believe offer or for luxury will home premium expand for product focusing receive less. a One-third lines, current we with communities base these

as While segments adult. when and affordable large driven of a first example of BMW luxury This Think great affordable home. millennials number are affluent including move-up and it active they X part more by crosses their a all growing buyer is more buy discerning who of a older in luxury. initiative Series,

tend brand as In lower-priced, or focus quicker. in old builds pace under. years to This XX% year purchaser one our capital of our XX on capital efficiency fact our on turn closings XXXX had fiscal strong strategy and over faster reputation communities complements

country was Apartment Housing in National the apartments and apartment largest which in across upscale by housing developed growth. Toll developer and both number named to XXXX fastest urban rental in Brothers country student Living continues group and Counsel. one Multifamily XX number show impressive locations growing multi-family the Our suburban the

undertake in of of or of development stages XX,XXX operation which various ventures. pipeline nearly nationwide all over a in we have We units joint

and long-term experienced will financial held recently Some others and which in operator of with entered market institution sold a purpose-built will upon believe be partnership rental we we an single-family Most completion. great projects potential. major the be these has

market As and of the October remains this healthy; is July start at we household level XXXX. month were on year environment of remain fiscal starts supportive remains as XXXX, of while constrained. housing. a our the their the highest low. encouraged positive confidence rates formations Consumer unemployment we very by housing of economy fiscal enter backdrop and the strong are interest With supply are homes since XXXX

footprint diverse We land believe XX% geographic enter this growth We over with and decade. the well-positioned we projecting this our new our our of community growth, year positions, lines count increasingly are as product the brand, course great are and broadening well-established points. our price we

to over it turn me let Marty. Now

Marty Connor

Thanks Doug.

note I to our be forward-looking found in is Before the during guidance quarter, measures discussion that normal that of this want a non-GAAP note release. earnings want of can subject comparable I also to the today's our their the address reconciliation specifics of caveats GAAP to statements. to referenced measures on I our back

environment QX of margin of margin are are when was sales write-downs we of numbers consistent our guidance end with excludes and sales year of Adjusted ago, third home interest revenue. so which home these homes. reflective was gross delivered quarter home sold most at These sales inventory challenge XX.X% a and gross XX.X% the just revenue. home or sales sales

was home from was profit of from Income of million. $XX.X percentage and X.X% sales sales Other entities revenues unconsolidated a operations gross was revenues. X%. total land as income SG&A

credit ended billion remains strong. and under facility. X.X XXXX cash and We year Our equivalents had balance sheet bank available with cash $X.X billion in fiscal our revolving

the bank year markets facility quarter, fiscal from reputation to in we facility. in extended our strong to and revolving maturity billion favorable with of bank Benefiting $X.X term billion facility's $X.X from along million and increased fourth our credit XXXX's market conditions, loan $XXX capital X-years the our that

$XXX public used of quarter, we million the we raised retire million a During expensive XX-year which of debt to in maturing markets public fourth $XXX of X.X% our also capital more portion later debt.

cash $X through credit with over liquidity months. XXXX, maturities public bank facilities begin in XX we and bank next we As no the or undrawn debt fiscal billion of have

years. debt Our maturity X.X weighted is average

acquisition on types, focus efficiency quicker upfront in broadening capital intend our price and increased geographic have footprint process and inventory land our through costs. we efficiency our turns land improve We to lower product also points by

efficiency price price execute We initiatives well. fiscal In common other on continue stock $XXX.X total a we purchase $XX.XX of million to million. of capital as shares average for X.X year approximately at XXXX, an approximately repurchased of

was at billion purchased at at X.XX fiscal In fiscal ended our Fiscal year-end a to to $X.XX for value $XX fourth $XX.XX share XXXX $X.XX we And ratio XXXX. XXXX. XX.X%. fiscal of $XX.XX million year-end shares compared year XXXX year-end $XX.XX our We per was book approximately million stockholders year compared share billion with fiscal equity XXXX total. debt-to-capital per net quarter,

price It our in and reduction Looking execute reflects The segment first-quarter product $XXX,XXX affordable on projecting average drop between diversification we delivered mix the focus in mix year of lower-priced homes. increased number homes to strategy. geographic strategic we and between our $XXX,XXX forward, in ago being of XXXX deliveries also as on and are price changes of and California is a and in more $XXX,XXX. and luxury attached the average a units XXXX an from with reflects and

year margin contract slowest gross home XXXX margin of which in revenues. from first should of the approximately the fiscal most half sales the quarter deliveries of as lowest XX.XX% was project quarter of be This were first fiscal home adjusted our QX We gross XXXX, signed sales period. first

