GlobeNewswire Inc | May 25, 2021 04:30PM EDT

May 25, 2021

FORT WASHINGTON, Pa., May 25, 2021 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (TollBrothers.com), the nations leading builder of luxury homes, today announced results for its second quarter ended April30, 2021.

FY 2021s Second Quarter Financial Highlights (Compared to FY 2020's Second Quarter):

-- Net income and earnings per share were $127.9 million and $1.01 per share diluted, compared to net income of $75.7 million and $0.59 per share diluted in FY 2020s second quarter. -- Pre-tax income was $169.8 million, compared to $102.1 million in FY 2020s second quarter. Pre-tax income in the second quarter of FY 2021 includes a charge of $34.2 million for the early retirement of debt. -- Home sales revenues were a second quarter record $1.84 billion, up 21% compared to FY 2020s second quarter; delivered homes were 2,271, up 18%. -- Net signed contract value was $3.05 billion, up 97% compared to FY 2020s second quarter; contracted homes were 3,487, up 85%. Net signed contracts, in both dollars and units, were all-time records. -- Backlog value was $8.69 billion at second quarter end, up 58% compared to FY 2020s second quarter; homes in backlog were 10,104, up 57%. Quarter-end backlog, in both dollars and units, were all-time records. -- Home sales gross margin was 21.9%, compared to FY 2020s second quarter home sales gross margin of 19.5%. -- Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 24.4%, compared to FY 2020s second quarter adjusted home sales gross margin of 22.9%. -- SG&A, as a percentage of home sales revenues, was 11.9%, compared to 13.8% in FY 2020s second quarter. -- Income from operations was $184.4 million. -- Other income, income from unconsolidated entities, and gross margin from land sales and other was $21.5 million. -- In March 2021, the Company announced an increase of its quarterly cash dividend to $0.17 per share, or a rate of $0.68 per share on an annualized basis, representing a 54.5% increase from the prior quarterly cash dividend of $0.11 per share.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: Our business continues to operate at a very high level. With strong demand and constrained industry-wide supply, we have continued to raise prices in excess of cost increases while setting all-time records for contracts and backlog in both units and dollars, and exceeding our guidance on nearly every metric.

These exceptional results reflect the strategic expansion of our product lines and geographies, as well as structural changes we have made in how we operate to focus on driving sustainable increases in profit margins and return on equity. Based on the land we currently control, we are projecting community count growth to 340 communities at fiscal year end, with an additional 10% growth in fiscal 2022.

We are encouraged by the continued strength of the housing market, which is supported by a long-term supply-demand imbalance, favorable demographics, especially the drive to home ownership among millennials, low mortgage rates, and the greater overall appreciation for ones home that has emerged out of the pandemic. These market conditions, which we expect to continue into the foreseeable future, play to our strengths of creating luxury communities in desirable locations, offering a broad range of price points, and providing our home buyers the ability to personalize their homes.

Based on the strength of our outlook for the remainder of this year and beyond, we are raising our fiscal year 2021 guidance on nearly all key metrics. We expect continued margin improvement through the second half of fiscal 2021 as well as in 2022, and we project return on beginning equity in excess of 20% in fiscal 2022.

Third Quarter and FY 2021 Financial Guidance: Third Quarter Full Fiscal Year 2021Deliveries (1) 2,675 units 10,200 - 10,400 unitsAverage Delivered Price $820,000 - $805,000 - $840,000 $825,000Adjusted Home Sales Gross Margin 24.8 % 24.6 %SG&A, as a Percentage of Home Sales 11.6 % 11.8 %RevenuesQuarter-End Community Count Approximately Approximately 310 340Other Income, Income from Unconsolidated $110.0Entities, and Gross Margin from Land Sales $20.0 million million and otherTax Rate 26.0 % 25.5 %

(1) Delivery guidance for the third quarter reflects the slower COVID-19 impacted sales environment of mid-March through May 2020

