Quantcast

Toll Brothers Inc (TOL) Q2 2019 Earnings Call Transcript


Logo of jester cap with thought bubble.

Image source: The Motley Fool.

Toll Brothers Inc (NYSE: TOL)
Q2 2019 Earnings Call
May 22, 2019 , 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the Toll Brothers Second Quarter Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Doug Yearley, Chairman and Chief Executive Officer. Please go ahead.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thank you, Chad. Welcome and thank you for joining us. I'm Doug Yearley , Chairman and CEO. With me today are Bob Toll, Chairman Emeritus; Rick Hartman, President and COO; Marty Connor, Chief Financial Officer; Fred Cooper, Senior VP of Finance and Investor Relations; Kira Sterling, Chief Marketing Officer; Gregg Ziegler, Senior VP and Treasurer and Don Salmon, President of TBI Mortgage Company.

Before I begin, I'd ask you to read the statement on forward-looking information in yesterday's release 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 and many other factors beyond our control that could significantly affect our future results. Those listening on the web can email questions to Investor Relations at tollbrothers.com. Fiscal year 2019 second quarter results were strong with earnings per share of $0.87, up 21%. Pre-tax earnings up 16% and home sales revenue up 7% and adjusted home sales gross margin improving 100 basis points compared to one year ago. Fiscal year 2019 second quarter net income and earnings per share were the highest second quarter in over a decade.

Our second quarter contracts were down 16% in dollars and 9% in units. We attribute this decline in part to the industrywide slowdown that began in the second half of 2018 and to a challenging year-over-year comparisons. We are encouraged that demand improved, as our second quarter progressed. April contracts were better than March which were better than February, while February and March contracts were down versus 2018 same months, 2019 April contracts surpassed last year's April on both a growth and a per community basis.

Although the spring selling season bloomed late, it builds momentum. In fact it was the best April on a gross and a per community basis for contracts since 2006. Traffic and deposits this May have also been encouraging. We view this as a positive sign for the overall health of the housing market. According to recen t report s, builder sentiment in May rose to a seven month high and single-family housing starts in April were up 6.2% versus March. The industry is being bullied by low interest rates, a strong employment picture and continued aging of the existing housing stock and a still limited supply of new homes in many markets.

Last week, we learned that we moved up 52 spots on the Fortune 500 to number 428. We continue to look for opportunities to grow and leverage our industry-leading brand as we expand our geographic footprint, product lines and the price points. On Monday, we announced our entry into the metro Atlanta market with the acquisition of Sharp Residential. The acquisition of Sharp brings us into the largest US housing market, where we did not operate. This quarter, we opened our first communities in Salt Lake City and Portland, Oregon, where we already -- where we are already seeing healthy buyer demand. We also acquired our first West Coast City Living urban condominium sites in Los Angeles and Seattle.

We continue to look to broaden our product lines and price points beyond our traditional move up and baby boomer active adult buyers. About one-third of our for-sale communities now offer some homes with base prices under $500,000. This enables us to serve millennials and other customers who want our luxurious quality and our brand but may seek a lower price point and a quicker more streamlined home buying process. We are particularly proud of our crossings at Meridian Community in Phoenix, where we have sold 53 homes at an average price in the mid to upper $300,000 since opening just seven months ago.

We are also serving urban and suburban renters. Through Toll Brothers apartment living, we currently have a pipeline of 18,600 units under development across the country. Recently, the National Multifamily Housing Council named us the fastest growing and 14th largest apartment developer in the country. We are excited with the growth and potential of this business. We are also investing in the single-family build to rent sector. This is another business, we believe has great potential. This quarter, we formed a joint venture with BB Living, an established build-to-rent developer and a large financial partner in a $400 million joint venture to purpose build and operate single-family rental communities.

We are initially targeting the Phoenix, Denver, Las Vegas, Jacksonville, Dallas, Houston and Boise markets. While Toll Brothers has committed a relatively modest $60 million to this partnership. We believe this investment will produce strong returns, over time. With a positive macroeconomic backdrop, record low unemployment, continued wage growth and solid consumer confidence, we are optimistic about the opportunities ahead.