in gross that were margins XX. XXXX selling first to half XX% and in Sales challenged environment down the and XX of QX impacts QX of compared XXXX of

cases this year have we price. As period over the latter of the many half able cost have have sales market beginning and the And same improvement pace building seen of in to in progressive a XXXX and increase increases slowed. been increased conditions,

these XXXX will our we that For fiscal as quarter-by-quarter gross progresses. modestly reasons, anticipate increase margin

to last demand understand full-year gross quarter With results evaluate and a and full impacts carefully want fiscal and the guidance. revenue stronger deliveries, half, [indiscernible] margin adjusted XXXX we the it providing how particularly unit over

of XX.X%. stock in expense percentage not that approximately first We occur quarter G&A SG&A sales approximately to related XXXX. home project a expected revenues includes quarters subsequent compensation the as $XX This of in million fiscal to of is

and involves we provide some in year. incur expect but opened costs revenues is in to communities, as new personnel investment community in would will years. sales and be of generation, SG&A the of advance of fiscal revenue modestly future higher revenue, revenue XX% Essentially which we we the other resulting appropriate With in as SG&A count our leverage percentage growth costs we advance believe this a home will projected in investment in this

annually income other to fiscal expect generate income approximately $XX expectation that sales XXXX. quarter $XXX be expected profit and to will gross land entities our We million same $XXX the reiterate of million. million is such we unconsolidated First in from and

will the first XXXX average quarters the last rate be project income in fiscal realized quarter full shares QX year in of majority We million tax approximately expect XX.X% of and year outstanding that of the shares. weighted We XXX.X the of this year. two

Doug. back me to turn it let Now

Doug Yearley

Thank Marty. you,

for consecutive Fortune thank to their Brothers work. Magazine. is We hard we Most by For attributes This them colleagues. tremendous the year Homebuilder Toll fifth World's named were honor all Admired our of

for up questions. are it open let's we Now Rocco, ready.

Operator

Yes, sir.

session. Associates. from We comes ahead. Instructions] And Please Zelman & [Operator now question-and-answer of go today's begin question Zelman will the Ivy first

Ivy Zelman

we solid looking that quarter a more Rocco. Good environment on than you, where ago. Thank lot definitely were a year congrats a positive morning and guys is and

and So seen Maybe color good around on you a of concern news. more around in double-digits a obviously count in absorption, have it's we've salt and to we orders still have community that of commented the could to bit little reacceleration dig you pricing communities. weakness in power California, bit down and where little nice see fact do were hear just your started demand lot Doug

first roughly. question in drilling maybe just just on California So,

Doug Yearley

Sure.

were to just weeks year-over-year sales. Southern flat the -- double-digit in. an primarily a year number pretty quarter came about as was weather weather driven even cancellations sitting of Francisco we're bit XX community in So we company townhome this This it long XX that we for homes through deposits that the of Ivy. actually XXX because SoCal. by weather that because thankfully up. is those average as that cancellations delays, call give extended about large that QX the years for And had construction We're that earlier was community down Crossing. many a those we it's the a and multiyear of time encouraged so led the from those to two six lost in in now had of at call contracts, backlog. first called with of Cal outside San Northern and quarter, lost that or Cal occurred condo of last cycle are some significant delays. low running to of And are prices had months construction of to more was half And a update of Metro it And down and

led to feels those that the bit. a is one the are buildings a But Overall, bit quarter cans much what distorted by a lot delivering issue of because the they what pretty we came now numbers as encouraged through numbers see drop off in California in It a in threw better. we're and California.

year is ago. a bit. than six feels mentioned bit months the a a price we mix think is ago for different I sure But Our where California down as better even

that hope California. understanding of of bit So a are in where I we an helps with

Orlando, really gave Reno. help gave ten well. of I'm not recently say markets, City, doing Those Jersey, you is out, just Massachusetts, sort ten. better, New top I New Las feels you but to Other Denver, Vegas, I more Northern York round about I Virginia, would Living sure Boise

top. they So on be would

Ivy Zelman

detail That I and they'd for drill you follow-up the more just let was my really I in California needed. in got thank on detail. Well, helpful and if others like what

but is the which about guided luxury for square footage. in great have communities than smaller footage, excellent anticipating were think we the smaller that of an business it's even stronger of mix growth coming. in you to how these community of see over Can XX% opening You you count growth like terms next talk evolves guys providing the of job I square year done keeping terms

how So what little like just by should and price point about breaks a absorption that count trying down to be we bit. thinking versus understand community actual

Doug Yearley

Sure.