Financial Highlights for the three months ended April 30, 2021 and 2020(unaudited): 2021 2020 $127.9 million, $75.7 million,Net Income or $1.01 per or $0.59 per share diluted share dilutedPre-Tax Income $169.8 million $102.1 million Pre-Tax Inventory Impairments $1.6 million $14.2 million Home Sales Revenues $1.84 billion $1.52 billion and 2,271 units and 1,923 unitsNet Signed Contracts $3.05 billion $1.55 billion and 3,487 units and 1,886 unitsNet Signed Contracts per Community 11.3 units 5.8 units Quarter-End Backlog $8.69 billion $5.49 billion and 10,104 units and 6,428 unitsAverage Price of Homes in Backlog $860,100 per $854,500 per home homeHome Sales Gross Margin 21.9 % 19.5 %Adjusted Home Sales Gross Margin 24.4 % 22.9 %Interest Included in Home Sales Costof Revenues, as a percentage of Home 2.4 % 2.5 %Sales RevenuesSG&A, as a percentage of Home Sales 11.9 % 13.8 %Revenues $184.4 million, $92.5 million,Income from Operations or 9.6% of total or 6.0% of total revenues revenuesOther Income, Income fromUnconsolidated Entities, and Gross $21.5 million $16.0 million Margin from Land Sales and OtherQuarterly Cancellations as aPercentage of Signed Contracts in 4.0 % 9.7 %QuarterQuarterly Cancellations as aPercentage of Beginning-Quarter 1.6 % 3.1 %Backlog

Financial Highlights for the six months ended April 30, 2021 and 2020(unaudited): 2021 2020 $224.4 million, or $132.5 million, orNet Income $1.77 per share $0.99 per share diluted dilutedPre-Tax Income $297.2 million $168.0 millionPre-Tax Inventory Impairments $2.8 million $15.2 millionHome Sales Revenues $3.25 billion and $2.81 billion and 4,048 units 3,534 unitsNet Signed Contracts $5.56 billion and $3.04 billion and 6,361 units 3,692 units $303.5 million, or $140.0 million, orIncome from Operations 8.7% of total 4.9% of total revenues revenuesOther Income, Income fromUnconsolidated Entities, and Land $71.7 million $36.2 millionSales Gross Profit

Additional Financial Information:

-- The Company ended its FY 2021 second quarter with approximately $715 million in cash and cash equivalents, compared to $1.37 billion at FYE 2020 and $950 million at FY 2021s first quarter end. At FY 2021 second quarter end, the Company also had $1.790 billion available under its $1.905 billion bank revolving credit facility, substantially all of which is scheduled to mature in November 2025. -- On April23, 2021, the Company paid its quarterly dividend of $0.17 per share to shareholders of record at the close of business on April9, 2021. -- Stockholders' Equity at FY 2021 second quarter end was $4.91 billion, compared to $4.88 billion at FYE 2020. -- FY 2021's second quarter end book value per share was $39.82 per share, compared to $38.53 at FYE 2020. -- The Company ended its FY 2021 second quarter with a debt-to-capital ratio of 42.2%, compared to 43.8% at FY 2021s first quarter end and 44.8% at FYE 2020. The Company ended FY 2021s second quarter with a net debt-to-capital ratio(1) of 35.6%, compared to 35.8% at FY 2021s first quarter end, and 33.3% at FYE 2020. -- The Company ended FY 2021s second quarter with approximately 74,500 lots owned and optioned, compared to 67,700 one quarter earlier, and 62,100 one year earlier. Approximately 51%, or 38,000, of these lots were owned, of which approximately 18,000 lots, including those in backlog, were substantially improved. -- In the second quarter of FY 2021, the Company spent approximately $205.8 million on land to purchase approximately 2,053 lots. -- The Company ended FY 2021s second quarter with 320 selling communities, compared to 309 at FY 2021s first quarter end and 326 at FY 2020s second quarter end. -- In March 2021, the Company redeemed all $250 million of its outstanding 5.625% senior notes due 2024. The Company incurred a pre-tax charge of approximately $34.2 million in the second quarter for the early retirement of debt.

(1)See Reconciliation of Non-GAAP Measures below for more information on the calculation of the Companys net debt-to-capital ratio.

Toll Brothers will be broadcasting live via the Investor Relations section of its website, investors.TollBrothers.com, a conference call hosted by Chairman & CEO Douglas C. Yearley, Jr. at 8:30 a.m. (ET) Wednesday, May 26, 2021, to discuss these results and its outlook for the third quarter and FY 2021. To access the call, enter the Toll Brothers website, click on the Investor Relations page, and select Events & Presentations. Participants are encouraged to log on at least fifteen minutes prior to the start of the presentation to register and download any necessary software.

