EX-99.1 2 tol-4302021xexh991nextgenw.htm EX-99.1 Document

FOR IMMEDIATE RELEASECONTACT: Frederick N. Cooper (215) 938-8312
May 25, 2021fcooper@tollbrothers.com

Toll Brothers Reports FY 2021 2nd Quarter Results

FORT WASHINGTON, PA, May 25, 2021 -- Toll Brothers, Inc. (NYSE:TOL) (TollBrothers.com), the nation’s leading builder of luxury homes, today announced results for its second quarter ended April 30, 2021.

FY 2021’s Second Quarter Financial Highlights (Compared to FY 2020's Second Quarter):
Net income and earnings per share were $127.9 million and $1.01 per share diluted, compared to net income of $75.7 million and $0.59 per share diluted in FY 2020’s second quarter.
Pre-tax income was $169.8 million, compared to $102.1 million in FY 2020’s second quarter. Pre-tax income in the second quarter of FY 2021 includes a charge of $34.2 million for the early retirement of debt.
Home sales revenues were a second quarter record $1.84 billion, up 21% compared to FY 2020’s second quarter; delivered homes were 2,271, up 18%.
Net signed contract value was $3.05 billion, up 97% compared to FY 2020’s second quarter; contracted homes were 3,487, up 85%. Net signed contracts, in both dollars and units, were all-time records.
Backlog value was $8.69 billion at second quarter end, up 58% compared to FY 2020’s second quarter; homes in backlog were 10,104, up 57%. Quarter-end backlog, in both dollars and units, were all-time records.
Home sales gross margin was 21.9%, compared to FY 2020’s second quarter home sales gross margin of 19.5%.
Adjusted home sales gross margin, which excludes interest and inventory write-downs, was 24.4%, compared to FY 2020’s second quarter adjusted home sales gross margin of 22.9%.
SG&A, as a percentage of home sales revenues, was 11.9%, compared to 13.8% in FY 2020’s second quarter.
Income from operations was $184.4 million.
Other income, income from unconsolidated entities, and gross margin from land sales and other was $21.5 million.
In March 2021, the Company announced an increase of its quarterly cash dividend to $0.17 per share, or a rate of $0.68 per share on an annualized basis, representing a 54.5% increase from the prior quarterly cash dividend of $0.11 per share.

Douglas C. Yearley, Jr., chairman and chief executive officer, stated: “Our business continues to operate at a very high level. With strong demand and constrained industry-wide supply, we have continued to raise prices in excess of cost increases while setting all-time records for contracts and backlog in both units and dollars, and exceeding our guidance on nearly every metric.
“These exceptional results reflect the strategic expansion of our product lines and geographies, as well as structural changes we have made in how we operate to focus on driving sustainable increases in profit margins and return on equity. Based on the land we currently control, we are projecting community count growth to 340 communities at fiscal year end, with an additional 10% growth in fiscal 2022.
“We are encouraged by the continued strength of the housing market, which is supported by a long-term supply-demand imbalance, favorable demographics, especially the drive to home ownership among millennials, low mortgage rates, and the greater overall appreciation for one’s home that has emerged out of the pandemic. These market conditions, which we expect to continue into the foreseeable future, play to our strengths of creating luxury communities in desirable locations, offering a broad range of price points, and providing our home buyers the ability to personalize their homes.
“Based on the strength of our outlook for the remainder of this year and beyond, we are raising our fiscal year 2021 guidance on nearly all key metrics. We expect continued margin improvement through the second half of fiscal 2021 as well as in 2022, and we project return on beginning equity in excess of 20% in fiscal 2022.”