a with So year. huge down with communities a that acquire. But expect that's obviously many that's number, up open we That a new and specific new we XXX very out. moves selling and land There's this are approvals to number. obviously

coming can of how in. So of the that obviously Marty's number but that's get also a SG&A and not helps that net commentary that's on activity. ahead lot out revenue explain And

of Philadelphia, locations, many top top list the giving Jacksonville, XXX Seattle. Arizona terms hit Phoenix, others that I'm but In just which the us Denver, locations openings new could There's are for the those for five. you is

wider fully opportunity the and up And truly second we is that of it and Price-point, first business. to home. will part luxury, MainStreet are wider selling get continue a to committed with Mainstreet customize move to the Brothers Toll your major

However, there still plus move a more chasing frankly that bit and House, affordable millennial as quite reach as some more BMW to little move-downs Toll is luxury. luxury series affluent going affordable ups aren't it's but more on the focused some X older and typical high

can higher build faster So a modestly efficiently what will turns you'll think I they're smaller less lower-priced more and that velocity higher is of with customization communities and have faster. them and see lower-priced we percentage sales homes because

will at but get really mixed of it core luxury is a it for that the now traditional couple it but move-up. We've in, just is is business this of incremental. the accelerating, been And years, supplementing so

Marty Connor

cited Another course as of community year a our steadier in calls is of I the make it's think year. that the of we've back-ended. these that other would course to is over This point I the over the count bit on happen going

Ivy Zelman

awesome Great comfortable existing that what the can you're community to today? growth, that Are time just based this at business. guys sure making same-store you count the sounds and I on understand you saying with on just respect looking of top see at grow absorption you

Doug Yearley

out of now see QX crystal as we macroeconomic better but how even the in the six don't the ball we the is today growth than environment year that Yes, sales are how we Based first plays saw our on weeks but of on commentary what balance encouraging. QX. have right with to the

Our land encouraging. positioning is very

exciting exciting. is growth points strategic our geographic product and price and line Our is diversity

the So right now about feel good business. very we

Ivy Zelman

have buddy happy Great my and holidays. to Awesome a on special Bob call. shout the to you

Bob Parahus

Thank you, Ivy. Happy holidays to everybody.

Doug Yearley

Thanks Ivy.

Operator

from America Please comes today question John Lovallo of go next of Bank our And ahead. Merrill Lynch.

John Lovallo

guys questions. you for taking Hey thank my

to the one want first exit trend going it Understanding you year gross to give fourth year it's that The improve assume a we did is XX.X% or but look, through on unreasonable as throughout somewhere could full-year that that the that closer is don't to you the margin. to quarter say at that and XX%? we

Marty Connor

that aggressive. to get think any into numbers one bit feels don't I a going particular but John, we're

John Lovallo

which that order maybe at West standpoint. of Okay. the Understood. And then key us were just performances very support the looking some just an Can good help some South and you from the growth? that markets of help obviously understand there drivers the

Doug Yearley

Lake units in by and that Salt and City phoenix. then contributed. be the entered and were was Sure. of the Jacksonville, which three XX% Boise which in remember primarily Denver. in in In Portland South Raleigh in And where Orlando, Atlanta the was West south driven by was that markets of acquisitions Carolina. and up sales And Sabal driven we number Sharp three course up. also XX% would And

John Lovallo

on like color a If you land million That's quick it margin. in at low squeeze it $XX that? came could here sales Okay. on one Could one in seems the give just I any helpful. fairly

Marty Connor

Yes.

that see the in you'll relates joint partners think our for It statement our finding future. income I really venture apartment. to in

revenue So and partner when we we sales reflect the land before months costs the a we rules land A and accounting apartment that sell will as by we land. few are sales it. that often find

gain, our sell it venture. that's the in for happened it a quarter. we'll sell what we And that Sometimes into but joint cost at oftentimes

John Lovallo

Thank Got you, guys. it.

Doug Yearley

welcome. You're

Operator

Dahl today question ahead. comes RBC go Please of next Markets. Mike our Capital And from

Mike Dahl

far. on count, a growth and quick clarification for Thanks the helpful information for just questions the comment. Marty community so taking my

the is rate of year-on-year a of be in sequential growth it'll throughout bit or steady the the quarter terms steadier, number each You that of around a in the communities steady XX% said build the year. course

Marty Connor

The the over the XX% evenly course will happen year. of

Mike Dahl

is market. supply on has Okay. for come starting that. to see pretty there Crossing little it's second understanding to the project cancellations but the been a that deliver constrained these And significant now just surprised And location. prime through still question I Thanks buildings delays, gets Metro of that's that on some a guess

imagine So so community the this as life for at of What pricings game? I have far the selling. of you've the the rationale stage over been course the would up as you heard the far cancellation in as

are success would you additional And of be provide could reselling first maybe finding then, in six these weeks some cancelled quarter at of you there the great. any color the first units,