The call can be heard live with an online replay which will follow.

ABOUT TOLL BROTHERS

Toll Brothers, Inc., A FORTUNE 500 Company, is the nation's leading builder of luxury homes. The Company was founded over fifty years ago in 1967 and became a public company in 1986. Its common stock is listed on the New York Stock Exchange under the symbol TOL. The Company serves first-time, move-up, empty-nester, active-adult, and second-home buyers, as well as urban and suburban renters. Toll Brothers builds in 24 states: Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, and Washington, as well as in the District of Columbia. The Company operates its own architectural, engineering, mortgage, title, land development, golf course development, smart home technology, and landscape subsidiaries. The Company also operates its own lumber distribution, house component assembly, and manufacturing operations.

2021 marks the 10th year Toll Brothers has been named to FORTUNE magazines Worlds Most Admired Companies list. Toll Brothers has been honored as Builder of the Year by Builder magazine and is the first two-time recipient of Builder of the Year by Professional Builder magazine. For more information visit TollBrothers.com.

Toll Brothers discloses information about its business and financial performance and other matters, and provides links to its securities filings, notices of investor events, and earnings and other news releases, on the Investor Relations section of its website (investors.TollBrothers.com).

FORWARD-LOOKING STATEMENTS

Information presented herein for the second quarter ended April 30, 2021 is subject to finalization of the Company's regulatory filings, related financial and accounting reporting procedures and external auditor procedures.

This release contains or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. One can identify these statements by the fact that they do not relate to matters of a strictly historical or factual nature and generally discuss or relate to future events. These statements contain words such as anticipate, estimate, expect, project, intend, plan, believe, may, can, could, might, should, likely, will, and other words or phrases of similar meaning. Such statements may include, but are not limited to, information and statements regarding: the impact of Covid-19 on the U.S. economy and on our business; expectations regarding inflation and interest rates; the markets in which we operate or may operate; our strategic priorities; our land acquisition, land development and capital allocation priorities; market conditions; demand for our homes; anticipated operating results and guidance; home deliveries; financial resources and condition; changes in revenues; changes in profitability; changes in margins; changes in accounting treatment; cost of revenues, including expected labor and material costs; selling, general, and administrative expenses; interest expense; inventory write-downs; home warranty and construction defect claims; unrecognized tax benefits; anticipated tax refunds; sales paces and prices; effects of home buyer cancellations; growth and expansion; joint ventures in which we are involved; anticipated results from our investments in unconsolidated entities; our ability to acquire or dispose of land and pursue real estate opportunities; our ability to gain approvals and open new communities; our ability to market, construct and sell homes and properties; our ability to deliver homes from backlog; our ability to secure materials and subcontractors; our ability to produce the liquidity and capital necessary to conduct normal business operations or to expand and take advantage of opportunities; and the outcome of legal proceedings, investigations, and claims.

Any or all of the forward-looking statements included in this release are not guarantees of future performance and may turn out to be inaccurate. This can occur as a result of incorrect assumptions or as a consequence of known or unknown risks and uncertainties. The major risks and uncertainties and assumptions that are made that affect our business and may cause actual results to differ from these forward-looking statements include, but are not limited to:

-- the effects of the ongoing Covid-19 pandemic, which are highly uncertain, cannot be predicted and will depend upon future developments, including the severity of the pandemic and its duration, the duration of social distancing and other mitigation strategies taken by applicable government authorities, the availability and effectiveness of vaccines, adequate testing and therapeutic treatments and the prevalence of widespread immunity to Covid-19; -- the effect of general economic conditions, including employment rates, housing starts, interest rate levels, availability of financing for home mortgages and strength of the U.S. dollar; -- market demand for our products, which is related to the strength of the various U.S. business segments and U.S. and international economic conditions; -- the availability of desirable and reasonably priced land and our ability to control, purchase, hold and develop such parcels; -- access to adequate capital on acceptable terms; -- geographic concentration of our operations; -- levels of competition; -- raw material and labor prices and availability; -- the effect of U.S. trade policies, including the imposition of tariffs and duties on home building products and retaliatory measures taken by other countries; -- the effects of weather and the risk of loss from earthquakes, volcanoes, fires, floods, droughts, windstorms, hurricanes, pest infestations and other natural disasters, and the risk of delays, reduced consumer demand, and shortages and price increases in labor or materials associated with such natural disasters; -- the risk of loss from acts of war, terrorism or outbreaks of contagious diseases, such as Covid-19; -- transportation costs; -- federal and state tax policies; -- the effect of land use, environment and other governmental laws and regulations; -- legal proceedings or disputes and the adequacy of reserves; -- risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, indebtedness, financial condition, losses and future prospects; -- changes in accounting principles; -- risks related to unauthorized access to our computer systems, theft of our and our homebuyers confidential information or other forms of cyber-attack; and -- other factors described in Risk Factors included in our Annual Report on Form 10-K for the year ended October 31, 2020 and in subsequent filings we make with the Securities and Exchange Commission (SEC).

