Toll Brothers 4Q15 Earnings Call Notes

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Toll Brothers’ (TOL) CEO Douglas Yearley on Q4 2015 Results

Still a ways to go to reach 1.6m housing starts

“With nationwide housing starts signaling about 1.1 million in 2015, the industry still has a lot of runway ahead to reach even its average annual production volumes of 1.6 million units per year since 1970.”

Homeowner equity is now approaching pre-downturn levels

“According to the Federal Reserve, homeowner equity has doubled since 2011, the start of the housing recovery, and is now approaching pre-downturn levels with the economy still improving and home equity growing, we believe our future should be bright.”

Foreign buyers went up in 4Q

“So California, our foreign national buyers actually went up in the fourth quarter. So we apparently are bucking the trend. You’re hearing of others. ”

Houston is slower no question

“In terms of Texas, Houston is slower, no question about it. It’s 2% to 3% of our business, very small part of our action. We do have several master plan communities where we not only build homes but sell lots to others.”

Continue to see tremendous demand in Northern Cal

“if tech was to slow, I think we have the land in the right locations and we will be fine. I don’t see that happening. We have continued through this week to see tremendous demand and have significant pricing power and I’m very comfortable with how we positioned Northern Cal.”

Top markets in the west, that’s where we’re spending on land

“I mentioned the top markets for us are the west, so you’ll see land spend in Seattle and you’ll see it in Nevada and I’m hopeful in Denver and Dallas and Northern Virginia and rounded up. The rest will be I think distributed around the country in the markets that we continue to be excited by.”