Toll Brothers, Inc. · NYSE:TOL
Toll Brothers — Investor Presentation (October 2022)
61 slides from Toll Brothers's investor presentation, Oct 31, 2022
Slide 1: Company Overview
Slide 2: Forward-looking statements
Information presented herein for the fourth quarter ended October 31, 2022, is subject to finalization of the Company's regulatory filings, related financial and accounting reporting procedures and external auditor procedures. This presentation contains or may contain forward-looking statements with
Slide 3: Table of Contents
EXECUTIVE SUMMARY 1 RwWN Company Overview Forward-looking Statement Table of Contents America’s Luxury Home Builder Toll Brothers Differentiators Quarter and FY Results Key Financial Metrics Quarterly Results Factors Driving Demand . National Footprint . Geographically Diversified Portfolio . Builde
Slide 4: Toll Brothers Is America's Luxury Home Builder
TOLL BROTHERS IS AMERICA’S LUXURY HOME BUILDER LEGACY & LEADERSHIP SOPHISTICATED LAND FINANCIAL & + Founded in 1967, NYSE-listed (TOL) in 1986 eee cceucy. N MANAGEMENT STRENGTH + 5t Largest U.S. homebuilder by revenues & RETURN ON EQUITY * Solid balance sheet with ~$3.1BN of liquidity . . * Strong c
Slide 5: The Dominant Player With Few Competitors In The Luxury Home Market
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 both high-growth & high barrier-t
Slide 6: Quarter and fiscal year key results
3 Months Ended October 31, Fiscal Year Ended Oc 2022 2021 % Change 2022 2021 % Change Contracts Units 1,186 2,957 (60%) 8,255 12,472 (34%) Dollars $1,320 $2,999 (56%) $9,067 $11,540 (21%) Backlog Units 8,098 10,302 (21%) 8,098 10,302 (21%) Dollars $8,874 $9,499 (7%) $8,874 $9,499 (7%) Deliveries Uni
Slide 7: Key financial metrics FY 2016-2022
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/documents/historical/tol- financial historical-foldout-749700.pdf | FY 2016 | FY 2017 | FY 2018 | FY 2019 | FY 202
Slide 8: Q4 & FY 2022 Results
Q4 & FY 2022 RESULTS FY 2022 earnings per share up 65% vs FY 2021 FY 2022 revenues up 15% vs FY 2021 Q4 2022 settlements up 21% in dollars, & up 13% in units Q4 2022 contracts down 56% in dollars, & down 60% in units FYE 2022 backlog down 7% in dollars, & down 21% in units Expect 10% community count
Slide 9: Factors Impacting Demand
FACTORS IMPACTING DEMAND + Affordability challenges from rapid rise in interest rates & in home prices has sidelined many potential buyers * 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
Slide 10: National Footprint Positions Toll Brothers for Growth
NATIONAL FOOTPRINT POSITIONS 24 STATES TOLL BROTHERS FOR GROWTH 60+ MARKETS it O nm n " i rin Raleigh Los Angeles '@) Q n Di © Myrtle Beach oe fe Charlestor Dc n Hilton Head fe, Jacksonville Total: 348 Note: Data as of October 31, 2022
Slide 11: Geographically Diversified Portfolio
GEOGRAPHICALLY DIVERSIFIED PORTFOLIO FYE 2022 FYE 2022 LOTS CONTROLLED REVENUE (TOTAL = 79,049) (TOTAL = $9.712BN) North Mid-Atlantic South Mountain Pacific VIRIDIAN | TX
Slide 12: Expansion Through Acquisitions
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, Tennessee & Atlanta, Georgia 2020 Sabal H
Slide 13: Land Acquisition and Development
LAND ACQUISITION * Control 76,049 home sites * Reduced land owned vs optioned; From 62/38% at FYE 2019 to 50/50% at FYE 2022 + 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 gold!