Third Quarter and FY 2021 Financial Guidance:
Third QuarterFull Fiscal Year 2021
Deliveries (1)
2,675 units
10,200 - 10,400 units
Average Delivered Price
$820,000 - $840,000
$805,000 - $825,000
Adjusted Home Sales Gross Margin24.8 %24.6 %
SG&A, as a Percentage of Home Sales Revenues11.6 %11.8 %
Quarter-End Community CountApproximately 310Approximately 340
Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and other
$20.0 million
$110.0 million
Tax Rate26.0 %25.5 %
(1) Delivery guidance for the third quarter reflects the slower COVID-19 impacted sales environment of mid-March through May 2020
Financial Highlights for the three months ended April 30, 2021 and 2020 (unaudited):
Net Income
$127.9 million, or $1.01 per share diluted
$75.7 million, or $0.59 per share diluted
Pre-Tax Income
$169.8 million
$102.1 million
Pre-Tax Inventory Impairments
$1.6 million
$14.2 million
Home Sales Revenues
$1.84 billion and 2,271 units
$1.52 billion and 1,923 units
Net Signed Contracts
$3.05 billion and 3,487 units
$1.55 billion and 1,886 units
Net Signed Contracts per Community
11.3 units
5.8 units
Quarter-End Backlog
$8.69 billion and 10,104 units
$5.49 billion and 6,428 units
Average Price of Homes in Backlog
$860,100 per home
$854,500 per home
Home Sales Gross Margin21.9 %19.5 %
Adjusted Home Sales Gross Margin24.4 %22.9 %
Interest Included in Home Sales Cost of Revenues, as a percentage of Home Sales Revenues2.4 %2.5 %
SG&A, as a percentage of Home Sales Revenues11.9 %13.8 %
Income from Operations
$184.4 million, or 9.6% of total revenues
$92.5 million, or 6.0% of total revenues
Other Income, Income from Unconsolidated Entities, and Gross Margin from Land Sales and Other
$21.5 million
$16.0 million
Quarterly Cancellations as a Percentage of Signed Contracts in Quarter4.0 %9.7 %
Quarterly Cancellations as a Percentage of Beginning-Quarter Backlog1.6 %3.1 %

Financial Highlights for the six months ended April 30, 2021 and 2020 (unaudited):
Net Income
$224.4 million, or $1.77 per share diluted
$132.5 million, or $0.99 per share diluted
Pre-Tax Income
$297.2 million
$168.0 million
Pre-Tax Inventory Impairments
$2.8 million
$15.2 million
Home Sales Revenues
$3.25 billion and 4,048 units
$2.81 billion and 3,534 units
Net Signed Contracts
$5.56 billion and 6,361 units
$3.04 billion and 3,692 units
Income from Operations
$303.5 million, or 8.7% of total revenues
$140.0 million, or 4.9% of total revenues
Other Income, Income from Unconsolidated Entities, and Land Sales Gross Profit
$71.7 million
$36.2 million
Additional Financial Information:
The Company ended its FY 2021 second quarter with approximately $715 million in cash and cash equivalents, compared to $1.37 billion at FYE 2020 and $950 million at FY 2021’s first quarter end. At FY 2021 second quarter end, the Company also had $1.790 billion available under its $1.905 billion bank revolving credit facility, substantially all of which is scheduled to mature in November 2025.
On April 23, 2021, the Company paid its quarterly dividend of $0.17 per share to shareholders of record at the close of business on April 9, 2021.
Stockholders' Equity at FY 2021 second quarter end was $4.91 billion, compared to $4.88 billion at FYE 2020.
FY 2021's second quarter end book value per share was $39.82 per share, compared to $38.53 at FYE 2020.
The Company ended its FY 2021 second quarter with a debt-to-capital ratio of 42.2%, compared to 43.8% at FY 2021’s first quarter end and 44.8% at FYE 2020. The Company ended FY 2021’s second quarter with a net debt-to-capital ratio(1) of 35.6%, compared to 35.8% at FY 2021’s first quarter end, and 33.3% at FYE 2020.
The Company ended FY 2021’s second quarter with approximately 74,500 lots owned and optioned, compared to 67,700 one quarter earlier, and 62,100 one year earlier. Approximately 51%, or 38,000, of these lots were owned, of which approximately 18,000 lots, including those in backlog, were substantially improved.
In the second quarter of FY 2021, the Company spent approximately $205.8 million on land to purchase approximately 2,053 lots.
The Company ended FY 2021’s second quarter with 320 selling communities, compared to 309 at FY 2021’s first quarter end and 326 at FY 2020’s second quarter end.
In March 2021, the Company redeemed all $250 million of its outstanding 5.625% senior notes due 2024. The Company incurred a pre-tax charge of approximately $34.2 million in the second quarter for the early retirement of debt.
(1)    See “Reconciliation of Non-GAAP Measures” below for more information on the calculation of the Company’s 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, May 26, 2021, to discuss these results and its outlook for the third 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.
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 magazine’s World’s 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).