Doug Yearley

Sure.

cases XX were over lost percentage seen significant of we And at they new a lifestyle we move, the prices the a in that have that quoted many months We where the timeframe around they next buyers number to out. changed, and backlog condos minus higher a are we plus lines with It's occurred to it plant incredibly significant is spectacular we hot townhomes in last is and high Fremont. Crossing familiar And density XXX and asked location. had to right at that that product those months. XX sale multiple like needed when XXX months. get where small XX-month Tesla because and their Metro sales opened It quoted Cal to what delivery. price is wanted or took community. is right move building we a deliver. to think year, backfilled for XX%. the six There BART village community of those delays that new a all we So with of within in Northern And they in feels where I from we buildings plus of weather those because And within increases some were station, we're with has

it. is very the still thankfully strong. extend market And that that's of So

prices up. We are are delivering and now

Mike Dahl

its And just selling the actually volume, so or period helpful. cancellations makes seems difference. is and distortion because just like XX Thanks. That's really low Okay.

Doug Yearley

You're welcome.

Operator

And next today ahead. Matthew comes go question of Bouley Please our from Barclays.

Christina Chiu

regarding My quarter year. a is from actually attributed gross confidence to just this XQ margins the Hi. half you improvement? on first is in today. Is Matt first deliveries margin Christina Chiu the with of guidance giving bottom question This that margin the or commentary timing the for for and first what's

Marty Connor

a takes to a nine generally home. build months XX It to Sure. us

sales have So lower are little was a thus in we we're quarter and had And environment approximately a quarter a happened just results that that while. a bit incentive And the most the we price in that deliveries more maybe ago. that year and quite associated sales challenged with the that in seen little in the lower-margins.

As the the better we world into market gross here us XXXX don't challenges balance on has of over XXXX, and same first face gotten six those gives weeks and it the margin. optimism of

Christina Chiu

And differential quarter differential you've mentioned versus previously given business. the on it. homebuilding How compared down does then the what your California the mix California margin seen? of remainder that this in Got you to earlier the

Marty Connor

California was many The hit marketplace others. year-ago of a harder than the a bit

the so it been as the first the is encouraged there we points it question and in down XXX on of But higher And margin is past. outlined by California. has company average compared than a to still couple where we are

Christina Chiu

Thank Got it. you.

Operator

And our Sachs. Goldman Susan of Maklari today ahead. go from comes next question Please

Susan Maklari

Thank morning, everyone. you. Good

Doug Yearley

Good morning.

Marty Connor

Susan Good morning,

Susan Maklari

should changes Can just acquisition in that maybe the first especially that you we to of? you terms question Is product a land kind pursuing to optioning aware are kind My should shift of is anything we means of around as other be land range. this of there expect in pursue strategy. lots a ASP wider do wider and any more there talk of

Doug Yearley

Sure, Susan.

times And Main that Main, on at land land bought have efficiency. occasion, get efficiency. corner a mortgage to you we're comes in we've it to we land to and third-parties When where the a with of can more gone over difficult On is opening to of about talked that bank land trying land capital and a we owned as increase at for the optioned you with continue how comments money see pay And us. to will overtime. structure land land to do the and purchase So capital seller expensive you focused that. more very our more by from

luxury communities. When luxury lower-priced we communities, buy maybe master-planned for in affordable land that

And opportunity more For are course example also of should you that. where more have There finished Those on to capital leads affordable returned faster. there more will lower-priced quicker. feed the as-needed of do that that basis. sales that will We efficiency. because luxury developers capital homes returns to also And price is lots an point.

different price price So over you less options lower with means owned. more and diversity deals more structured points us will of which generally And time more see those points. land more with at

lots base a of the we under that price $XXX,XXX. under homes -- In quarter, XX% option price put fourth proposed the base had of

been it fairly And and for a our consistent efficient. just shows affordable So Main more with number strategy That like more as be has our capital I now. several is Main luxury strategy. traditional think that that more and that supplement think to quarters will I

Marty Connor

That's a premiums cetera. et base price of XXX,XXX doesn't include options or lot

Susan Maklari

side Okay. helpful. as talk cost year. terms that of on can a follow-up, lumber of you've up just are heading come in into bit thinking lately. bit And materials Great. you a to seems and the what That's things next a you it like have How about prices labor very little seen then

Doug Yearley

tariffs in and have not for adverse impact. encouraged that quarter had And costs materials in were flat. both We're labor an fourth the

Susan Maklari

you. Thank Okay.