Slide 14: Growing Percentage of Lots Optioned vs. Owned
GROWING PERCENTAGE OF LOTS OPTIONED VS. OWNED (AT FYE) 80,867 76,049 48,837 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Mm Owned mmm Optioned Avg. Owned
Slide 15: Strong Buyer Profile
Toll Brothers STRONG BUYER PROFILE _,Toll Brothers | IN Q@4 2022, 48% 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. % of Total 20% . LTV FICO Settlement
Slide 16: 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 17: Leadership In The Luxury Market
LEADERSHIP IN 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 $420 $420 $423 ; i i ; ; ; ; $484 $924 $639 $524 LGl HOMES DR HORTON CENTURY MERIT
Slide 18: Leadership in the Luxury Market
lea Toll Brothers BRIDLE RANCH SDALE, AZ 18
Slide 19: Edge on Hudson, Sleepy Hollow, NY
Slide 20: Mesa Ridge, Las Vegas, NV
Slide 21: Estates at Ramm Hollow, Lincroft, NJ
Slide 22: Increased Focus on Affordable Luxury
INCREASED FOCUS ON AFFORDABLE LUXURY TOLL BROTHERS COMMUNITY COUNT BY BUYER SEGMENT 48% 43% 40% 39% : } i i 42% 39% 40% _ | | Affordable Luxury Luxury Age Targeted / Empty Nester FY 2019 mFY 2020 mFY 2021 mFY 2022
Slide 23: Bartram Ranch, St. Johns, FL
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Slide 25: Abaco Point, Naples, FL
Slide 26: Toll Brothers at Cadence, Scottsdale, AZ
Slide 27: National Regency brand in 55+ Active Adult market
* National Regency brand name in 55+ Active Adult/Empty Nester Market * Established presence in 18 states & growing R E G E N CY * Control -16,800 (7,500 owned / 9,300 optioned) lots for Active BY TOLL BROTHERS Adult/Empty Nester communities * Baby Boomers making their next home move Note: Data as o
Slide 28: Regency at Montaine, Englewood, CO
Toll Brothers “REGENCY AT MONTAINE | ENGLEWOOD, CO
Slide 29: Preserve at Emerald Pines, Methuen, MA
Slide 30: Regency at Palisades, Charlotte, NC
Slide 31: Regency
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Slide 32: Suburban High-Density
Slide 33: Successful Urban Track Record
SUCCESSFUL URBAN TRACK RECORD * Formed in 2003 to leverage luxury brand in urban market * Completed construction on 45 buildings totaling ~7,200 units BRAND EXPERIENCE * Currently selling communities in New York City and New Jersey’s Gold Coast + Land in Metro New York City + Joint venturing with in
Slide 34: Toll Brothers City Living
. ~~ “TOLT’BROTH Cll Ye lo Brothers
Slide 35: —
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Slide 36: Toll Brothers Apartment Living
Hi west @ wee | | - yl 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 11th large
Slide 37: GEESEEEREEEE
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Slide 38: Apartment Living Pipeline
TOLL BROTHERS APARTMENT LIVING PIPELINE 27,265 TOTAL UNITS IN 8 2 Denver Santa Fe, 245 Units PROPERTIES ‘Southern California Cameo, 262 Units The Lindley, 363 Units Rafferty, 218 Units Victoria Bivd, 349 Units Oceanside NCTD, 547 Units ‘Warner Center, 341 Units Nashville @ STUDENT HOUSING UMD - Terr
Slide 39: The Toll Brothers Advantage
UNRIVALED CHOICE * Highly personalized & hands-on Design Studio experience guided by a professional design consultant * Selections from premium products, state-of-the-art appliances, & luxury fixtures & finishes PRESTIGIOUS LOCATIONS * Toll Brothers builds communities in the heart of where people wa
Slide 40: Toll Brothers Design Studios
= = TOLL BROTHERS DESIGN STUDI ~— DANBURY, CT Build-to-Order model provides unrivaled choice for our home buyers Goal: 80% of homes pre-sold build-to-order, 20% spec We operate 33 Toll Brothers Design Studios, a retail-like space where buyers choose both structural & finishing options Our buyers inc
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Slide 42: Highest Ranking Selling Communities in Submarket Desirability Index
HIGHEST RANKING SELLING COMMUNITIES IN ‘SUBMARKET DESIRABILITY INDEX’ 3.06 2.83 276 a 6g 259 257 254 252 2.32. 2.29. 218 214 2.08 1.96 1.50 TOL MHO TMHC PHM LEN TPH HOV MTH KBH ZH CCS DHI MDC NVR LGIH mmm Score Average The weighted average Submarket Desirability Index is the proprietary measurement
Slide 43: Toll Integrated Systems Panel & Truss Plant
TOLL INTEGRATED SYSTEMS PANEL & TRUSS PLANT + Manufactures & distributes panels, trusses, trim, doors, millwork, & windows + — Provides Turnkey Framing Services to 10 states (9 Divisions) * — Supplied components for 29% of our homes in FY 2022 + — Improves timeline & quality; reduces costs, waste, &
Slide 44: Environmental, Social and Governance
* — Inaugural report released April 19, 2021 * Metrics updated in FY 2022 for FY 2021 * — Utilizes industry-specific standards from the Sustainability Accounting Standards Board (SASB) * Benchmarks efforts on a range of environmental, social & governance matters * — Visit the report at TollBrothers.
