GlobeNewswire Inc | Aug 24, 2021 04:30PM EDT

August 24, 2021

FORT WASHINGTON, Pa., Aug. 24, 2021 (GLOBE NEWSWIRE) -- Toll Brothers, Inc. (NYSE:TOL) (TollBrothers.com), the nations leading builder of luxury homes, today announced results for its third quarter ended July31, 2021.

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

-- Net income and earnings per share were $234.9 million and $1.87 per share diluted, compared to net income of $114.8 million and $0.90 per share diluted in FY 2020s third quarter. -- Pre-tax income was $303.4 million, compared to $151.9 million in FY 2020s third quarter. -- Home sales revenues were $2.23 billion, up 37% compared to FY 2020s third quarter; delivered homes were 2,597, up 28%. -- Net signed contract value was $2.98 billion, up 35% compared to FY 2020s third quarter; contracted homes were 3,154, up 11%. Net signed contracts, in both dollars and units, were third quarter records. -- Backlog value was $9.44 billion at third quarter end, up 55% compared to FY 2020s third quarter; homes in backlog were 10,661, up 47%. Quarter-end backlog, in both dollars and units, were all-time records. -- Home sales gross margin was 22.7%, compared to FY 2020s third quarter home sales gross margin of 21.0%. -- Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 25.6%, compared to FY 2020s third quarter adjusted home sales gross margin of 23.9%. -- SG&A, as a percentage of home sales revenues, was 10.5%, compared to 11.9% in FY 2020s third quarter. -- Income from operations was $276.7 million. -- Other income, income from unconsolidated entities, and gross margin from land sales and other was $29.1 million.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: We are very pleased with our third quarter performance. Home sales revenues were up 37%,and pre-tax income and earnings per share more than doubled compared to one year ago. We are benefiting from our strategy of broadening our product lines, price points and geographies as we continue to grow our business, drive price, expand margins and improve our capital efficiency.

Demand continues to be very strong. Net signed contracts were up 35% in dollars to approximately $3 billion compared to the prior year period. The housing market is being driven by many strong fundamentals, including low mortgage rates, favorable millennial-driven demographics, a decade of pent-up demand, low new home supply, and a tight resale market. We expect strong and sustainable demand for our homes in the years to come.

Our deep land position provides a solid foundation for growth, with 340 communities projected by FYE 2021 and an additional 10% community count growth in fiscal 2022. Our record backlog, our focus on capital and operating efficiency, and the continued strength of the housing market give us confidence that our full FY 2022 margins will significantly exceed the strong margins we project for our FY 2021 fourth quarter and that our return on beginning equity will exceed 20% in FY 2022 and beyond.

Fourth Quarter and FY 2021 Financial Guidance: Fourth Full Fiscal Year Quarter 2021Deliveries 3,450 units 10,100 unitsAverage Delivered Price per Home $840,000 $830,000Adjusted Home Sales Gross Margin 25.6% 24.9%SG&A, as a Percentage of Home Sales 9.8% 11.3%RevenuesQuarter-End Community Count 340 340Other Income, Income from Unconsolidated Entities, and Gross Margin from LandSales $40 million $140 millionand OtherTax Rate 26.0% 24.6%

Financial Highlights for the three months ended July 31, 2021 and 2020(unaudited): 2021 2020Net Income $234.9 million, or $1.87 $114.8 million, or $0.90 per share diluted per share dilutedPre-Tax Income $303.4 million $151.9 millionPre-Tax Inventory $13.2 million $6.7 millionImpairmentsHome Sales Revenues $2.23 billion and 2,597 $1.63 billion and 2,022 units unitsNet Signed Contracts $2.98 billion and 3,154 $2.21 billion and 2,833 units unitsNet Signed Contracts per 10.2 units 8.5 unitsCommunityQuarter-End Backlog $9.44 billion and 10,661 $6.09 billion and 7,239 units unitsAverage Price per Home $885,200 $840,600in BacklogHome Sales Gross Margin 22.7% 21.0%Adjusted Home Sales 25.6% 23.9%Gross MarginInterest Included in Home Sales Cost ofRevenues, as apercentage of Home 2.2% 2.5%Sales RevenuesSG&A, as a percentage of HomeSales Revenues 10.5% 11.9%Income from Operations $276.7 million, or 12.3% $149.6 million, or 9.1% of total revenues of total revenuesOther Income, Income from UnconsolidatedEntities, and GrossMargin from Land $29.1 million $3.6 millionSales and OtherQuarterly Cancellations as a Percentageof Signed Contracts in 3.1% 8.0%QuarterQuarterly Cancellations as a Percentageof Beginning-Quarter 1.0% 3.8%Backlog

