Bank of America Merrill Lynch 2015 Paper, Packaging and ...Bank of America Merrill Lynch . 2015...

Bank of America Merrill Lynch 2015 Paper, Packaging and Builders Conference

December 9th, 2015

2

CONTACT INFORMATION CONTACT INFORMATION

Investor Relations Team

RUSSELL ROCHESTIE VP, Finance

Email: rrochestie@tollbrothersinc.com Phone: 215-938-5227

MARTIN CONNOR CFO

Email: mconnor@tollbrothersinc.com Phone: 215-938-6934

FREDERICK COOPER SVP, Finance, International Development

& Investor Relations Email: fcooper@tollbrothersinc.com

Phone: 215-938-8312

GREGG ZIEGLER SVP, Treasurer

Email: gziegler@tollbrothersinc.com Phone: 215-938-8365

Information presented herein for the forth quarter ended October 31, 2015 is subject to finalization of the Company's regulatory filings, related financial and accounting reporting procedures and external auditor procedures.

Certain information included in this presentation is forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, information related to: anticipated operating results; anticipated financial performance, resources and condition; selling communities; home deliveries; average home prices; consumer demand and confidence; contract pricing; business and investment opportunities; and market and industry trends.

Such forward-looking information involves important risks and uncertainties that could significantly affect actual results and cause them to differ materially from expectations expressed herein and in other Company reports, SEC filings, statements and presentations. These risks and uncertainties include, among others: local, regional, national and international economic conditions; fluctuating consumer demand and confidence; interest and unemployment rates; changes in sales conditions, including home prices, in the markets where we build homes; conditions in our newly entered markets and newly acquired operations; the competitive environment in which we operate; the availability and cost of land for future growth; conditions that could result in inventory write-downs or write-downs associated with investments in unconsolidated entities;

the ability to recover our deferred tax assets; the availability of capital; uncertainties in the capital and securities markets; liquidity in the credit markets; changes in tax laws and their interpretation; effects of governmental legislation and regulation; the outcome of various legal proceedings; the availability of adequate insurance at reasonable cost; the impact of construction defect, product liability and home warranty claims, including the adequacy of self-insurance accruals, and the applicability and sufficiency of our insurance coverage; the ability of customers to obtain financing for the purchase of homes; the ability of home buyers to sell their existing homes; the ability of the participants in various joint ventures to honor their commitments; the availability and cost of labor and building and construction materials; the cost of raw materials; construction delays; domestic and international political events; and weather conditions. For a more detailed discussion of these factors, see the information under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our most recent annual report on Form 10-K and our subsequent quarterly reports on Form 10-Q filed with the Securities and Exchange Commission.

Any or all of the forward-looking statements included in this presentation are not guarantees of future performance and may turn out to be inaccurate. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

STATEMENT OF FORWARD-LOOKING INFORMATION

3

4

• Founded in 1967 and publicly traded since 1986

• Nation’s leading luxury home builder

• Average delivered home price of $755,000 in FY 2015 was more than double the average of most other public homebuilders

• Builds in 19 states and approximately 50 markets

• Balanced footprint across key Eastern, Western and Southern markets

• Expanding urban presence in New York, Washington, DC and Philadelphia

• Serves urban and suburban, luxury move-up, empty nester, and active-adult buyers as well as renter in select markets

• Strong balance sheet and credit ratings

• Executive & director beneficial ownership of approximately 10.5% at January 15, 2015

OVERVIEW

The Hills at Parker, Parker, CO

THE #1 BRAND IN LUXURY HOME BUILDING

5

FORTUNE’S MOST ADMIRED HOME BUILDING COMPANY 2015

Rank Overall Score

1 Toll Brothers 6.23

2 Lennar 6.00

3 Standard Pacific 5.78

4 NVR 5.34

5 D.R. Horton 4.99

6 PulteGroup 4.98

7 Taylor Morrison Home 4.63

8 Ryland Group 4.39

9 KB Home 4.29

6

7

2015 AMERICA’S MOST TRUSTED HOME BUILDER™

Disclaimer: Toll Brothers received the highest numerical score in the United States in the proprietary Lifestory Research 2015 America’s Most Trusted Home Builder™ study. Study based on 43,200 new home shoppers in 27 markets. Proprietary study results are based on

experiences and perceptions of consumers surveyed between January and December 2014.

Toll

Brothers

Standard Pacific Ashton Woods

Meritage Taylor Morrison Drees

K. Hovnanian David Weekley Shea

M/I Ryland Ryan (NVR) Richmond American

Beazer D.R. Horton Highland Pulte Lennar

Toll Brothers received the highest score among the largest 133 builders in the country, based on

a study of 43,200 new home shoppers in the nation’s top 27 housing markets.