Doug Yearley

welcome. You're

Operator

our Please Wells ahead. Fargo. question today go And Patterson next comes of Truman from

Unidentified Analyst

Actually it's [indiscernible].

give on if And quarter. wondering color you was any were could sentiment? the impeachment I on that adult if in active buyers First the demand weighing the us proceedings

Doug Yearley

It's new as QX part doing into many steady. and was markets. about we've And very a in Active well talked business. moving our very we're important of expanding adult it's it's it

one large of that heard We no, very in active LA not a are buyer. anyone number in from I would to me any not concern added in and And adult nothing is which sales the results have other exciting County the coming gotten That's from And impeachment is Phoenix. on demographic. one communities weighing have very proceedings reflect has that field. that of that

Marty Connor

till Bob just proceedings haven't we segment, the of par raised heard and the any it. impeachment Or

Doug Yearley

look the ongoing X.X at last talking been proceedings for have results appear to impact you have the months, those been if don't and whatsoever. adverse we've any about if they And

Unidentified Analyst

returns. As your to that also inventory the increase Is improving to vertical side is a capital do anything could your turns there, there you look you efficiency improve on inventory the -- returns and benefit.

Doug Yearley

all the that at looking time. We're

that organized As build in efficiently that Northeast new have we five hopefully possible sites get that purchasing involved We're get of There's advantage panel in their us homebuilding to drive to as sure down. you driving yet disciplines and help know other in hard we houses efficient can to to to on very industry. costs very works and show very in the that's some of and of balance group technology houses up, have down plants trust innovation found a Mid-Atlantic build having in out have as money. we all those we extraordinary and Midwest. Friday. make the the even innovation no tracking and course, investing to And continue and will it pay very continue at taking refine of coming the contractors make and that that sheet but every make And by for ready. prices us it's when architecture our robust or religiously job They

Unidentified Analyst

is gross one, in quick guide? real there One margin any the you. accounting purchase Thank XQ

Marty Connor

Very modest, Paul.

Unidentified Analyst

Okay. Thank you.

Doug Yearley

you. You're welcome. Thank

Operator

ahead. of Please from And Jade our KBW. go next today comes Rahmani question

Jade Rahmani

much. very Thanks

things seem was you see condo I brokers on you that comment think I have seeing an in up to how was was perhaps commented to indicated City you up City opening Living in could there the some wondering November. a Living picked if that in have sales or tick. the of market in your New City York remarks question response

Doug Yearley

in for We're Manhattan. Hoboken, Jersey and in exciting beginning Philadelphia an high-rise. construction City under Yes. We're active

mid-rise begin a to small high-rise building We have we're and LA a Seattle. about new downtown in in

coming of the not remind is we're towers. you So and the Jersey. super now And right I in luxury gold New as New revenue York coast out of the

New City an or minus side per $XXXX per in on relatively York niche that We and foot square Jersey affordable are market. is that on And well foot the done we as the focusing and square $XXXX Manhattan we've in plus pretty example. like

at took building And a XX foot in XX building is sales it that in a we SoHo. West quarter. -- We call fourth at which have $XXXX Charlton about the

the in fourth in side Hoboken and quarter. a we We had Jersey XX a We're Hoboken that and sell to $XXXX Jersey continue ten at well building City. in And a sales a foot. during City building sales

four New to I better. it price York's years was not and but five very So And like locations ago I've ourselves we points or where back at much where it's these described. positioned

Jade Rahmani

Thanks very much.

you of year-ago the delivery quick can give that how percentage period. Secondly, deliveries that maybe with and homes compared came the from

Doug Yearley

up Gregg for is looking that us.

Gregg Ziegler

of XX% asked 'XX, In QX it approximately year-ago. was and you about a

Let's see.

QX 'XX of it about XX.X%. So was

much averages that's difference, a if long-term not So much look of line our in look over as at with time. you you pretty this over

Jade Rahmani

Thanks very much.

Doug Yearley

Thank you.