Financial Highlights for the nine months ended July 31, 2021 and 2020(unaudited): 2021 2020Net Income $459.3 million, or $3.63 per $247.3 million, or $1.87 per share diluted share dilutedPre-Tax Income* $600.6 million $319.9 millionPre-Tax Inventory $16.0 million $21.9 millionImpairmentsHome Sales Revenues $5.48 billion and 6,645 $4.44 billion and 5,556 units unitsNet Signed $8.54 billion and 9,515 $5.26 billion and 6,525Contracts units unitsIncome from $580.2 million, or 10.1% of $289.7 million, or 6.4% ofOperations total revenues total revenuesOther Income, Income fromUnconsolidatedEntities, and $100.7 million $39.9 millionLand Sales GrossProfit

*Pre-tax income in the nine months ended July 31, 2021 includes charges of $35.2 million for the early retirement of debt.

Additional Information:

-- The Company ended its FY 2021 third quarter with approximately $946 million in cash and cash equivalents, compared to $1.37 billion at FYE 2020 and $715 million at FY 2021s second quarter end. At FY 2021 third quarter end, the Company also had $1.79 billion available under its $1.905 billion bank revolving credit facility, substantially all of which is scheduled to mature in November 2025. -- On July23, 2021, the Company paid its quarterly dividend of $0.17 per share to shareholders of record at the close of business on July9, 2021. -- Stockholders' Equity at FY 2021 third quarter end was $5.03 billion, compared to $4.88 billion at FYE 2020. -- FY 2021's third quarter-end book value per share was $41.34 per share, compared to $38.53 at FYE 2020. -- The Company ended its FY 2021 third quarter with a debt-to-capital ratio of 41.6%, compared to 42.2% at FY 2021s second quarter end and 44.8% at FYE 2020. The Company ended FY 2021s third quarter with a net debt-to-capital ratio(1) of 33.1%, compared to 35.6% at FY 2021s second quarter end, and 33.3% at FYE 2020. -- The Company ended FY 2021s third quarter with approximately 79,500 lots owned and optioned, compared to 74,500 one quarter earlier, and 61,400 one year earlier. Approximately 47% or 37,500, of these lots were owned, of which approximately 17,800 lots, including those in backlog, were substantially improved. -- In the third quarter of FY 2021, the Company spent approximately $200.9 million on land to purchase approximately 2,138 lots. -- The Company ended FY 2021s third quarter with 314 selling communities, compared to 320 at FY 2021s second quarter end and 323 at FY 2020s third quarter end. -- The Company repurchased approximately 1.7 million shares of its common stock during the quarter at an average price of $57.66 per share for an aggregate purchase price of approximately $95.4 million. In the nine months ended July 31, 2021, the Company repurchased approximately 5.7million shares of its common stock at an average price of $48.37 per share for an aggregate purchase price of approximately $275.1 million. -- On August, 24, 2021, the Company announced a strategic partnership with Equity Residential to selectively acquire and develop sites for new rental apartment communities in metro Boston, MA; Atlanta, GA; Austin, TX; Denver, CO; Orange County/San Diego, CA; Seattle, WA, and Dallas-Fort Worth, TX.

