Toll Brothers, Inc. · NYSE:TOL
Toll Brothers — Q1 2024 Earnings Presentation
44 slides from Toll Brothers's earnings presentation, March 2024
Slide 1: Toll Brothers at Adero Canyon, Fountain Hills, AZ
WT OLL BROTHERS AT ADERO CANYON | FOUNTAIN HILLS, AZ
Slide 2: Forward-looking statements
Information presented herein for the first quarter ended January 31, 2024 is subject to finalization of the Company's regulatory filings, related financial and accounting reporting procedures and externalauditor procedures, This release contains or may contain forward-looking statements within the m
Slide 3: Executive summary and contents
EXECUTIVE SUMMARY DIVERSE PRODUCT MIX POSITIONED FOR FINANCIALS 1. Company Overview 16. The Toll Brothers Advantage GROWTH 35. Book Value and Earnings Per ing i i - Operational Efficiencies 2. Forward-looking Statement 17. Toll Brothers Design Studios 27 oe erational Eficlencies Share i « areifionti
Slide 4: Toll Brothers is America's Luxury Home Builder
TOLL BROTHERS IS AMERICA’S LUXURY HOME BUILDER LEGACY & LEADERSHIP Founded in 1967, NYSE-listed (TOL) in 1986 5th Largest U.S. homebuilder by revenues A Fortune 500 builder in 24 states & 60+ markets - 11 new markets since 2019 Greatest product diversification in the industry Leadership in Luxury ma
Slide 5: Toll Brothers Differentiators
TOLL BROTHERS DIFFERENTIATORS THE DOMINANT PLAYER WITH FEW COMPETITORS IN THE LUXURY HOME MARKET + Nationally-recognized, award-winning brand * Our build-to-order model meets the needs of buyers who have the desire & means to personalize their homes + Luxury communities in desirable locations in bot
Slide 6: Q1 FY 2024 Results
QI FY 2024 RESULTS * Q1 2024 Contracts up 42% in dollars, & up 40% in units * Q12024 Backlog down 18% in dollars, & down 13% in units * Q12024 earnings per share up 32% vs Q1 2023 * Q12024 settlements up 10% in dollars, & up 6% in units * Expect 10% community count growth in FY 2024 ¢ Expect to deli
Slide 7: Key financial metrics, FY2016-FY2023
FULL HISTORICAL DATA FROM 1986, WHEN TOLL BROTHERS BECAME A LISTED COMPANY ON THE NYSE, CAN BE FOUND USING THIS LINK - https://investors.tollbrothers.com/-/media/Files/T/TollBrothers-IR/Attachments/tol-38yr-financiak-summary.pdt | FY 2016 | FY | FY 2018 | FY 2019 | FY 2020 | FY 2021 | FY 2022 | FY 2
Slide 8: Factors driving demand
Constrained supply of new & resale homes on the market Home price appreciation in existing homes for our buyers Toll buyers have benefited from a decade of solid stock market / low unemployment Surge of Millennials purchasing first home Boomers making life-style changes Work-from-home phenomenon mea
Slide 9: National footprint positions Toll Brothers for growth
NATIONAL FOOTPRINT POSITIONS 24 STATES TOLL BROTHERS FOR GROWTH 60+ MARKETS Community Count Total: 377 Note: Data as of January 31, 2024
Slide 10: Geographically diversified portfolio
FYE 2023 FYE 2023 LOTS CONTROLLED REVENUE (TOTAL = 70,664) (TOTAL = $9.87BN) North Mid-Atlantic South Ei Mountain Pacific REGENCY AT GLEN ELLEN | MILLIS}
Slide 11: Total addressable market
Jae Annual TOL oa Homes 16MM a With Income > $200k Tig Total Soe Addressable 16,000,000 = Market . TOL Annually Name Reaches .06% of TAM It would take us about ~16 years to sell to just 1% of the total addressable market