Slide 45: 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 still bel
Slide 46: Key Market Trends
KEY MARKET TRENDS MARKET TRENDS Millennials are now buying their first homes Baby Boomers consider their next move: the home they want to retire in, asecond home, or a multi-generational living option Economy & population growth in the Southeast, Texas, Mountain States, West; Jobs in the South & Wes
Slide 47: Median Age of Owner-Occupied Housing
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 48: 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 49: Buyer Credit
Billions of Dollars Billions of Dollars • • • •
Slide 50: Increased Focus on Capital Efficiency & Return on Equity
THE CANYONS Alte PORTER RAN 4 poe BORTER RANCH 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 51: Debt Maturity Profile
As of October 31, 2022 Cash & Equivalents $1.35BN Fitch Inc. BBB- (Positive) Revolver Availability $1.79BN Moody’s Baa3_ (Stable) Standard & Poor's BB+ (Positive) TOTAL LIQUIDITY $3.13BN so |B} so so so & FYE 2022 2023 2024 2025 2026 2027 2028 2029 2030 m Public Debt (Senior) = Bank Debt* “Bank debt
Slide 52: Strong Bank and Capital Market Relationships
First Huntingdon Finance Corp. Toll Brothers Finance Corp. $1.905 BN Revolving Credit Facility $650 MM Term Loan Due November 2026+ Due November 2026 Commitment Commitment Series Coupon Principal Maturity (yrs) Citi $125MM —Truist $102 MM Bank of America $125MM — SMBC* $102 MM Goldman Sachs $125MM W
Slide 53: Book Value Per Share
$15.36 $15.61 $18.51 $19.68 $22.02 $24.15 $26.14 $28.82 $32.57 $35.99 $38.53 $44.08 $54.79
Slide 54: Balance Sheet Protection
$2 $2 $2 $3 $4 $6 $6 $5 $3 $2 $2 $2 $2 $3 $4 $4 $5 $6 $7 $7 $7 $8 $10 Revenues (BNs)
Slide 55: Stock Repurchase Summary
2022 10,997,564 $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 $64MM/$0.11 2018 12,108,158 $503MM $41.56 $62MM/$0.11 2017 7,693,630 $291MM $3781 $39MM/$0.08 2016 13,652,384 $393MM $28.77 == TOTAL 74,444,359 $
Slide 56: Adjusted Gross Margin & EBITDA
ADJUSTED GROSS MARGIN & EBITDA 20 2016 2017 2018 2019 2020 2021 2022 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 Cost of Revenues 3,190,957 4,047,615 4,448,452 5,536,812 5,534,217 5,534,103 6,528,454 7,237,409 Gross Margin 980,291 1,121,893
Slide 57: Net Debt-to-Capital
NET DEBT-TO-CAPITAL 2009 2 2011 2012 2013 201. 2015 2017 2018 9 2020 2021 2022 Loans payable 472,854 94,491 106,556. 99,817 107,222 652,619 1,000,439 ___871,079 637,416 _686,801_1,111,449 _1,147,955_1,011,534_1,185,275 Senior notes 1,578,212 1,536,005 1,484,204 _ 2,065,334 __2,305,765__2,638,241__2,
Slide 58: Housing stock by year built
Built 1969 or earlier Built 1970 to 1979 Built 1980 to 1989 Yt Built 1990 to 1999 Built 2000 to 2009 Built 2010 or later WEST CLIFIE AT PORTER RANCH | < LOS ANGE LES, CA Note: 2021 Fear ACS Estimates
Slide 59: 9 or less 10 to 19 20 to 29
9 or less 10 to 19 20 to 29 30 to 39 40 to 49 50 or more 2009 2019
Slide 60: Book value per share
$19.68 $22.02 $24.15 $26.14 $28.82 $32.57 $35.99 $38.53 $44.08 $54.79
Slide 61: Dividends per share
$0.32 $0.44 $0.44 $0.44 $0.68 $0.77