(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. (EST) Wednesday, August 25, 2021, to discuss these results and its outlook for the fourth 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 third quarter ended July 31, 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 ongoing effects of the Covid-19 pandemic, which remain highly uncertain, cannot be predicted and will depend upon future developments, including the duration of the pandemic, the impact of mitigation strategies taken by applicable government authorities, the continued 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 land; -- access to adequate capital on acceptable terms; -- geographic concentration of our operations; -- levels of competition; -- the price and availability of lumber, other raw materials, home components and labor; -- 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; -- federal and state tax policies; -- transportation costs; -- 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) July 31, October 31, 2021 2020 (Unaudited) ASSETS Cash and cash equivalents $ 946,097 $ 1,370,944 Inventory 8,293,280 7,658,906 Property, construction and office equipment, 304,013 316,125 netReceivables, prepaid expenses and other assets 865,133 956,294 Mortgage loans held for sale 183,268 231,797 Customer deposits held in escrow 86,928 77,291 Investments in unconsolidated entities 550,432 430,701 Income taxes receivable 34,908 23,675 $ 11,264,059 $ 11,065,733 LIABILITIES AND EQUITY Liabilities: Loans payable $ 1,036,632 $ 1,147,955 Senior notes 2,403,576 2,661,718 Mortgage company loan facility 148,655 148,611 Customer deposits 632,483 459,406 Accounts payable 552,998 411,397 Accrued expenses 1,199,204 1,110,196 Income taxes payable 206,608 198,974 Total liabilities 6,180,156 6,138,257 Equity: Stockholders? Equity Common stock 1,529 1,529 Additional paid-in capital 712,259 717,272 Retained earnings 5,566,562 5,164,086 Treasury stock, at cost (1,241,582 ) (1,000,454 )Accumulated other comprehensive loss (3,855 ) (7,198 )Total stockholders' equity 5,034,913 4,875,235 Noncontrolling interest 48,990 52,241 Total equity 5,083,903 4,927,476 $ 11,264,059 $ 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 Nine Months Ended July 31, July 31, 2021 2020 2021 2020 $ % $ % $ % $ %Revenues: Home sales $ 2,234,365 $ 1,627,812 $ 5,481,329 $ 4,441,383 Land sales and 21,116 23,677 267,652 90,609 other 2,255,481 1,651,489 5,748,981 4,531,992 Cost of revenues:Home sales 1,726,124 77.3% 1,286,108 79.0% 4,282,410 78.1% 3,540,208 79.7%Land sales and 18,709 88.6% 22,259 94.0% 222,534 83.1% 80,959 89.3%other 1,744,833 1,308,367 4,504,944 3,621,167 Gross margin - 508,241 22.7% 341,704 21.0% 1,198,919 21.9% 901,175 20.3%home salesGross margin -land sales and 2,407 11.4% 1,418 6.0% 45,118 16.9% 9,650 10.7%other Selling, generaland 233,915 10.5% $ 193,477 11.9% 663,824 12.1% 621,136 14.0%administrativeexpensesIncome from 276,733 149,645 580,213 289,689 operations Other: Income (loss)from 16,636 (2,566 28,313 5,304 unconsolidatedentitiesOther income - 10,026 4,786 27,311 24,917 netExpenses relatedto early ? ? (35,211 ? retirement ofdebtIncome before 303,395 151,865 600,626 319,910 income taxesIncome tax 68,463 37,104 141,329 72,603 provisionNet income $ 234,932 $ 114,761 $ 459,297 $ 247,307 Per share: Basic earnings $ 1.90 $ 0.91 $ 3.68 $ 1.89 Diluted earnings $ 1.87 $ 0.90 $ 3.63 $ 1.87 Cash dividend $ 0.17 $ 0.11 $ 0.45 $ 0.33 declaredWeighted-averagenumber of shares:Basic 123,826 126,722 124,727 131,024 Diluted 125,610 127,399 126,390 132,032 Effective tax 22.6% 24.4% 23.5% 22.7% rate

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

Three Months Ended Nine Months Ended July 31, July 31, 2021 2020 2021 2020Inventory impairment charges recognized:Cost of home sales - landowned/controlled for future $ 13,150 $ 6,690 $ 14,897 $ 21,634 communitiesCost of home sales - ? ? 1,100 300 operating communities $ 13,150 $ 6,690 $ 15,997 $ 21,934 Depreciation and $ 20,757 $ 16,415 $ 53,938 $ 46,700 amortizationInterest incurred $ 37,398 $ 41,794 $ 117,112 $ 131,547 Interest expense: Charged to home sales cost $ 49,995 $ 40,467 $ 127,412 $ 111,278 of salesCharged to land sales and 1,065 2,820 3,482 4,124 other cost of salesCharged to other income - ? ? ? 2,440 net $ 51,060 $ 43,287 $ 130,894 $ 117,842 Home sites controlled: July 31, July 31, 2021 2020Owned 37,493 35,289 Optioned 42,024 26,151 79,517 61,440

