Toll Brothers FY 3Q16 Earnings Call Notes

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Toll Brothers’ (TOL) CEO Douglas Yearley on Q3 2016 Results

Just not seeing weakness in luxury new home market

” While there has been a lot of discussion about weakness in the luxury new home market, we just aren’t seeing it based on this quarters contract growth across all of our regions and our strong deposit start in fiscal year 2016 fourth quarter. Our contract growth this quarter was among the best in the industry. It appears that buyers in the luxury market continue to be drawn to our great brand name and nationwide reputation. ”

6th most admired company in the country

” This February we were number 6, among global brands in the quality of our products, services offered according to Fortune Magazine’s survey of the World’s Most Admired Company. The only companies in the world that ranked above us were Apple, Walt Disney, Amazon, Alphabet, and Nordstrom.””

No change in appetite from foreign buyers

“We have not seen a change in the appetite of foreign buyers. This has remained about the same at about 3% to 4% of our total contracts nationwide with the greatest concentration being about 15% to 20% in California, 10% to 15% in New York City, and 5% to 10% in Seattle. These percentages have not changed materially over the past few years.

Saw sequential improvement throughout the quarter

“We saw a sequential improvement in sales throughout the entire quarter. July was better than June and June was better than May.”

Continue to be very bullish about the West

“We continue to be opportunistic with land buys. We’re looking all over the country. This past quarter much of the land we bought, most of the land we bought was in California where we had some very good opportunities to buy at various price points and in various locations. So we continue to be very bullish about the West

If rates go up it’s something we’ll deal with

“In terms of rates going up it is not something we can control. What we do offer is a year rate lock on jumbo loans so people want to walk into very close to today’s rate they can do that with a market rate float down. If rates go up we will deal with it. I don’t see any terrific increase in rates coming but right now I would say the market is strong”