Now let me turn it over to Marty.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Thanks, Doug. Before I address the specifics of this quarter. I do want to note that a reconciliation of the non-GAAP measures referenced during today's discussion to their comparable GAAP measures can be found in the back of yesterday's release. Our home building operations teams had a great quarter. We exceeded our guidance and our pre-tax income rose 15% on a home sale revenue increase of just 7%. Adjusted home sale gross margin came in 100 basis points better than a year ago. Driven primarily by solid operations and favorable mix and the positive impact from collection of a brownfield credit. Our cancellation rate during the quarter returned to historical norms versus the slightly elevated level of 2019's first quarter.

We believe this reflects a more confident consumer and an improved market. Interest expense through cost of sales was 2.6% of home sales revenues, down 20 basis points compared to a year ago. In fiscal year 2019, second quarter, we had an SG&A margin of 10.4% which is in line with fiscal year 2018's second quarter. This was better than our guidance due to our strong home sale revenues. We remain focused on maintaining our conservative balance sheet with ample liquidity, low leverage and a long-dated debt maturity profile. We ended fiscal year 2019 second quarter with a debt to capital ratio of 42.5% on a gross basis and a net debt to capital ratio of 34.6% compared to 44.6% and 40.4% respectively at fiscal year 2018's second quarter end.

We had more than $2 billion of untapped cash and available credit facilities at quarter end. As announced Monday, we used some of this liquidity to acquire Sharp Residential and we are well positioned and remain active in pursuit of additional attractive land and builder opportunities.We also remain committed to prudent capital management. Share repurchases will continue to be part of our capital allocation strategy. Our weighted average debt maturity is five years. Our weighted average interest rate is 4.65% and we only have $250 million of maturities due in the next 33 months. Last week, Standard & Poor's acknowledged the strength of our operations and balance sheet by moving our outlook from stable to positive.

Our book value per share at fiscal year 2019 second quarter-end was $33.84, our highest ever and it's up from $33.04 last quarter. At almost $34 per share, we have grown our book value per share at a compound annual rate of 16% since our going public in 1986. Due to the lack of visibility into consumer demand, the past few quarters, we had not previously provided second half and fiscal year 2019 guidance.Now based on our backlog and other factors, we are providing our initial forward-looking income statement guidance for the second half of fiscal year 2019.

We expect third quarter deliveries of between 1,800 and 2,000 units with an average delivered price of between $855,000 and $880,000.We expect fiscal year 2019 deliveries of between 7,700 and 8,100 units with an average delivered price of between $855,000 and $880,000, the same as the third quarter. We expect third quarter adjusted home sale gross margin of approximately 22.5% and SG&A as a percentage of third quarter home sales revenues of approximately 10.7%. We expect fiscal year 2019 adjusted home sale gross margin of approximately 23% and SG&A as a percentage of fiscal year 2019 home sale revenues of approximately 10.4%. Our third quarter and fiscal year 2019 guidance are tempered slightly by the impact of weather that will delay some home closings in certain of our Northern California communities, including our high density Metro Crossing project in Fremont. Northern California had an unusually long rainy season this year, that lasted from October until May disrupting land development activity and home production. This is significant as our Northern California division with projected margins higher than the Company average has 630 units in backlog, representing $920 million of future revenue.

Our guidance for adjusted home sales gross margin during the balance of the fiscal year also reflects the slower demand and rising incentives associated with the challenging sales environment of last fall and winter, as well as normal changes in mix. Additionally, impacting our margin guidance is a 10 to 20 basis point impact from purchase accounting, associated with our acquisition of Sharp Residential and the fewer higher priced units in New York City projected to close in the balance of the year at low margins. We expect third quarter other income -- income from unconsolidated entities and land sales gross profit of approximately $13 million in total and we expect a tax rate of approximately 27.5%.