Inventory at July31, 2021 and October31, 2020 consisted of the following (amounts in thousands):

July 31, October 31, 2021 2020Land and land development costs $ 2,126,699 $ 2,094,775 Construction in progress 5,423,110 4,848,647 Sample homes 325,512 398,053 Land deposits and costs of future 417,959 317,431 development $ 8,293,280 $ 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 July 31, Units $ (Millions) Average Price Per Unit $ 2021 2020 2021 2020 2021 2020REVENUES North 552 412 $ 402.9 $ 290.4 $ 729,900 $ 704,900 Mid-Atlantic 361 305 276.9 201.3 $ 766,900 $ 659,900 South 435 410 291.7 276.3 $ 670,600 $ 674,000 Mountain 755 612 553.2 425.4 $ 732,700 $ 695,100 Pacific 386 263 524.0 406.4 $ 1,357,500 $ 1,545,300 Traditional Home 2,489 2,002 2,048.7 1,599.8 $ 823,100 $ 799,100 BuildingCity Living 108 20 184.1 26.4 $ 1,704,600 $ 1,318,300 Corporate and other 1.6 1.6 Total home sales 2,597 2,022 2,234.4 1,627.8 $ 860,400 $ 805,000 Land sales and other 21.1 23.7 Total consolidated $ 2,255.5 $ 1,651.5 CONTRACTS North 539 620 $ 450.5 $ 428.0 $ 835,700 $ 690,400 Mid-Atlantic 361 478 314.7 334.5 $ 871,900 $ 699,800 South 736 538 585.6 344.1 $ 795,600 $ 639,500 Mountain 956 801 846.5 561.8 $ 885,500 $ 701,400 Pacific 517 393 713.4 536.7 $ 1,380,000 $ 1,365,600 Traditional Home 3,109 2,830 2,910.7 2,205.1 $ 936,200 $ 779,200 BuildingCity Living 45 3 69.0 8.8 $ 1,533,300 $ 2,936,000 Total consolidated 3,154 2,833 $ 2,979.7 $ 2,213.9 $ 944,700 $ 781,500 BACKLOG North 1,880 1,885 $ 1,525.5 $ 1,325.5 $ 811,400 $ 703,200 Mid-Atlantic 1,218 954 1,077.7 707.5 $ 884,800 $ 741,600 South 2,408 1,302 1,786.2 930.7 $ 741,800 $ 714,800 Mountain 3,539 1,888 2,826.8 1,408.8 $ 798,800 $ 746,200 Pacific 1,563 1,129 2,138.9 1,581.6 $ 1,368,500 $ 1,400,900 Traditional Home 10,608 7,158 9,355.1 5,954.1 $ 881,900 $ 831,800 BuildingCity Living 53 81 82.4 131.1 $ 1,554,100 $ 1,617,900 Total consolidated 10,661 7,239 $ 9,437.5 $ 6,085.2 $ 885,200 $ 840,600