Information presented herein for the second quarter ended April 30, 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 effects of the ongoing Covid-19 pandemic, which are highly uncertain, cannot be predicted and will depend upon future developments, including the severity of the pandemic and its duration, the duration of social distancing and other mitigation strategies taken by applicable government authorities, the 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 parcels;
access to adequate capital on acceptable terms;
geographic concentration of our operations;
levels of competition;
raw material and labor prices and availability;
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;
transportation costs;

federal and state tax policies;
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 “Management’s 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.

(Amounts in thousands)
April 30,
October 31,
Cash and cash equivalents$714,968 $1,370,944 
Inventory8,260,664 7,658,906 
Property, construction and office equipment, net276,224 316,125 
Receivables, prepaid expenses and other assets849,764 956,294 
Mortgage loans held for sale204,421 231,797 
Customer deposits held in escrow94,432 77,291 
Investments in unconsolidated entities533,595 430,701 
Income taxes receivable40,951 23,675 
$10,975,019 $11,065,733 
Loans payable$1,033,165 $1,147,955 
Senior notes2,403,163 2,661,718 
Mortgage company loan facility146,932 148,611 
Customer deposits609,387 459,406 
Accounts payable502,293 411,397 
Accrued expenses1,115,437 1,110,196 
Income taxes payable203,853 198,974 
Total liabilities6,014,230 6,138,257 
Stockholders’ Equity
Common stock1,529 1,529 
Additional paid-in capital709,422 717,272 
Retained earnings5,352,573 5,164,086 
Treasury stock, at cost(1,148,406)(1,000,454)
Accumulated other comprehensive loss(2,048)(7,198)
Total stockholders' equity4,913,070 4,875,235 
Noncontrolling interest47,719 52,241 
Total equity4,960,789 4,927,476 
$10,975,019 $11,065,733 

(Amounts in thousands, except per share data and percentages)
Three Months Ended
April 30,
Six Months Ended
April 30,
Home sales$1,836,260 $1,516,234 $3,246,964 $2,813,571 
Land sales and other93,864 32,838 246,536 66,932 
1,930,124 1,549,072 3,493,500 2,880,503 
Cost of revenues:
Home sales1,434,493 78.1 %1,220,978 80.5 %2,556,286 78.7 %2,254,100 80.1 %
Land sales and other92,091 98.1 %26,418 80.4 %203,825 82.7 %58,700 87.7 %
1,526,584 1,247,396 2,760,111 2,312,800 
Gross margin - home sales401,767 21.9 %295,256 19.5 %690,678 21.3 %559,471 19.9 %
Gross margin - land sales and other1,773 1.9 %6,420 19.6 %42,711 17.3 %8,232 12.3 %
Selling, general and administrative expenses219,170 11.9 %$209,128 13.8 %429,909 13.2 %427,659 15.2 %
Income from operations184,370 92,548 303,480 140,044 
Income from unconsolidated entities10,483 (4,271)11,677 7,870 
Other income - net9,213 13,836 17,285 20,131 
Expenses related to early retirement of debt(34,240)(35,211)
Income before income taxes169,826 102,113 297,231 168,045 
Income tax provision41,960 26,443 72,866 35,499 
Net income$127,866 $75,670 $224,365 $132,546 
Per share:
Basic earnings$1.03 $0.59 $1.79 $1.00 
Diluted earnings$1.01 $0.59 $1.77 $0.99 
Cash dividend declared$0.17 $0.11 $0.28 $0.22 
Weighted-average number of shares:
Basic124,295 128,205 125,177 133,175 
Diluted125,999 128,809 126,780 134,349 
Effective tax rate24.7%25.9%24.5%21.1%