Operator

go And our next question ahead. Please ISI. today comes from Stephen Evercore Kim of

Trey Morrish

actually Hey on for Morrish guys. Trey This Steve. is

affordable the luxury we something appreciate. about the greatly it's that place, So talk

and get relative to types more you Moving Toll homes you of general margin can But how traditional business the the being profile do buyer. and appealing home? on do more down ultimately point your of price think millennial open accented this to these how part view the the big

Doug Yearley

looking more more active nesters to down home. have are the want bit million absolutely XX a millennials home millennial. move-up just we of affordable that move talked is So a which we and empty primarily affordable bit for size have of it to out And that luxury focuses affordable there on about we adults a We've course, as that buyers and the the now we also that luxury the have recognized same bunch boomers.

approaching gives not least that's that have and our I affordable price XX% When third you we're put where some move $XXX,XXX. down. That's but that communities all at some all under together again I driven primarily base five. a XX% XX% of again in our affordable starter of said up I my is that's by have I opening mentioned, and move you price. think prepared that think That's opening the of millennial But communities home as price indication comments an an under

and finishes Phoenix some have a communities add Jacksonville in you a or we and price add home places [ph]. that changes certainly and are that and house lot structural Now Boise. and Houston opening get an opening other [six] other to But the and to as premium Vegas like you Los some can XXX XXX and and

but think to as as not that So I fair we're consider XX% defining luxury understand segment. probably accurate a number affordable XX%, it's

first Our our more time. be move segments case will it first time, luxury are, down, move up in

you that that more get it So an and you. delivering be important we and to sort greater of are not tell more segment luxury diversity locations points we're of focused having lines. product you it's to But all going all affordable price can on a I --

Bob Toll

comes upon price. the Three, what luxury look This at stuff, a our up. did point you us years rather we price took lot four, average to of the from ago, way five vantage depending result

Doug Yearley

California?

Bob Toll

yes. Yes,

Doug Yearley

price right million. price Southern Average X million, in Northern average Cal in Cal X.X

Bob Toll

was average as house. one per [indiscernible] have got $XXX,XXX the to about We the million X.X That house. same price up will $XXX,XXX

Doug Yearley

In Phily?

Bob Toll

No. Little less.

So million you from at vantage back [indiscernible]. X point, a look have to step this ceilings and

in just here difference that's mix got occurred. You've

and now X then the made is more product. into up what Toll when got we just Toll rediscovering Brothers Brothers And million are we're in the this Toll Brothers We market. average slightly X surprisingly and

Doug Yearley

and be first is Toll. large A-X. and And therefore That plug and first can down we discerning give affluent can have be I'll their Their very just home settling buying car, are later this the more home their you later first demographic out as are coming. and

Trey Morrish

it. But smaller turns would homes bit a will they're of margin little a bit But the probably -- given lower footprint. little be faster. these Got I imagine on

line quarters So have that talking better that fair a the few way focus bit been that guys for it? is is the traditional about is think in about a little products, to than return you to probably a

Doug Yearley

think little a very be will that's gross and fair less the and will think we the I be ROE margin higher. bit

Trey Morrish

lastly, up year And you to any be Okay. happening are things you that then in that high-end this talked the the range how given the $XXX that. JV other and expect versus of about end year what on $XXX million income million in to low-end a can

Marty Connor

business, components. security of from sales line is from under security know on to and routine sales balance you our pile in our title of Manhattan, item million retail business, that other mortgage from various from of interest income customers the business, in pieces sale buildings income, golf business other we some as of commercial our our XX Well our that can various million sales, the The our XX in we cash kind of pull some the income of accumulated ground pockets balance sold, apartment business, some the from. is

And we're part think generate looking the our XXXX a income apartment to business sizable as starts of and and as at forward our more of we JV apartment I and for year that enthusiastically apartment formations. of disposition from strategy buildings. more move is JV

other formations And sell through then, also to lots we sales you have of some that where our either land can JV on through or builders. plan those occur gains master communities

Trey Morrish

guys. Okay. I Thank you very much appreciate it.

Doug Yearley

Thank you.

welcome. You are very

Operator

And our ahead. Jack Micenko SIG. next comes question go from of Please

Jack Micenko

wanted on Good XXXX. to the I morning. Marty, touch

last opening year what the comments, You guys cycle you you in this talked quarter. sold the fourth it XX you delivered about have to time nine months

are of seemed visibility. it product Toll cycle a lack more the The guess mean full-year around homes time shift thinking set to lot quick you've reticence at would compress. a we of going So or be delivery I as I like you got XXXX

product is -- and business. of we historically little the think maybe a the as Help different mixing deliveries from more gap As why between product? XXXX us changes, and sort attached understand the visibility about your margin there and

Marty Connor

times to pretty of cycle price impact get but only the $XXX,XXX range delivery affordable as can factors at I the some think points in these How between selling on we expected not have luxury much you there. touched We're also revenue. by It move million and a quick couple less compressed points. a few $X really the pricing. homes we million in have $X margin in range our of wide

XX that So increase to be availability. to able that do months rapid business of to growth we quarter comes is continues the the nine period in in it whether in pretty going sales light six that's first fourth we're carefully hinted those the to And the particularly might going if to the a to what saw traditional even X in and this labor and up going quarter period or happen study we into delivered. in X-month expansion to how at this instead. be rapid the in weeks in Or

Doug Yearley

still can sales late early in October. the mid-April industry to the selling spring a homes. spring of that are selling number Right communities is And and sell part of traditional that sell that by most of deliver can season. to least deliver homes There this that communities January when we in have season at

improvement season, for that months to just over significant to we're little more as said approach understand it's time take Marty the in orders last as about pretty the think I X.X us with to and the a spring So, prudent full-year.