3 Months Ended October 31, Fiscal Year Ended October 31,

($ in millions), except Avg Prices 2015 2014 % Change 2015 2014 % Change

Contracts

Units 1,437 1,282 12% 5,910 5,271 12%

Dollars $1,253 $971 29% $4,956 $3,897 27%

Avg price ($ in 000s) $872 $757 15% $838 $739 13%

Backlog

Units 4,064 3,679 10% 4,064 3,679 10%

Dollars $3,504 $2,720 29% $3,504 $2,720 29%

Avg price ($ in 000s) $862 $739 17% $862 $739 17%

Deliveries

Units 1,820 1,807 1% 5,525 5,397 2%

Dollars $1,437 $1,351 6% $4,171 $3,912 7%

Avg price ($ in 000s) $790 $747 6% $755 $725 4%

TOLL BROTHERS RESULTS

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9

• Housing market is on solid foundation. Slow and steady demand acceleration boding well for the long-term health of the market

• Increasing but still depressed volumes of new and existing home sales

• Improving job growth with little wage growth

• Continued population growth through recession and recovery

• Household formations are increasing

• Seven years of pent-up demand releasing

• Mortgage market has improved. Rates remain low. Affordability remains solid

• Home purchase decision is a confidence-sensitive issue

• Few land entitlements have been processed for several years, resulting in lot shortages in some markets

• Constrained capital availability favors largest builder

• Rising home prices improve home equity of potential buyers

Liseter, Newtown Square, PA

CURRENT U.S. HOUSING MARKET

10

NATIONWIDE FOOTPRINT POSITIONS US FOR GROWTH

* As of October 31, 2015

19 STATES, 50 MARKETS

North

Mid-Atlantic

South

West

California

City Living

R E G I O N S / S e l l i n g C o m m u n i t i e s

Chicago Hartford

Austin

Dallas Phoenix

San Francisco

Philadelphia

Charlotte Raleigh

Ft . Myers West Palm Beach

Los Angeles

Naples

Las Vegas

San Diego

Miami

Detroit

Palm Springs

Denver

San Antonio Jupiter

Reno

Jacksonville

Minneapolis

San Jose

Houston

Seattle

Tucson

Fort Collins

Boca Raton

Sacramento

Orlando

Wilmington

Washington DC

Princeton New York

Boston

68

64

56

64

29

7

$163

$286 $313 $314 $326 $328 $329

$365 $369 $377 $382

$464 $478

$531

$755

LGI DR Horton M/I Beazer Lennar KB Home Pulte Meritage NVR MDC Hovnanian TaylorMorrison

CalAtlantic TRI Pointe TollBrothersFY 2015

Average Delivered Home Price* ($000)

ONLY NATIONAL HOMEBUILDER FOCUSED ON LUXURY MARKET

Toll’s main competitors are small private builders, not the larger public builders.

* Updated based on most recent reported fiscal-year-end deliveries. 11

TOLL HOME PRICES FY 2015* (by unit deliveries)

2%

60%

20%

18%

Under $300,000

$300,000 to $749,999

$750,000 to $999,999

Over $1,000,000

*Numbers may not add due to rounding in units

62% Under

$750,000

12

13

• Move-up

• Empty Nester

• Active Adult

• Second Home

• Urban-Infill

• Urban Redevelopment

• Golf Course & Country Club

• High-Rise

• Suburban High Density

• Urban & Suburban Rental

THE WIDEST VARIETY OF HOMES IN THE INDUSTRY

64%

16%

17%

4%

FY 2015

91%

8% 1%

FY 2000

PRODUCT DIVERSIFICATION (by unit deliveries)

Single Family Attached Age Qualified City Living 14

M OV E - U P

15

Chapel Hill at Sparta, Sparta, NJ

Casabella at Windermere, Windermere, FL E M P T Y N E S T E R

16

AC T I V E A D U LT Anthem Ranch by Toll Brothers, Broomfield, CO

17

Gale Ranch, San Ramon, CA M A S T E R P L A N N E D

18

SECOND HOME

19

Aviano® at Desert Ridge, Phoenix, AZ

20

URBAN REDEVELOPMENT Pierhouse at Brooklyn Bridge Park, Brooklyn, NY

SUBURBAN HIGH DENSITY

21

URBAN INFILL

22

23

Parc Riverside, Washington, DC

Parc at Plymouth Meeting, Plymouth Meeting, PA

The Morgan at Provost Square, Jersey City, NJ

URBAN & SUBURBAN RENTAL

23

* As of October 31, 2015 24

• Formed in 2001 as the urban development division of Toll Brothers, Inc.