We expect fiscal year 2019 other income, income from unconsolidated entities and land sales gross profit of approximately $100 million in total, and we expect a tax rate of approximately 27.5%. Lastly, we expect interest expense to cost of sales to be approximately 2.7% of home sales revenue for the balance of the year and our weighted average share count to be approximately 148 million shares for the third quarter and (ph) year. We are pleased that our community count grew from 283 a year ago to 311 at the second quarter end, the Sharp acquisition will add 10 more communities to this total. Now, let me turn it back to Doug.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thank you, Marty. Chad, we're all set for questions.

Questions and Answers:

Operator

Sounds good. Thank you. We will now begin the question-and-answer session. (Operator instructions) Your first question comes from Stephen Kim with Evercore ISI. Please go ahead.

Trey Morrish -- Evercore ISI Institutional Equities -- Analyst

Hey guys, it's actually Trey on for Steve. Thanks for taking some time for questions. First, I want to talk about the -- the April contracts. You said, it clearly got better and looking at the geographic spread, it looks like that California was clearly now your weakest in the quarter. I was wondering if that might have been the driver why April was so much better than the first two months or if it was just a holistic better improvement across the entire portfolio.

Douglas C. Yearley -- Chairman & Chief Executive Officer

It was more holistic across the entire portfolio. To give the numbers because I know they will be asked. February was down 22% over February of '18 in units. March was down 19% over March of '18 in units and April was up 11% over April of '18 in units. It was spread around the country the improvement in April. Some highlights, New Jersey, Pennsylvania, Florida, Texas, Michigan, Arizona, Nevada, and California.

Trey Morrish -- Evercore ISI Institutional Equities -- Analyst

Okay, got it. That's helpful. And then looking at your guidance, is there any way you could potentially quantify the margin impact or at least give us a ballpark of the margin impact from your -- the disruption from the north -- Northern California developments.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

We expect approximately a 100 units fewer than we might have projected at the beginning of the year or then backlog conversion factors might project for the third quarter and we only project to make up about half of those in the fourth quarter.

Douglas C. Yearley -- Chairman & Chief Executive Officer

But as we mentioned, the backlog in Northern Cal is significant, it is higher margin than the Company average. And those homes are sold and will be delivered. They have just been delayed a little bit because of a really bad fall-winter and spring rainy season in San Francisco.

Trey Morrish -- Evercore ISI Institutional Equities -- Analyst

Okay, got it. Thank you very much, guys.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

And I think one of the other things kind of worth noting is that those buildings in the Fremont area are generally attached multifamily condo buildings. So they had a tendency to settle in a lumpy manner or be accelerated or be delayed in a lumpy manner. So there's a little variability in these projections associated with the specific timing of closings for those buildings at a time if you will.

Trey Morrish -- Evercore ISI Institutional Equities -- Analyst

Thank you.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You see how the entire building at about the same time.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Right. Or you don't.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Correct.

Operator

Our next question will be from Stephen East with Wells Fargo. Please go ahead.

Paul Przybylski -- Wells Fargo -- Analyst

Thanks. Actually this is Paul Przybylski on for Stephen, I guess, first off, your orders were a little bit lower than what we were expecting in California. I was wondering, if you could add any color on that market between Northern and Southern and how incentives trended in California in 2Q versus what we saw last fall and then also if you're seeing, the feeder markets of Las Vegas, Reno and Boise seeing any negative impacts as California school.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Sure, Paul. Let me start with the comp, it was a difficult comp, the second quarter of '18 in California, was up 45% in units and 52% in dollars over Q2 of '17. So we faced that. We also have a lack of current inventory in some locations in California because we had some openings last year that had a lot of pent-up demand that sold very rapidly in the early months of their opening and now, we're more in the middle innings of those communities, where demand is good, but it's not benefiting from the early on pent-up demand. Layered onto that, as we talk about the severe weather of Northern Cal, it certainly had a bigger impact on land development and construction, but we also believe it had some impact on sales.