Marty Connor

That was the second Nine you $XXX,XXX. later of here, price we're view how in it example for $XXX,XXX. months projecting things can Jack for on gives change us. average rapidly some delivered 'XX, at quarter our

Doug Yearley

But that's mix

Marty Connor

Yes.

Doug Yearley

not. is That

Marty Connor

That's all mix.

Doug Yearley

That's not is just mix. a the That price same-store. of

Marty Connor

Right.

Jack Micenko

Sure.

side. an Okay. had on the And then quarter you debt active

on think a of to a that debt versus side, XXXX X.X% what quarter in on some that I does tailwind I tailwind interest, margin, the reported think were XXXX. margin you done the reported of this is you've gross things the

Marty Connor

think it as to the interest into as don't could income take the We statement. flows a year. months inventory benefit through XX XX I rapidly capitalize and it happens before our

Jack Micenko

non-punitive? benefit net But,

Marty Connor

correct. Non-punitive

Jack Micenko

Great. Thanks right. All guys.

Doug Yearley

you. Thank welcome. You're

Operator

comes And our go Michael Rehaut JPMorgan next Please ahead. question of today Securities. from

Unidentified Analyst

for this is Hi, Mike. [indiscernible] on a

in Thanks. so for of you're more I any XQ particular XQ First far in any stronger in could or on if and particular. share where or foreign regions seen first of changes strength XQ anything what weeks just six being order then, your was seeing since color just growth overall you've particular your besides wondering And XQ? weakness by you contracts more month the

Doug Yearley

than the month continued more And better November every December. first was fourth the in of prior that half the year's so So, and trend month. of even quarter

And then Salt Orlando, Northern would since Western specific Lake haven't Phoenix, City, Virginia, general in without we the Florida, you terms Jacksonville, of Austin, we've weeks the except into first on specifics given six the be hottest commentary South been areas quarter, the getting where Denver, Boise.

Marty Connor

Very consistent with the fourth quarter.

Doug Yearley

my Those that's are fairly list -- are and on all right. they

else the was fourth New Jersey Massachusetts have we think maybe I fairly it's yes but maybe and on quarter consistent. something

Unidentified Analyst

My you. levels. on second just Thank Great. incentive question

the to year. special your was particular in last I now. And XQ region. the throughout market incentive could you market improving percentage anything to 'XX. by levels trends in wondering And if And Thanks. incentive been year anything incentive out also call are they've share where or overall, compared this quarter in So, the in

Doug Yearley

have noting. They is flat. worth for trend time. some been are market no Incentives There specific flat

us power. pricing sales We giving that recent activity some with are encouraged is

Unidentified Analyst

sequentially? clarify And flat you just to mean

Doug Yearley

correct. That's Flat.

Unidentified Analyst

Thank you.

Doug Yearley

You are welcome.

Operator

today next Ken go comes Zener from of KeyBanc. Please question our And ahead.

Ken Zener

Good morning everybody.

about with was of saying units XX flat adjusted asset Southern hear the California year-over-year California weaker. So as assume Crossing. came -- I Metro -- put would California you for where want I and stuff. X% down out just That turns start to still to seem be Doug northern about the that California

Marty Connor

maybe it's as somewhere but in ballpark, that improvement The not dramatic yes. yes

Ken Zener

Okay.

So of reason guys the margin EBIT, half in have by quarter on -- about the northern represents and segment still I Northern your I California fourth just the EBIT? don't California that ask under is but just is

next year guys in the just down we change FY, that mix I think and while for place. really think California. going all under moving as in are have .And the is FY'XX because should California's something but condo does guys Metro price about about units to then Crossing, year to EBIT I price that you XX%. broadly, is If or benchmark the of for How obviously next first mean points that the quarter's of built that of kind year we assume. should also

still was And you're here opinion is what accretive. your kind that XX% couple them I'm to ASP a concentrated. it's seems California's ASP close it be going to FY'XX I margin as mean which going really is FY'XX. There's your going for to So would questions EBIT. but of of different first-quarter like be But, in of