• Development experience includes new and redeveloped mid- and high-rise condominiums, townhomes, apartments, urban infill, brownfields, and mixed-use communities

• Metro New York Urban Division began in Hoboken, NJ in 2003 and expanded into New York City in 2004, with projects in Manhattan, Brooklyn, and Queens

• Since inception, the City Living division has built and sold more than 3,800 units in 29 buildings, with more than 700 units in 9 buildings under construction and over 1,100 units in 7 buildings in planning in metro New York City, Washington DC and Philadelphia*

400 Park Avenue South, New York, NY 1110 Park Avenue, New York, NY

FOCUS ON LAND

• One of the largest land developers in the U.S.

• Control 44,253 home sites*

• Operate in the most difficult land approval markets in the country

• Skilled in land acquisition, approvals, and development across all markets

• Manage site design and land improvements across most communities

• Provides protection against potential land shortages in our lot-constrained markets

• All land deals approved at corporate headquarters by senior management

* As of October 31, 2015 25

Parkland Golf and Country Club, Parkland, FL

25

BUILDING ON A SOLID LAND POSITION

2000 2001 2002 2003 2004 2005 Q2 2006 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Owned Optioned

48,628 47,167 44,253

33,118

39,146 40,844

48,058

60,189

83,126

91,207

59,251

39,784

31,917 34,852 37,497

40,350

73,768

8,381

35,872

Lots Owned and Optioned

16,500 Finished Lots at 10/31/15

Fiscal Year End 26

146 155

170

200

220 230

300 315

273

200 195

215 224

232

263

288

NUMBER OF SELLING COMMUNITIES

27

At Fiscal Year End

JOHN BURNS’ SUBMARKET DESIRABILITY INDEX May 2015

Submarket Desirability Index: The weighted-average Submarket Desirability Index for each builder denotes which builders' communities are in the best locations within each market.

Rank Wtd Avg Submarket Desirability Index

1 Toll Brothers 3.33

2 Taylor Morrison 2.93

3 Standard Pacific 2.86

4 K Hovnanian 2.85

5 Pulte Group 2.82

6 M/I Homes 2.72

7 Ryland 2.66

8 Meritage 2.58

9 Beazer 2.55

10 Lennar 2.53

11 Tri Pointe 2.46

12 KB Homes 2.43

13 DR Horton 2.34

14 M. D. C. Holdings 2.32

15 William Lyon 2.32

16 NVR 2.10

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HOMEBUILDER SCHOOL QUALITY INDEX

9.06 8.88 8.40

7.30 6.89 6.82 6.67

6.33 5.87

5.59 5.47 5.47 5.44

4.75 4.20 4.11

3.66

1.17

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

10.00

TOL WCIC TMHC MHO TPH CAA HOV PHM NVR LEN MTH WLH BZH MDC DHI CCS KBH LGIH

Average School District Rating (0-10 Scale)

Source: Raymond James, “’Back to School, Episode IV’: Our Expanded Land Analysis of Public Homebuilders” U.S. Research, October 20, 2015 29

• Toll’s luxury systems developed over 40 years

• Buyers choose from hundreds of structural and designer options

• In FY 2015 the average buyer added approximately $134,000 in options and premiums, consistent with 16 - 20% of base in prior years

• Provides competitive advantage vs. small builders

• Toll Architecture systemizes high-volume home production

CUSTOM HOMES BUILT USING HIGH -VOLUME TECHNOLOGY

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Regency at Wappinger – Villas, Wappinger Falls, NY

TOLL INTEGRATED SYSTEMS – PANEL & TRUSS PLANT

• Manufactures and distributes wall panels, floor and roof trusses, signature millwork, windows, and doors

• Operates four plants in suburban Philadelphia, Virginia, and Indiana

• Builds more than 150 different homes with multiple elevations and hundreds of options

• Improves timeline, quality, costs, and reduces waste

• Reduces dependence on skilled carpenters in times of labor shortage

31

• 22% of buyers paid cash

• Served 57% of Toll buyers using mortgages in FY 2015

• Pre-sells loans individually to minimize risk

• Investors who provide our customers with mortgages have continued to issue new commitments

• Our buyers have strong credit profiles with an average FY 2015 FICO score of 756 on conforming loans and jumbo loans