Slide 12: All households and $200,000+ income households
ALL HOUSEHOLDS $200,000+ INCOME HOUSEHOLDS (in 000s) (in 000s) 134,000 18,000 132,000 131,400 16,000 130,000 14,000 128,000 12,000 10,000 126,000 8,000 124,000 122,500 6,000 122,000 4,000 120,000 2,000 118,000 0 2012 2022 2012 2022 Source: U.S. Census Bureau (P60-249), September 2023
Slide 13: Evolution of the homebuilding industry
EVOLUTION OF THE HOMEBUILDING INDUSTRY WHY IS HOMEBUILDING A BETTER BUSINESS THAN IN THE PAST? WHAT HAS CHANGED? + Largest players are taking share - Public homebuilders have gone from 27% market share in 2012 to about 51% today + Better access to capital - Small private builders struggle to finance
Slide 14: Land acquisition and development
LAND ACQUISITION * Control 70,449 home sites * Reduced land owned vs optioned; From 62/38% at FYE 2019 to 51/49% at QI FY 2024 + Use land banking, JVs, staged/structural takedowns & seller financing + We operate in the most difficult land approval markets in U.S. - once you get it approved, it’s gol
Slide 15: Growing percentage of lots optioned vs. owned
GROWING PERCENTAGE OF LOTS OPTIONED VS. OWNED (AT FYE) 80,867 76,049 70,664 70,449 63,182 48,837 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 QI 2024 mm Owned mmm Optioned Avg. Owned
Slide 16: Toll Brothers Mortgage Company
Toll Brothers MORTGAGE COMPANY IN Q1 2024, 60% OF BUYERS CHOSE TOLL BROTHERS MORTGAGE COMPANY, IN-HOUSE LENDER EXCLUSIVE TO TOLL BROTHERS CUSTOMERS, OFFERING EXCEPTIONAL EXPERIENCE & OPERATIONAL BENEFITS IN MANAGING BACKLOG THROUGH CLOSING. 6 of Total Settlements Incl.Cash Excl. Cash LTV FICO Q1FY 2
Slide 17: The Toll Brothers Advantage
SUMMIT AT WESTCLIFF LOS ANGELES, CA THE TOLL BROTHERS ADVANTAGE INDUSTRY’S MOST PRESTIGIOUS LOCATIONS * Toll Brothers builds communities in the heart of where people want to live + Access to natural features, proximity to schools, commuter routes & entertainment DISTINCTIVE ARCHITECTURE + Extraordin
Slide 18: Toll Brothers Design Studios
ii Ni | il TOLL BROTHERS DESIGN STUDIOS + Build-to-Order model provides unrivaled choice for our home buyers * Goal: 60% of homes pre-sold build-to-order, 40% spec + We operate 34 Toll Brothers Design Studios, a retail-like space where buyers choose both structural & finishing options * Our buyers i
Slide 19: Greatest product diversification in the industry
GREATEST PRODUCT DIVERSIFICATION IN THE INDUSTRY + Entry-Level * Affordable Luxury * Luxury Move-Up * Active Adult * Urban Infill * Urban Redevelopment * Large-Scale Master Plans * High-Rise Urban Condos * Suburban High-Density * Urban & Suburban Rental * Student Housing Rental * Single-Family Renta
Slide 20: Only national homebuilder focused on the luxury market
TOLL BROTHERS IS THE ONLY NATIONAL HOMEBUILDER FOCUSED ON THE LUXURY MARKET. OUR MAIN COMPETITORS ARE SMALL PRIVATE BUILDERS, NOT THE LARGER PUBLIC HOMEBUILDERS. AVERAGE DELIVERED PRICE Top 5 Homebuilders (by revenues)* $1,028 693 sos $539 $545 $4s2 $493 $518 $433. «$451 $446 $451 $351 $377 ' L $382
Slide 21: Rolling Hills Country Club, Rolling Hills Estates, CA