Many of the factors mentioned above or in other reports or public statements made by us will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from our forward-looking statements.

Forward-looking statements speak only as of the date they are made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.

For a further discussion of factors that we believe could cause actual results to differ materially from expected and historical results, see the information under the captions Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form 10-K filed with the SEC and in subsequent reports filed with the SEC. This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all of our forward-looking statements are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

TOLL BROTHERS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Amounts in thousands)

April 30, October 31, 2021 2020 (Unaudited) ASSETS Cash and cash equivalents $ 714,968 $ 1,370,944 Inventory 8,260,664 7,658,906 Property, construction and office equipment, 276,224 316,125 netReceivables, prepaid expenses and other assets 849,764 956,294 Mortgage loans held for sale 204,421 231,797 Customer deposits held in escrow 94,432 77,291 Investments in unconsolidated entities 533,595 430,701 Income taxes receivable 40,951 23,675 $ 10,975,019 $ 11,065,733 LIABILITIES AND EQUITY Liabilities: Loans payable $ 1,033,165 $ 1,147,955 Senior notes 2,403,163 2,661,718 Mortgage company loan facility 146,932 148,611 Customer deposits 609,387 459,406 Accounts payable 502,293 411,397 Accrued expenses 1,115,437 1,110,196 Income taxes payable 203,853 198,974 Total liabilities 6,014,230 6,138,257 Equity: Stockholders? Equity Common stock 1,529 1,529 Additional paid-in capital 709,422 717,272 Retained earnings 5,352,573 5,164,086 Treasury stock, at cost (1,148,406 ) (1,000,454 )Accumulated other comprehensive loss (2,048 ) (7,198 )Total stockholders' equity 4,913,070 4,875,235 Noncontrolling interest 47,719 52,241 Total equity 4,960,789 4,927,476 $ 10,975,019 $ 11,065,733

TOLL BROTHERS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Amounts in thousands, except per share data and percentages)(Unaudited)

Three Months Ended Six Months Ended April 30, April 30, 2021 2020 2021 2020 $ % $ % $ % $ %Revenues: Home sales $ 1,836,260 $ 1,516,234 $ 3,246,964 $ 2,813,571 Land sales and 93,864 32,838 246,536 66,932 other 1,930,124 1,549,072 3,493,500 2,880,503 Cost of revenues:Home sales 1,434,493 78.1 % 1,220,978 80.5 % 2,556,286 78.7 % 2,254,100 80.1 %Land sales and 92,091 98.1 % 26,418 80.4 % 203,825 82.7 % 58,700 87.7 %other 1,526,584 1,247,396 2,760,111 2,312,800 Gross margin - 401,767 21.9 % 295,256 19.5 % 690,678 21.3 % 559,471 19.9 %home salesGross margin -land sales and 1,773 1.9 % 6,420 19.6 % 42,711 17.3 % 8,232 12.3 %other Selling, generaland 219,170 11.9 % $ 209,128 13.8 % 429,909 13.2 % 427,659 15.2 %administrativeexpensesIncome from 184,370 92,548 303,480 140,044 operations Other: Income fromunconsolidated 10,483 (4,271 ) 11,677 7,870 entitiesOther income - 9,213 13,836 17,285 20,131 netExpenses relatedto early (34,240 ) (35,211 ) retirement ofdebtIncome before 169,826 102,113 297,231 168,045 income taxesIncome tax 41,960 26,443 72,866 35,499 provisionNet income $ 127,866 $ 75,670 $ 224,365 $ 132,546 Per share: Basic earnings $ 1.03 $ 0.59 $ 1.79 $ 1.00 Diluted earnings $ 1.01 $ 0.59 $ 1.77 $ 0.99 Cash dividend $ 0.17 $ 0.11 $ 0.28 $ 0.22 declaredWeighted-averagenumber of shares:Basic 124,295 128,205 125,177 133,175 Diluted 125,999 128,809 126,780 134,349 Effective tax 24.7 % 25.9 % 24.5 % 21.1 % rate