I just heard this past weekend, it was another wash-out weekend, which we think, certainly dampens some of the sales activity. But just to put it into perspective, last year, I'm looking at Metro Crossing, Tassajara Hills and Gale Ranch in Northern Cal, which were three of our bigger communities and Altair and Robertson Ranch in Southern Cal. They combined had 332 contracts in the second quarter of last year compared to 127 this year. Now part of that is slower demand this spring, versus last spring. But the much bigger part is what I first described with the lack of inventory. The middle innings and some weather-related issues, particularly in the North.

So one part of your question was North versus South. I think, it's -- been fairly similar in both markets. I will say that what we've seen in April and the first three weeks of May is very encouraging.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Northern California and Southern California where our top two markets for the bulk of last year and probably the year before that and they are still top 10 markets for us.

Paul Przybylski -- Wells Fargo -- Analyst

Okay, great. And then could you add some color around the Sharp acquisition and maybe how it came about and what should be doing product wise and your growth expectations and -- and how that profitability compares to the Toll gross margin. And then any other opportunities for M&A in the Southeast of Florida?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Sure. So we've had our eye on Atlanta for a number of years. As I mentioned, it's the largest market that we are not in and we have an M&A team that is in action, all the time. Everywhere looking for opportunities. We met Tom Sharp. We were very impressed with with his leadership, his company and his land, which I personally toured and I'm very impressed with and we were able to put the deal together. I think, it's a good fit in price point. He goes from about $300,000 to $900,000 and we are going to offer homes throughout that range. There's a number of opportunities he showed me that frankly with his capital structure, he was unable to buy, but now, we can step in and hopefully take advantage.

And so I look for significant growth in Atlanta. I'm excited by the opportunity beyond Atlanta, M&A is active right now. We are very engaged in studying, a number of opportunities nationwide, some are existing markets, some are new markets and that team is working overtime.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

And Paul, as you know, in purchase accounting, units you acquire that are in backlog, you write up the inventory and deliver at a lower gross margin in the 5% to 10 % range in the way we account for it. And so that'll have a 10 to 20 basis point dampening impact in our third and fourth quarter of fiscal year 2019. The impact will be much less moving forward from there and you asked about the gross margins from the Sharp acquisition. As we model them on a run rate basis without any expectations of synergies or improvements, we think, they'll be maybe a 100 basis points below our Company average. But we bought that at Shapell and we bought that at Coleman and we bought that at CamWest and we were positively wrong because they got better than the Company average. And we expect a pretty high return on our investment here and an IRR and recoupment of our investment over the next three to four years.

Paul Przybylski -- Wells Fargo -- Analyst

Thank you. I appreciate it.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thanks, Paul.

Operator

Our next question comes from Nishu Sood with Deutsche Bank . Please go ahead.

Timothy Daley -- Deutsche Bank -- Analyst

Hi, this is actually Tim Daley in for Nishu. So my first question is just a follow on about the acquisitions. So it was at the lower end of the spectrum that you guys have typically operated in and then I know that, Doug, you did mention a few times that you are kind of trying to target that millennial bit more and maybe outside of the traditional active adult and move up markets. So just curious, is how should we interpret this deal and then those comments with the longer-term strategy of Toll Brothers and are you guys looking to organically expand this entry level footprint outside of Atlanta, if you could just provide some color on the strategy. And if there's any sort of shift there, we should be thinking about?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Sure. So -- yeah, I wouldn't read anything into the $300,000 to $900,000 and price price range and average price of $500,000 for Sharp, and we bought Coleman Homes in Boise, now three years ago. Three and half years ago. And their price was in the low 300s.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

280 actually.

Douglas C. Yearley -- Chairman & Chief Executive Officer

And we built it. We do 500 homes a year plus or minus in Boise with nice margins, very high ROE at a lower price point. I mean, we have operations around the country. As I mentioned in my prepared comments, one third of our communities now offer at least one home on the price sheet with a base price under $500,000. So this is not some profound shift. We recognize the millennial generation is a large generation. We are not going to sit back for a decade, and wait for them to buy the traditional second or third move-up home from Toll Brothers, they're buying homes later, they are therefore wealthier and there is a huge opportunity for us to sell in the threes, fours, fives in existing markets and in possibly some new markets to that crowd.