Slide 22: Community count by buyer segment
TOLL BROTHERS COMMUNITY COUNT BY BUYER SEGMENT 47% 42% 42% om 40% 39% zay, 39% 36% 20% 49% 20% 20% ; ; L L Affordable Luxury Luxury Age Targeted / Empty Nester mMFY 2020 mFY2021 m@FY2022 mFY2023 "QIFY 2024
Slide 23: Holly Farm, Woodstock, GA
Slide 24: National Regency brand in 55+ Active Adult market
D » National Regency brand name in 55+ Active Adult/Empty Nester Market Established presence in 18 states & growing Toll Brothers: Control -14,700 (6,900 owned / 7,800 optioned) lots for Active Adult/Empty Nester communities R E G E N C Y Baby Boomers making their next home move Note: Data as of Jan
Slide 25: Regency at Desert Color, St George, UT
Slide 26: Toll Brothers City Living
TOLL BROTHERS CITY LIVING SUCCESSFUL URBAN TRACK RECORD * Formed in 2003 to leverage luxury brand in urban market * Completed construction on 43 buildings totaling ~6,000 units BRAND EXPERIENCE * Currently selling communities in New York City and New Jersey’s Gold Coast * Land in Metro New York City
Slide 27: Toll Brothers Apartment Living
MEO | ORANG COMPLEMENTS FOR-SALE BUSINESS ¢ Building on Toll Brothers brand name + Income generated from operations, fees, gains on sale or refinancing * Combine premier locations with luxury, for-sale finishes, services, & amenities in urban & suburban markets BROAD EXPERIENCE + Named 6" largest Mu
Slide 28: Operational efficiencies through innovation
OPERATIONAL EFFICIENCIES THROUGH INNOVATION TOLL INTEGRATED SYSTEMS PANEL & TRUSS PLANT ¢ Manufactures & distributes lumber, panels, trusses, engineered wood products, millwork, windows, exterior and interior trim & doors. ¢ 7 East Coast plants serving Boston to Tampa * Provides Building Materials t
Slide 29: Where is the market now
WHERE IS THE MARKET NOW DEMAND EQUATION * Continued population growth * Household formations are strong * From 2010 to 2020, new-home construction fell 6.8 million units short of what was needed to meet household- formation growth and replace obsolete units (WSJ) * Homeownership rate rising, but sti
Slide 30: Public builders are gaining market share
PUBLIC BUILDERS ARE GAINING MARKET SHARE LIC BUILDERS CONTINUE TO TAKE SHARE FROM THE PRIVATE BUILDERS AND ARE NOW 50% OF NEW HOME SETTLEMENTS AND PUBLIC BUILDERS DO NOT DO TEARDOWNS PUB ALMOS AND ON 1,600,000 1,400,000 1,200,000 1,000,000 800,000 CLOSINGS 600,000 400,000 200,000 0 E-OFFS PUBLIC AND
Slide 31: Home builder acquisitions spur growth
HOME BUILDER ACQUISITIONS SPUR GROWTH IN ADDITION TO STARTING MULTIPLE DE NOVO DIVISIONS, WE HAVE ACCELERATED OUR EXPANSION THROUGH ACQUISITIONS. Rialto Homes San Antonio, Texas 2022 StoryBook Homes Las Vegas, Nevada 2021 Keller Homes Colorado Springs, Colorado 2020 Thrive Residential Nashville, Ten
Slide 32: Housing stock is aging
2005 2007 2009 2011 2013 2015 2017 2019 2021
Slide 33: What buyers want today
Slide 34: Industry is undersupplied as households increase
Households (000) INDUSTRY IS UNDERSUPPLIED AS HOUSEHOLDS INCREASE HOUSING STARTS HAVE NOT KEPT PACE WITH HOUSEHOLD GROWTH 125,000 100,000 75,000 50,000 1970-1979 1980-1989 1990-1999 2000-2007 Average Annual Average Annual Average Annual Average Annual Housing Starts Housing Starts Housing Starts Hou