• Average LTV of 70% FY 2015

• 41.7% of buyers used jumbo mortgages FY 2015

TBI MORTGAGE

Toll Brothers at Amalfi Hills, Yorba Linda, CA

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DIVERSIFYING INCOME STREAMS

Generated $88.7 million of other & JV income FY 2015

Project $100 million to $150 million in FY 2016

Sustainable, recurring income

Suburban Home Building

(For Sale)

Land Sales & Development

City Living (Condo for Sale)

Apartment Living (Rental)*

Ancillary Businesses

- 50 markets in 19 states • Move up • Empty nester • Active Adult • Second home • Master-

planned resort style

• Suburban high density

- Gibraltar Capital and Asset Management

- TBI Mortgage - Golf Course

Development & Management

- Toll Landscaping - Security - Title

- Located in Urban and Suburban locations

- 3 projects (1,102 units) leasing

- 4 projects (1,834 units) under development

- 11 projects (3,496 units) in the pipeline

- Manhattan, Brooklyn, and Queens, NYC

- Hoboken and Jersey City, NJ

- Metro Washington, DC

- Philadelphia, PA

- Shapell (CA) - Northgrove at

Spring Creek (TX)

- Woodson's Reserve (TX)

- Travisso (TX) - Sienna South

(TX) - Other lot sales

to 3rd parties

Revenue JV & other income Revenue & JV JV & other income Other income

On Income Statement:

33 *As of October 31, 2015

Briarcliff at Magnolia, Seattle, WA

34

New Markets

• Entered major markets of Houston and Seattle

• Reentered Austin

Expanding Core Business

• Expanded City Living within Metro NYC and Philadelphia, introduced City Living to Metro Washington, DC with other major markets under consideration

• Expanding Active Adult beyond East and Midwest into Western U.S. (Denver, Las Vegas, Reno)

New Initiatives

• Acquired and fully integrated Shapell Homes, bolstering footprint in key Northern and Southern coastal California markets (complemented by two communities in Southern California: Hidden Canyon and Baker Ranch, a master planned community)

• Formed Gibraltar Capital, a distressed asset acquirer

• Developing rental apartments in Northeast and Mid-Atlantic and looking to expand nationally

• Significantly expanding TX presence

WHAT’S NEW SINCE THE DOWNTURN?

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• Investing in Apartment Development to maximize synergies of our operations and hedge for-sale cyclicality

• Developed & operate 1,441 units*

• Leasing commenced at three communities consisting of 1,102 units

• 1,416 Toll Brothers Apartment Living units under construction in three projects from Massachusetts to Washington DC*

• 418 Toll Brothers Campus Living units under development at UMD in College Park, MD*

• Control land for 3,496 future apartment and student living units in Northeast / Mid-Atlantic corridor*

• Expect to invest an additional $100 million to $200 million in Toll Brothers Apartment Living and Campus Living over next 2 years

• Plan to expand business into Toll markets nationally

TOLL APARTMENT LIVING

* As of October 31, 2015

Parc at Plymouth Meeting, Plymouth Meeting, PA

San Francisco

NorCal

SoCal

San Jose Gilroy Evergreen

Orinda Alamo Creek

Los Angeles

Gale Ranch

Plum Canyon

San Diego

Long Beach

Carlsbad

Porter Ranch Thousand Oaks

Yorba Linda

Laguna Niguel

36

Opportunity Overview

• Acquisition announced in November 2013 and closed February 2014

• One of the largest homebuilders in California and the leading builder in several of the state’s premier, high-growth markets

• ~5,000 concentrated lots in 15 locations, 97.5% of which were entitled

• Well-known luxury brand with a reputation for delivering high-quality, sought-after home product

• Sizable amount of lots concentrated in a manageable number of communities

• Currently selling from 15 former Shapell communities

ACQUISITION OF SHAPELL HOMES: Leading Coastal California Homebuilder and Developer

Geographic Footprint Highly Attractive and Proven Lot Locations in NorCal and SoCal

SUPERIOR CAPITAL MARKET ACCESS

SENIOR/CORPORATE CREDIT RATINGS

Fitch Inc. BBB- (Stable)

Standard & Poor’s BB+ (Stable)

Moody’s Ba1 (Stable)

All three affirmed Toll’s Credit Ratings after Shapell acquisition announcement Nov 2013.