TOLL BROTHERS, INC. AND SUBSIDIARIESSUPPLEMENTAL DATA(Amounts in thousands)(unaudited)

Three Months Ended Six Months Ended April 30, April 30, 2021 2020 2021 2020Inventory impairment charges recognized:Cost of home sales -land owned/controlled $ 1,581 $ 13,914 $ 1,747 $ 14,945 for future communitiesCost of home sales - 300 1,100 300 operating communities $ 1,581 $ 14,214 $ 2,847 $ 15,245 Depreciation and $ 16,305 $ 15,618 $ 33,181 $ 30,285 amortizationInterest incurred $ 38,447 $ 46,104 $ 79,715 $ 89,754 Interest expense: Charged to home sales $ 44,092 $ 38,037 $ 77,417 $ 70,811 cost of salesCharged to land salesand other cost of 579 737 2,417 1,304 salesCharged to other 2,440 2,440 income - net $ 44,671 $ 41,214 $ 79,834 $ 74,555 Home sites controlled: April 30, April 30, 2021 2020Owned 37,952 37,112 Optioned 36,514 25,028 74,466 62,140

Inventory at April30, 2021 and October31, 2020 consisted of the following (amounts in thousands):

April 30, October 31, 2021 2020Land and land development costs $ 2,101,713 $ 2,094,775 Construction in progress 5,479,780 4,848,647 Sample homes 351,932 398,053 Land deposits and costs of future 327,239 317,431 development $ 8,260,664 $ 7,658,906

Toll Brothers operates in two segments: Traditional Home Building and Urban Infill ("City Living"). Within Traditional Home Building, the Company operates in the following five geographic segments, with current operations in the states listed below:

-- North: Connecticut, Delaware, Illinois, Massachusetts, Michigan, Pennsylvania, New Jersey and New York -- Mid-Atlantic: Georgia, Maryland, North Carolina, Tennessee and Virginia -- South: Florida, South Carolina and Texas -- Mountain: Arizona, Colorado, Idaho, Nevada and Utah -- Pacific: California, Oregon and Washington

Three Months Ended April 30, Units $ (Millions) Average Price Per Unit $ 2021 2020 2021 2020 2021 2020REVENUES North 562 449 $ 390.7 $ 296.0 $ 695,100 $ 659,300 Mid-Atlantic 304 303 218.3 192.9 $ 718,100 $ 636,600 South 408 348 280.2 230.8 $ 686,700 $ 663,400 Mountain 605 505 431.8 337.5 $ 713,800 $ 668,300 Pacific 347 289 458.6 423.3 $ 1,321,600 $ 1,464,700 Traditional Home 2,226 1,894 1,779.6 1,480.5 $ 799,500 $ 781,700 BuildingCity Living 45 29 58.0 36.8 $ 1,288,500 $ 1,268,000 Corporate and other (1.3 ) (1.1 ) Total home sales 2,271 1,923 1,836.3 1,516.2 $ 808,600 $ 788,500 Land sales and other 93.9 32.8 Total consolidated $ 1,930.2 $ 1,549.0 CONTRACTS North 551 377 $ 454.4 $ 269.8 $ 824,600 $ 715,700 Mid-Atlantic 386 294 323.9 219.9 $ 839,100 $ 748,100 South 800 395 561.8 273.3 $ 702,300 $ 691,800 Mountain 1,216 509 920.0 362.0 $ 756,600 $ 711,300 Pacific 488 294 707.6 400.5 $ 1,450,000 $ 1,362,100 Traditional Home 3,441 1,869 2,967.7 1,525.5 $ 862,500 $ 816,200 BuildingCity Living 46 17 85.3 27.7 $ 1,854,500 $ 1,627,300 Total consolidated 3,487 1,886 $ 3,053.0 $ 1,553.2 $ 875,500 $ 823,500 BACKLOG North 1,893 1,677 $ 1,477.9 $ 1,187.1 $ 780,700 $ 707,900 Mid-Atlantic 1,218 781 1,039.7 574.2 $ 853,600 $ 735,200 South 2,107 1,174 1,492.1 861.4 $ 708,200 $ 733,800 Mountain 3,338 1,699 2,533.4 1,271.4 $ 759,000 $ 748,400 Pacific 1,432 999 1,949.7 1,450.7 $ 1,361,500 $ 1,452,100 Traditional Home 9,988 6,330 8,492.8 5,344.8 $ 850,300 $ 844,400 BuildingCity Living 116 98 197.4 148.1 $ 1,701,700 $ 1,510,900 Total consolidated 10,104 6,428 $ 8,690.2 $ 5,492.9 $ 860,100 $ 854,500