Slide 35: Increased focus on capital efficiency and return on equity
INCREASED FOCUS ON CAPITAL EFFICIENCY & RETURN ON EQUITY LAND PURCHASING: REDUCE OWNED LAND Structuring land acquisitions more efficiently Option more land as a % of total Increased use of staged/structured takedowns, as well as seller financing Use third-party land banking & JVs Controlling more la
Slide 36: Book value and earnings per share growth
TOLL BROTHER: S&P 500 BOOK VALUE S&P 500 AVERAGE EARNINGS CAGR: 4% $65.49 PER SHARE GROWTH CAGR: 8% $12.36 $10.90 Py [| [] l I 201 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2013 2014 «2015 2016 2017-2018) 2019 2020 2021: «2022-2023 Fiscal Year Fiscal Year
Slide 37: ROE and dividend growth
S&P 500 ROE CAGR: 4% 8.8% 2013. «2014: «6.2015 = 2016 = 2017-—s 2018 = 2019 2020 Fiscal Year Note: Return on Beginning Equity = Net Income / Prior Year Ending Equity. TOLL BROTHERS 24.3% 22.8% 17.1% | 2021 2022 2023 S&P 500 DIVIDEND GROWTH CAGR: 9% $0.41 $0.24 $0.44 $0.44 2017 2018 2019 2020 Fiscal
Slide 38: Stock repurchase / dividend
~ Y Y STOCK REPURCHASE / DIVIDEND ‘ SUMMARY Average Price Total $/ 2024P TBD $500MM TBD $85MM/$0.21* 2023 7,860,340 $566MM $72.00 $91MM/$0.21* 2022 10,999,502 $543MM $49.34 $89MM/$0.20 2021 7,421,423 $378MM $50.97 $77MM/$0.17 2020 15,951,855 $634MM $39.75 $57MM/$0.11 2019 6,619,345 $234MM $35.28 $64
Slide 39: Balance sheet protection
BALANCE SHEET PROTECTION Net Debt-To-Capital 2000-2023 (FYE) 45.8% 48.0% 46.0% 40.7% 41.1% 39.5% 40.9% 35.3% 34.5% 31.7% 2008 - 2011: 32.3% 33.2% 32.9% 33.3% 27.4% as market plummeted, 26.7% Toll’s balance sheet 23.3% 25.1% 23.4% strengthened inate . 9 17.7% 12.5% 13.3% “4.8% 2000 2001 2002 2003 200
Slide 40: Debt maturity profile
DEBT MATURITY PROFILE AS OF JANUARY 31, 2024 Cash & Equivalents $0.75 BN Moody's Baas (Stable) Revolver Availability $1.76 BN Standard & Poor’s BBB- (Stable) Fitch Inc. BBB (Stable) TOTAL LIQUIDITY $2.51 BN $400M fixed at 1.5% through 10/25; $250M floating | -~| (currently 6.5%) wa NY $488 $61 $102
Slide 41: Appendix
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Slide 42: Contracts, backlog, deliveries and earnings summary
3 Months Ended January 31, Fiscal Year Ended October 31, 2024 2023 % Change 2023 2022 % Change Contracts Units 2,042 1,461 40% 8,077 8,255 (2%) Dollars $2,065 $1,454 42% $7,908 $9,067 (13%) Backlog Units 6,693 7,733 (13%) 6,578 8,098 (19%) Dollars $7,081 $8,585 (18%) $6,945 $8,874 (22%) Deliveries U
Slide 43: Adjusted gross margin and EBITDA
ADJUSTED GROSS MARGIN & EBITDA 2 2016 2017 2018 2019 2020 2021 2022 2023 = =Q12024 Revenues - home sales 4,171,248 5,169,508 5,815,058 7,143,258 += 7,080,379 6,937,357 8,431,746 9,711,170 9,866,026 —‘1,931,836 Cost of Revenues 3,190,957 4,047,615 4,448,452 5,536,812 5,534,217 5,534,103 6,538,454 7,2
Slide 44: Net debt-to-capital
NET DEBT-TO-CAPITAL 2009 2019 2020 Loans payable 472,854 94,491 106,556 __99,817_ 107,222 652,619 1,000,439 __871,079 __ 637,416 __686,801__1,11449 1,147,955 _ 1,011,534 185,275 1,164,224 1,064,149 Senior notes 1578212 1,536,005 1,484,204 2,065,334 2,305,765 _2,638,241_2,689,801_2,694,372_2,462,463