Nine Months Ended July 31, Units $ (Millions) Average Price Per Unit $ 2021 2020 2021 2020 2021 2020REVENUES North 1,565 1,254 $ 1,106.2 $ 840.5 $ 706,800 $ 670,300 Mid-Atlantic 892 848 659.1 556.6 $ 738,900 $ 656,400 South 1,184 1,032 788.8 690.8 $ 666,200 $ 669,400 Mountain 1,885 1,518 1,363.0 1,026.0 $ 723,100 $ 675,900 Pacific 959 819 1,313.7 1,225.1 $ 1,369,900 $ 1,495,800 Traditional Home 6,485 5,471 5,230.8 4,339.0 $ 806,600 $ 793,100 BuildingCity Living 160 85 249.9 103.0 $ 1,561,900 $ 1,211,800 Corporate and other 0.6 (0.6 ) Total home sales 6,645 5,556 5,481.3 4,441.4 $ 824,900 $ 799,400 Land sales 267.7 90.6 Total consolidated $ 5,749.0 $ 4,532.0 CONTRACTS North 1,539 1,397 $ 1,261.6 $ 985.0 $ 819,800 $ 705,100 Mid-Atlantic 1,120 1,014 966.1 723.9 $ 862,600 $ 713,900 South 2,104 1,286 1,536.2 861.8 $ 730,100 $ 670,100 Mountain 3,150 1,800 2,518.3 1,281.3 $ 799,500 $ 711,800 Pacific 1,478 974 2,065.1 1,320.5 $ 1,397,200 $ 1,355,700 Traditional Home 9,391 6,471 8,347.3 5,172.5 $ 888,900 $ 799,300 BuildingCity Living 124 54 193.3 83.9 $ 1,558,900 $ 1,553,700 Total consolidated 9,515 6,525 $ 8,540.6 $ 5,256.4 $ 897,600 $ 805,600

Unconsolidated entities:

Information related to revenues and contracts of entities in which we have an interest for the three-month and nine-month periods ended July31, 2021 and 2020, and for backlog at July31, 2021 and 2020 is as follows:

Units $ (Millions) Average Price Per Unit $ 2021 2020 2021 2020 2021 2020Threemonths endedJuly 31,Revenues 10 9 $ 27.6 $ 35.6 $ 2,755,000 $ 3,957,900 Contracts 6 2 $ 18.0 $ 7.0 $ 2,997,800 $ 3,510,600 Ninemonths endedJuly 31,Revenues 26 41 $ 71.2 $ 127.0 $ 2,738,300 $ 3,098,200 Contracts 25 17 $ 71.8 $ 57.5 $ 2,871,900 $ 3,381,900 Backlogat July 3 2 $ 10.6 $ 6.8 $ 3,528,800 $ 3,390,600 31,

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 Nine Months Ended July 31, July 31, 2021 2020 2021 2020Revenues - homes $ 2,234,365 $ 1,627,812 $ 5,481,329 $ 4,441,383 salesCost of revenues 1,726,124 1,286,108 4,282,410 3,540,208 - home salesHome sales gross 508,241 341,704 1,198,919 901,175 margin Interest recognizedAdd: in cost of 49,995 40,467 127,412 111,278 revenues - home sales Inventory 13,150 6,690 15,997 21,934 write-downsAdjusted homessales gross $ 571,386 $ 388,861 $ 1,342,328 $ 1,034,387 margin Homes salesgross margin asa percentage of 22.7 % 21.0 % 21.9 % 20.3 %home salerevenues Adjusted homesales grossmargin as a 25.6 % 23.9 % 24.5 % 23.3 %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 fourth 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 fourth quarter and full FY 2021. The variability of these charges may have a potentially unpredictable, and potentially significant, impact on our fourth 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) July 31, 2021 April 30, 2021 October 31, 2020Loans payable $ 1,036,632 $ 1,033,165 $ 1,147,955 Senior notes 2,403,576 2,403,163 2,661,718 Mortgage company loan facility 148,655 146,932 148,611 Total debt 3,588,863 3,583,260 3,958,284 Total stockholders' equity 5,034,913 4,913,070 4,875,235 Total capital $ 8,623,776 $ 8,496,330 $ 8,833,519 Ratio of debt-to-capital 41.6 % 42.2 % 44.8 % Total debt $ 3,588,863 $ 3,583,260 $ 3,958,284 Less: Mortgage company loan (148,655 ) (146,932 ) (148,611 ) facility Cash and cash equivalents (946,097 ) (714,968 ) (1,370,944 )Total net debt 2,494,111 2,721,360 2,438,729 Total stockholders' equity 5,034,913 4,913,070 4,875,235 Total net capital $ 7,529,024 $ 7,634,430 $ 7,313,964 Net debt-to-capital ratio 33.1 % 35.6 % 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