I highlighted one community in Phoenix. Historically, Phoenix for us had an average price of $900,000 selling primarily to the affluent empty-nester. We opened Crossings at Meridian in the mid-3s and have 53 sales in 7 months with good margins, very high ROE. I'm very proud of how we're going about it. We are doing more and more of that organically in our existing markets and we will also look to do that through acquisition, if the right builder comes along, whether it would be an existing market or a new market.

Timothy Daley -- Deutsche Bank -- Analyst

Great. Appreciate those details. And then I guess the second one is more for Marty. So Marty, you did note that share repurchases will continue to be part of the capital allocation strategy going forward. But this quarter and even last quarter the buybacks were a bit lighter than they have been trending over the last couple of years despite the stock kind of trading around a similar tangible book value multiple. So just curious as to, how should we kind of balance the commentary that you provided on the continuation of buybacks along with the kind of lower run rate that we're currently trending at for this year. And should we maybe think that we're going to get back to that $200 million, $300 million a year annual run rate over the -- that we've seen since 2015 basically or maybe a bit more subdued pace as you guys look to allocate capital but somewhere else, similar to the commentary around acquisitions et cetera. So yes, some more detail there would be grateful as well.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Sure. Thanks, Tim. We've got to caution against reading too much into our limited stock repurchases this quarter. Repurchases remain a key part of our capital allocation strategy. We've balanced the deployment of the -- our capital into our stock with our upcoming maturities of debt. The land and builder acquisition opportunities we see in the near term. I might emphasize those. The price of the stock, and obviously the time periods where we can buy the stock back based on blackout rules. The past few quarters were also impacted by some conservatism in capital spend, driven by the uncertain demand environment of last fall in the winter and as Doug mentioned continuing into February and March for us this year.

Timothy Daley -- Deutsche Bank -- Analyst

Great, thanks for the details and the time.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

Our next question will be from Ken Zener with KeyBanc. Please go ahead.

Kenneth Zener -- KeyBanc. -- Analyst

Good morning, gentlemen.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Hi Ken.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Good morning, Ken.

Kenneth Zener -- KeyBanc. -- Analyst

Marty, (inaudible). I think you said. I might have got it wrong but 630 units were in Northern California backlog, was that correct? Did I hear you say that?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Yes.

Kenneth Zener -- KeyBanc. -- Analyst

So that's just about, just under 60% of your total California backlog. Was that similar to kind of where we were last year. I just -- I didn't think Northern California was greater than Southern California, was that a big shift year-over-year?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Go ahead, Gregg. You're looking at really small numbers on the page that I can't see.

Gregg L. Ziegler -- Senior Vice President & Treasurer

(Multiple Speakers) California North, that just have 630 units in backlog. California South have just a little bit under 400. So that for today, you can see it, little bit of a delta in the backlog,

Douglas C. Yearley -- Chairman & Chief Executive Officer

But the question was last year.

Gregg L. Ziegler -- Senior Vice President & Treasurer

(Multiple Speakers) As we go a year ago.

Douglas C. Yearley -- Chairman & Chief Executive Officer

The Metro Crossing in Northern...

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Yeah. I would suspect California has a higher percentage becasue of the comeback -- like well -- units there and comp like...

Gregg L. Ziegler -- Senior Vice President & Treasurer

Yes, we had approximately 600 units in backlog a year ago in the North and in the South, we have a little over 700 units.

Douglas C. Yearley -- Chairman & Chief Executive Officer

There you go.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Yeah, so it did shift from the South to the North this year.

Kenneth Zener -- KeyBanc. -- Analyst

Yeah, great, I appreciate that detail. And the only reason I asked is, can you maybe update us at least (ph) Southern California and Orange County and stuff has -- had more of the four national buyer. Have you seen any change there in terms of change in this case being stability, which could be a good thing, and because we are seeing inflecting data on the existing sales side, that's actually can be and can interpret as being positive. So I'm trying to see, have you seen any of that type of stability. Thank you very much.