(Amounts in thousands)
Three Months Ended
April 30,
Six Months Ended
April 30,
Inventory impairment charges recognized:
Cost of home sales - land owned/controlled for future communities$1,581 $13,914 $1,747 $14,945 
Cost of home sales - operating communities300 1,100 300 
$1,581 $14,214 $2,847 $15,245 
Depreciation and amortization$16,305 $15,618 $33,181 $30,285 
Interest incurred$38,447 $46,104 $79,715 $89,754 
Interest expense:
Charged to home sales cost of sales$44,092 $38,037 $77,417 $70,811 
Charged to land sales and other cost of sales579 737 2,417 1,304 
Charged to other income - net2,440 2,440 
$44,671 $41,214 $79,834 $74,555 
Home sites controlled:April 30,
April 30,
Owned37,952 37,112 
Optioned36,514 25,028 
74,466 62,140 

Inventory at April 30, 2021 and October 31, 2020 consisted of the following (amounts in thousands):
April 30,
October 31,
Land and land development costs$2,101,713 $2,094,775 
Construction in progress5,479,780 4,848,647 
Sample homes351,932 398,053 
Land deposits and costs of future development327,239 317,431 
$8,260,664 $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
April 30,
Units$ (Millions)Average Price Per Unit $
North562 449 $390.7 $296.0 $695,100 $659,300 
Mid-Atlantic304 303 218.3 192.9 $718,100 $636,600 
South408 348 280.2 230.8 $686,700 $663,400 
Mountain605 505 431.8 337.5 $713,800 $668,300 
Pacific347 289 458.6 423.3 $1,321,600 $1,464,700 
Traditional Home Building2,226 1,894 1,779.6 1,480.5 $799,500 $781,700 
City Living45 29 58.0 36.8 $1,288,500 $1,268,000 
Corporate and other(1.3)(1.1)
Total home sales2,271 1,923 1,836.3 1,516.2 $808,600 $788,500 
Land sales and other93.9 32.8 
Total consolidated$1,930.2 $1,549.0 
North551 377 $454.4 $269.8 $824,600 $715,700 
Mid-Atlantic386 294 323.9 219.9 $839,100 $748,100 
South800 395 561.8 273.3 $702,300 $691,800 
Mountain1,216 509 920.0 362.0 $756,600 $711,300 
Pacific488 294 707.6 400.5 $1,450,000 $1,362,100 
Traditional Home Building3,441 1,869 2,967.7 1,525.5 $862,500 $816,200 
City Living46 17 85.3 27.7 $1,854,500 $1,627,300 
Total consolidated3,487 1,886 $3,053.0 $1,553.2 $875,500 $823,500 
North1,893 1,677 $1,477.9 $1,187.1 $780,700 $707,900 
Mid-Atlantic1,218 781 1,039.7 574.2 $853,600 $735,200 
South2,107 1,174 1,492.1 861.4 $708,200 $733,800 
Mountain3,338 1,699 2,533.4 1,271.4 $759,000 $748,400 
Pacific1,432 999 1,949.7 1,450.7 $1,361,500 $1,452,100 
Traditional Home Building9,988 6,330 8,492.8 5,344.8 $850,300 $844,400 
City Living116 98 197.4 148.1 $1,701,700 $1,510,900 
Total consolidated10,104 6,428 $8,690.2 $5,492.9 $860,100 $854,500 

