Toll Brothers, Inc. (NYSE:TOL) Q2 2022 Earnings Conference Call May 25, 2022 8:30 AM ET

Company Participants

Douglas Yearley - Chief Executive Officer

Marty Connor - Chief Financial Officer

Rob Parahus - President and Chief Operating Officer

Fred Cooper - Senior Vice President, Finance and Investor Relations

Wendy Marlett - Chief Marketing Officer

Gregg Ziegler - Senior Vice President and Treasurer

Conference Call Participants

John Lovallo - UBS

Rafe Jadrosich - Bank of America

Stephen Kim - Evercore ISI

Charles Perron - Goldman Sachs

Deepa Raghavan - Wells Fargo Securities

Alan Ratner - Zelman & Associates

Buck Horne - Raymond James

Operator

Good morning and welcome to the Toll Brothers’ Second Quarter Earnings Conference Call. [Operator Instructions] The company is planning to end the call at 9:30 when the market opens. During the Q&A, please limit yourself to one question and one follow-up. Please note this event is being recorded. I’d now like to turn the conference over to Douglas Yearley, CEO. Please go ahead.

Douglas Yearley

Thank you, Jason. Good morning. Welcome and thank you for joining us. With me today are Marty Connor, Chief Financial Officer; Rob Parahus, President and Chief Operating Officer; Fred Cooper, Senior VP of Finance and Investor Relations; Wendy Marlett, Chief Marketing Officer; and Gregg Ziegler, Senior VP and Treasurer.

Before I begin, I ask you to read the statement on forward-looking information in our earnings release of last night and on our website. I caution you that many statements on this call are forward-looking based on assumptions about the economy, world events, housing and financial markets, interest rates, the impact of the pandemic, the availability of labor and materials, inflation and many other factors beyond our control that could significantly affect future results.

We are very pleased with our second quarter performance as we met or exceeded our guidance on all key metrics. We delivered a record 2,407 homes in the second quarter at an average price of approximately $908,000, resulting in record home sales revenue of $2.2 billion. This was an increase of 19% compared to last year’s second quarter revenue. Our teams did a great job delivering homes in what continues to be a very challenging production environment.

Adjusted gross margin of 26.1% in the quarter improved 170 basis points compared to last year’s second quarter and was 60 basis points better than guidance. SG&A expense, at 11.1% of homebuilding revenues, was 80 basis points better than both last year’s second quarter and our guidance. Driven by significant revenue growth and expanding margins, we generated earnings per share of $1.85, up 83% compared to last year.