Six Months Ended April 30, Units $ (Millions) Average Price Per Unit $ 2021 2020 2021 2020 2021 2020REVENUES North 1,013 842 $ 703.3 $ 550.1 $ 694,300 $ 653,300 Mid-Atlantic 531 543 382.3 355.4 $ 720,000 $ 654,500 South 749 622 497.1 414.5 $ 663,700 $ 666,400 Mountain 1,130 906 809.8 600.6 $ 716,600 $ 662,900 Pacific 573 556 789.8 818.6 $ 1,378,400 $ 1,472,300 Traditional Home 3,996 3,469 3,182.3 2,739.2 $ 796,400 $ 789,600 BuildingCity Living 52 65 65.8 76.6 $ 1,265,400 $ 1,178,500 Corporate and other (1.1 ) (2.2 ) Total home sales 4,048 3,534 3,247.0 2,813.6 $ 802,100 $ 796,200 Land sales 246.5 66.9 Total consolidated $ 3,493.5 $ 2,880.5 CONTRACTS North 1,000 777 $ 811.1 $ 557.0 $ 811,100 $ 716,900 Mid-Atlantic 759 536 651.4 389.4 $ 858,200 $ 726,500 South 1,368 748 950.7 517.7 $ 695,000 $ 692,100 Mountain 2,194 999 1,671.8 719.5 $ 762,000 $ 720,200 Pacific 961 581 1,351.7 783.8 $ 1,406,600 $ 1,349,100 Traditional Home 6,282 3,641 5,436.7 2,967.4 $ 865,400 $ 815,000 BuildingCity Living 79 51 124.3 75.1 $ 1,573,400 $ 1,472,500 Total consolidated 6,361 3,692 $ 5,561.0 $ 3,042.5 $ 874,200 $ 824,100

Unconsolidated entities:

Information related to revenues and contracts of entities in which we have an interest for the three-month and six-month periods ended April30, 2021 and 2020, and for backlog at April30, 2021 and 2020 is as follows:

Units $ (Millions) Average Price Per Unit $ 2021 2020 2021 2020 2021 2020Threemonths endedApril 30,Revenues 11 9 $ 32.5 $ 24.3 $ 2,951,700 $ 2,700,100 Contracts 14 7 $ 42.2 $ 26.7 $ 3,016,000 $ 3,814,400 Sixmonths endedApril 30,Revenues 16 32 $ 43.6 $ 91.4 $ 2,727,800 $ 2,856,500 Contracts 19 15 $ 53.8 $ 50.5 $ 2,832,100 $ 3,364,800 Backlogat April 7 9 $ 20.1 $ 35.4 $ 2,878,500 $ 3,931,200 30,

RECONCILIATION OF NON-GAAP MEASURES

This press release contains, and Company managements discussion of the results presented in this press release may include, information about the Companys adjusted homes sales gross margin and the Companys net debt-to-capital ratio.

These two measures are non-GAAP financial measures which are not calculated in accordance with generally accepted accounting principles (GAAP). These non-GAAP financial measures should not be considered a substitute for, or superior to, the comparable GAAP financial measures, and may be different from non-GAAP measures used by other companies in the home building business.

The Companys management considers these non-GAAP financial measures as we make operating and strategic decisions and evaluate our performance, including against other home builders that may use similar non-GAAP financial measures. The Companys management believes these non-GAAP financial measures are useful to investors in understanding our operations and leverage and may be helpful in comparing the Company to other home builders to the extent they provide similar information.