Marty Connor

Ken, upper So a California look down the the thirties to percentage think in I expect XXXX it from at total. in we EBIT I XXXX, for think we when of And lower it's to come we think as thirties. would

including the quarter. around margin improve expect course compared to through the the first We of California to the year, company

Ken Zener

FY'XX, Marty? the correct that to was And Okay. be SG&A FY'XX, above then, it's for you said going modestly

Marty Connor

is. it Yes,

Ken Zener

first called you million XX the out in quarter? the excluding That's

Marty Connor

It includes the million XX out. called I

Ken Zener

basis And then described what an on of variable? percent, fixed versus you. your SG&A Thank I annual as guess

Marty Connor

So the XX% I that and to of variable SG&A. mostly is be asset total expect we would around the think

Ken Zener

gentlemen. you much Thank very

Operator

comes Jay from with ahead. McCanless Our next question Wedbush today go Securities. Please

Jay McCanless

for thanks my morning good and questions on. Hey, taking

in XQ the breakout from could first growth. The came had versus one your that I you order acquisitions all growth in the organic

Bob Toll

of a through pages. lot [Indiscernible] Okay.

Okay.

small pretty -- That's right. pretty have we small. So

Marty Connor

the XX quarter. quarter Toll. One Sabal Jay. the of half Sabal there, We're contracts XX was owned a about in was in sec getting Sharp by was quarter contracts and a

Jay McCanless

fourth incentives. that. didn't for know I sorry And it you compare XQ I before How for year-over-year and you hear all maybe did those the terms Thank for discussed then, answer I'm but XQ'XX? then the in quarter of versus

Doug Yearley

up of from the in flat to the looks quarter ever incentive despite They and then out. 'XX. is just Incentives to were It third see, second Gregg XQ Year-over-year, were peaked the pull little. flat going ticked like they on, that fourth in a hold XQ. let's so quarter little. And

another have you while question, our loads? Do file

Jay McCanless

absolutely. Yes,

question different asking maybe Jack's a way. just So

moving impact smaller footage, when product times. to should If you happen be and XX-month burner at does a the just what it's that the that point is a cycle are bit square time to a expect it's cycle to little contract to start to or going that guys price not we smaller X going to

Doug Yearley

cycle will time. More will we they're they options. affordable they reasons have should less smaller It luxury over homes gave the which be incremental faster, is -- and be for

Marty Honor

just now It's tell vary. product from that a better Jay, we'll going down. go tough have to months of It final type. to should and a six it's real mix you

Doug Yearley

bucks range. The same or QX, flat. or the QX same ago to to prior $XXXX, year incentives minus compared answer, plus basically answer a to the same That's within QX and QX a

Jay McCanless

Thanks Great. again.

Doug Yearley

welcome. You're

Operator

today's Ladies from Mark ahead. go question Global. final gentlemen, Please and Seaport comes Weintraub of

Mark Weintraub

market also is this you on again we you margins last but which the more biggest think the year variables to timing-related your have in to affordable if getting the factor question as one versus And was complex, the and geographical hoping quarter quarter. of recognizing market at Thank this And three three, the we look first expected Delta is were three better. to have health is. those in of fall if this could mix percentage guidance those play variables of you. out complex I us buckets? give just might the for like first you feel pointed how at recognizing you sounds would shifts. margin What impact But for health in the the guesstimate If adjusted shift to coming gross product. year's and that's for we

Marty Connor

the a have with then going I to you impact mix I the then to price obviously And is the point but on -- is mix sorry marketplace California. think mix the things. will the positive the geographic less give skew And don't can margins. have think I percentages, will least least I'm

Mark Weintraub

for first a negative but are will positive going the markets Well, clarify. we become to Right. then forward quarter, just

Doug Yearley

correct. That's correct. Yes,

Mark Weintraub

ability that variables to also one referenced And labor then, if XXXX. there different trickier And were homes could to ways on. one I Right. availability I you get want versus one those the is, two it building homes. understand which other you you focusing of would One forecast the all could, of cost follow-on wanting it that quick are was, get the to the makes to play guess

Doug Yearley

in flat quarter. we and have costs to are We fourth the And say the quarter encouraged labor able we homes to not have to that been material that in build were and some the labor third time.

Mark Weintraub

Okay. you. there. Thank I'll leave it

Doug Yearley

Thank you.

Marty Connor

Thanks Mark.

Operator

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

Doug Yearley

Rocco, thank you much. very

for great a season. holiday support. Thank your wonderful did everybody have you and You And a interest job.

Operator

today's conference Today's has thank sir. We you, you presentation. for attending all concluded. Thank now

lines disconnect have wonderful a now may and day. You your

Toll Brothers (TOL) 10 Dec 192019 Q4 Earnings call transcript