37

$350

$500

$400

$350

$250

$420 $400

$250

$350

$288

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025FY

Public Debt (Senior)

Convertible Debt (Senior)**

Bank Debt †

$ millions

* As of October 31, 2015 ** Convertible notes mature in September 2032. Holders’ first put right is December 2017 at a conversion price of $49.08

† Bank Debt includes $350 million of outstanding draws on our credit facility as of 10/31/2015 due in FY 2018 and our $500 million term loan due in FY 2019

MAINTAIN CONSERVATIVE DEBT MATURITIES* Accessing Capital For Growth

38

No corporate debt maturities until October 2017

46.0% 48.2%

46.2%

40.9%

35.5%

27.6%

31.8%

26.8%

12.6%

7.4%

13.6% 15.0%

23.6%

32.5%

47.0%

41.1% 39.5%

Net-Debt-To-Capital* 2000-2015

STRONG BALANCE SHEET PROVIDES ROOM TO GROW

* Calculated as total debt minus mortgage warehouse loans minus cash and marketable securities divided by total debt minus mortgage warehouse loans minus cash and marketable securities plus stockholders’ equity.

** Pro Forma net debt-to-capital ratio after completing the Shapell acquisition on Feb. 4, 2014.

39

At Fiscal Year End

DEMOGRAPHICS FAVOR THE INDUSTRY

40

Toll Brothers at Hidden Canyon , Lake Forest, CA

UNEMPLOYMENT RATES

0

2

4

6

8

10

12

Jan

-92

Jul-

92

Jan

-93

Jul-

93

Jan

-94

Jul-

94

Jan

-95

Jul-

95

Jan

-96

Jul-

96

Jan

-97

Jul-

97

Jan

-98

Jul-

98

Jan

-99

Jul-

99

Jan

-00

Jul-

00

Jan

-01

Jul-

01

Jan

-02

Jul-

02

Jan

-03

Jul-

03

Jan

-04

Jul-

04

Jan

-05

Jul-

05

Jan

-06

Jul-

06

Jan

-07

Jul-

07

Jan

-08

Jul-

08

Jan

-09

Jul-

09

Jan

-10

Jul-

10

Jan

-11

Jul-

11

Jan

-12

Jul-

12

Jan

-13

Jul-

13

Jan

-14

Jul-

14

Jan

-15

Jul-

15

Un

emp

loym

ent R

ate

(%)

November 2015 Civilian Labor Force Rate 5.0%

College Graduate Rate 2.5%

Civilian Labor Force

College Graduates

Source: U.S. Bureau of Labor Statistics 41

$100,000+ INCOME HOUSEHOLDS GROWING 3 TIMES FASTER THAN ALL U.S. HOUSEHOLDS

1980 2014

82.4

124.6

All Households (mill)

1980 2014

11.3

30.8

$100,000+ Income Households (mill)

Source: U.S. Census Bureau (P60-252)

(2014 Dollars)

42

1,585,000

767,000

818,000

1970-2007 2008-2014

Annual Shortfall in Production

(est.) Average Annual

Production

Source: U.S. Census Bureau

Total estimated construction shortfall of 5.7 million houses from 2008-2014.

Actual Average Annual Housing

Starts

Average Annual Housing Starts

BASIC DEMOGRAPHICS DRIVE AN INDUSTRY EMERGING FROM ITS SLUMBER

43

HOUSING STARTS VS. HOUSEHOLD GROWTH

1970-1979 Average Annual

Housing Starts

1.77 (mil)

1980-1989 Average Annual

Housing Starts

1.49 (mil)

1990-1999 Average Annual

Housing Starts

1.37 (mil)

2000-2007 Average Annual

Housing Starts

1.74 (mil)

2008-2014 Average Annual

Housing Starts

.77 (mil)

0.00

800.00

1,600.00

2,400.00

70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 140

20,000

40,000

60,000

80,000

100,000

120,000

Source: U.S. Census Bureau

Ho

use

ho

lds

(00

0)

Ho

usin

g Starts (00

0)

N u m b e r o f H o u s e h o l d s H a s G r o w n 7 8 % S i n c e 1 9 7 0

Total Single and Multi- Family Housing Starts

Total Households 44

WHY TOLL BROTHERS?

• A proven management team with a tremendous track record

• The dominant player with few competitors in the luxury market

• Control 44,253 lots in a lot-constrained environment*

• A strong balance sheet

• Balanced footprint across key Eastern, Western and Southern markets

• Expanding urban presence in New York, Washington, DC, and Philadelphia

• Nationally recognized, award-winning brand

• A homebuilder with a niche in urban, rental and distressed real estate

• Diversified move-up, active adult, and high-density product lines

• The nation's growing number of affluent households

• Strongest buyer profile in the industry

* As of October 31, 2015 45