Adjusted Home Sales Gross Margin The following table reconciles the Companys homes sales gross margin as a percentage of homes sale revenues (calculated in accordance with GAAP) to the Companys adjusted homes sales gross margin (a non-GAAP financial measure). Adjusted homes sales gross margin is calculated as (i) homes sales gross margin plus interest recognized in homes sales cost of revenues plus inventory write-downs recognized in home sales cost of revenues divided by (ii) homes sale revenues.

Adjusted Home Sales Gross Margin Reconciliation(Amounts in thousands, except percentages)

Three Months Ended Six Months Ended April 30, April 30, 2021 2020 2021 2020Revenues - homes $ 1,836,260 $ 1,516,234 $ 3,246,964 $ 2,813,571 salesCost of revenues 1,434,493 1,220,978 2,556,286 2,254,100 - home salesHome sales gross 401,767 295,256 690,678 559,471 margin Interest recognizedAdd: in cost of 44,092 38,037 77,417 70,811 revenues - home sales Inventory 1,581 14,214 2,847 15,245 write-downsAdjusted homessales gross $ 447,440 $ 347,507 $ 770,942 $ 645,527 margin Homes salesgross margin asa percentage of 21.9 % 19.5 % 21.3 % 19.9 %home salerevenues Adjusted homesales grossmargin as a 24.4 % 22.9 % 23.7 % 22.9 %percentage ofhome salerevenues

The Companys management believes adjusted home sales gross margin is a useful financial measure to investors because it allows them to evaluate the performance of our home building operations without the often varying effects of capitalized interest costs and inventory impairments. The use of adjusted home sales gross margin also assists the Companys management in assessing the profitability of our home building operations and making strategic decisions regarding community location and product mix.

Forward-looking Adjusted Homes Sales Gross MarginThe Company has not provided projected third quarter and full FY 2021 homes sales gross margin or a GAAP reconciliation for forward-looking adjusted homes sales gross margin because such measure cannot be provided without unreasonable efforts on a forward-looking basis, since inventory write-downs are based on future activity and observation and therefore cannot be projected for the third quarter and full FY 2021. The variability of these charges may have a potentially unpredictable, and potentially significant, impact on our third quarter and full FY 2021 homes sales gross margin.

Net Debt-to-Capital RatioThe following table reconciles the Companys ratio of debt to capital (calculated in accordance with GAAP) to the Companys net debt-to-capital ratio (a non-GAAP financial measure). The net debt-to-capital ratio is calculated as (i) total debt minus mortgage warehouse loans minus cash and cash equivalents divided by (ii) total debt minus mortgage warehouse loans minus cash and cash equivalents plus stockholders equity.

Net Debt-to-Capital Ratio Reconciliation(Amounts in thousands, except percentages)

April 30, 2021 January 31, October 31, 2021 2020Loans payable $ 1,033,165 $ 971,504 $ 1,147,955 Senior notes 2,403,163 2,652,162 2,661,718 Mortgage company loan facility 146,932 112,619 148,611 Total debt 3,583,260 3,736,285 3,958,284 Total stockholders' equity 4,913,070 4,786,835 4,875,235 Total capital $ 8,496,330 $ 8,523,120 $ 8,833,519 Ratio of debt-to-capital 42.2 % 43.8 % 44.8 % Total debt $ 3,583,260 $ 3,736,285 $ 3,958,284 Less: Mortgage company loan (146,932 ) (112,619 ) (148,611 ) facility Cash and cash (714,968 ) (949,696 ) (1,370,944 ) equivalentsTotal net debt 2,721,360 2,673,970 2,438,729 Total stockholders' equity 4,913,070 4,786,835 4,875,235 Total net capital $ 7,634,430 $ 7,460,805 $ 7,313,964 Net debt-to-capital ratio 35.6 % 35.8 % 33.3 %

The Companys management uses the net debt-to-capital ratio as an indicator of its overall leverage and believes it is a useful financial measure to investors in understanding the leverage employed in the Companys operations.

CONTACT: Frederick N. Cooper (215) 938-8312fcooper@tollbrothers.com

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/d841822c-9b95-4cb8-8763-24cc9776710c