 Six Months Ended
April 30,
Units$ (Millions)Average Price Per Unit $
North1,013 842 $703.3 $550.1 $694,300 $653,300 
Mid-Atlantic531 543 382.3 355.4 $720,000 $654,500 
South749 622 497.1 414.5 $663,700 $666,400 
Mountain1,130 906 809.8 600.6 $716,600 $662,900 
Pacific573 556 789.8 818.6 $1,378,400 $1,472,300 
Traditional Home Building3,996 3,469 3,182.3 2,739.2 $796,400 $789,600 
City Living52 65 65.8 76.6 $1,265,400 $1,178,500 
Corporate and other(1.1)(2.2)
Total home sales4,048 3,534 3,247.0 2,813.6 $802,100 $796,200 
Land sales246.5 66.9 
Total consolidated$3,493.5 $2,880.5 
North1,000 777 $811.1 $557.0 $811,100 $716,900 
Mid-Atlantic759 536 651.4 389.4 $858,200 $726,500 
South1,368 748 950.7 517.7 $695,000 $692,100 
Mountain2,194 999 1,671.8 719.5 $762,000 $720,200 
Pacific961 581 1,351.7 783.8 $1,406,600 $1,349,100 
Traditional Home Building6,282 3,641 5,436.7 2,967.4 $865,400 $815,000 
City Living79 51 124.3 75.1 $1,573,400 $1,472,500 
Total consolidated6,361 3,692 $5,561.0 $3,042.5 $874,200 $824,100 

Unconsolidated entities:
Information related to revenues and contracts of entities in which we have an interest for the three-month and six-month periods ended April 30, 2021 and 2020, and for backlog at April 30, 2021 and 2020 is as follows:
Units$ (Millions)Average Price Per Unit $
Three months ended April 30,
Revenues11 $32.5 $24.3 $2,951,700 $2,700,100 
Contracts14 $42.2 $26.7 $3,016,000 $3,814,400 
Six months ended April 30,
Revenues16 32 $43.6 $91.4 $2,727,800 $2,856,500 
Contracts19 15 $53.8 $50.5 $2,832,100 $3,364,800 
Backlog at April 30,$20.1 $35.4 $2,878,500 $3,931,200 

This press release contains, and Company management’s discussion of the results presented in this press release may include, information about the Company’s adjusted homes sales gross margin and the Company’s 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 Company’s 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 Company’s 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 Company’s homes sales gross margin as a percentage of homes sale revenues (calculated in accordance with GAAP) to the Company’s 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
April 30,
Six Months Ended
April 30,
Revenues - homes sales$1,836,260 $1,516,234 $3,246,964 $2,813,571 
Cost of revenues - home sales1,434,493 1,220,978 2,556,286 2,254,100 
Home sales gross margin401,767 295,256 690,678 559,471 
Add:Interest recognized in cost of revenues - home sales44,092 38,037 77,417 70,811 
Inventory write-downs1,581 14,214 2,847 15,245 
Adjusted homes sales gross margin$447,440 $347,507 $770,942 $645,527 
Homes sales gross margin as a percentage of home sale revenues21.9 %19.5 %21.3 %19.9 %
Adjusted home sales gross margin as a percentage of home sale revenues24.4 %22.9 %23.7 %22.9 %

The Company’s 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 Company’s 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 Margin
The Company has not provided projected third 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 third quarter and full FY 2021. The variability of these charges may have a potentially unpredictable, and potentially significant, impact on our third quarter and full FY 2021 homes sales gross margin.

Net Debt-to-Capital Ratio
The following table reconciles the Company’s ratio of debt to capital (calculated in accordance with GAAP) to the Company’s 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)
April 30, 2021January 31, 2021October 31, 2020
Loans payable$1,033,165 $971,504 $1,147,955 
Senior notes2,403,163 2,652,162 2,661,718 
Mortgage company loan facility146,932 112,619 148,611 
Total debt3,583,260 3,736,285 3,958,284 
Total stockholders' equity4,913,070 4,786,835 4,875,235 
Total capital$8,496,330 $8,523,120 $8,833,519 
Ratio of debt-to-capital42.2 %43.8 %44.8 %
Total debt$3,583,260 $3,736,285 $3,958,284 
Less:Mortgage company loan facility(146,932)(112,619)(148,611)
Cash and cash equivalents (714,968)(949,696)(1,370,944)
Total net debt2,721,360 2,673,970 2,438,729 
Total stockholders' equity4,913,070 4,786,835 4,875,235 
Total net capital$7,634,430 $7,460,805 $7,313,964 
Net debt-to-capital ratio35.6 %35.8 %33.3 %

The Company’s 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 Company’s operations.