Douglas C. Yearley -- Chairman & Chief Executive Officer

We are encouraged by the improving sequential order trend month to month to month through the spring and so yes, it's stable and getting better. Which makes us feel pretty good.

Kenneth Zener -- KeyBanc. -- Analyst

Thank you.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

The next question will be from Michael Rehaut with JP Morgan Securities. Please go ahead.

Michael Rehaut -- JP Morgan Securities -- Analyst

Thanks, good morning, everyone.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Good morning, Mike.

Michael Rehaut -- JP Morgan Securities -- Analyst

First question I had was on the -- the sales pace trajectory. Obviously, good to hear that April orders up 11% year-over-year and you said, sales pace was up year-over-year as well. If kind of looking at the back half of the year specifically, even the third quarter and last year you did a sales pace of around 2.6% -- slightly better than the average sales pace that you did this second quarter. And so, and actually that 2.6%, I think was the highest it's been in quite some time. Certainly over the last several years. So just thinking about as many companies have talked to so far this year trends kind of being consistent with normal seasonality, notwithstanding the April sales pace up year-over-year. Should we expect as you go into the back half of the year for there to be that normal sequential declines. I mean, historically you've done anywhere from 15% to 20% down sequentially into the third quarter from the second and obviously a further 10%-ish or so fall off in the fourth quarter, does anything as you look at the demand trends today and obviously, you kind of talked to April and May being encouraging, does anything point you in the direction that 3Q and 4Q wouldn't adhere to that normal type of seasonality?

Gregg L. Ziegler -- Senior Vice President & Treasurer

But, I don't see it. Doug, you can jump in. Any reason for it not to follow the normal seasonality of years and years. But we are up pretty significantly in number of communities and the comps for us quarter-over-quarter get quite a bit easier in the third quarter and the fourth quarter.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Right. That I was exactly (inaudible)

Michael Rehaut -- JP Morgan Securities -- Analyst

Okay, so -- and community count is obviously a separate driver, but it is focused on sales pace. I think, what you said would make sense. And just wanted to confirm that. So thanks for that. Secondly, just some housekeeping items. If I could, you had mentioned Marty that the second quarter gross margin was driven by a few factors. One of them being a credit. I was just hoping to get the number there. The dollar or basis point impact.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

It was around $5 million.

Michael Rehaut -- JP Morgan Securities -- Analyst

All right perfect. And then the community count as part of your guidance, you had -- toward the end of your guidance for 3Q in fiscal '19, right at the end, after share count, you had mentioned something around community count expectations for the next quarter or two, I missed that, I apologize.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

I don't think, we really gave any particular guidance at the end. So you didn't miss anything. We ended Q2 with 311. We're going to add 10 from the Sharp acquisition and then we expect moderate growth from there through the balance of the year.

Michael Rehaut -- JP Morgan Securities -- Analyst

Okay, great, thanks so much.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

Our next question comes from John Lovallo with Bank of America Merrill Lynch, please go ahead.

John Lovallo -- Bank of America Merrill Lynch. -- Analyst

Hey, guys. Thank you for taking my questions. The first one Marty, you noted the roughly 100 fewer 3Q closings due to the weather in Northern California, sorry, which would explain a lot of the delta versus our forecast. But I am just curious if your 3Q delivery outlook takes into consideration the 125 homes in backlog from Sharp?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Yes. We expect 25 to 50 homes from Sharp to close in both the third and the fourth quarter.

John Lovallo -- Bank of America Merrill Lynch. -- Analyst

Okay, that's helpful. And then the 3Q SG&A as a percentage of sales is forecasted to rise, I think it was a 160 basis points year-over-year. The lower deliveries are probably a big driver there, but is there anything else that we should be considering in that increase year-over-year?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Yeah, I think certainly a little less revenue compared to 2018 impact there, Matt (ph). We have the normal compensation increases for our teams. We have some Sharp transaction costs in the third quarter that are $500,000 to $1 million and then we have period costs associated with the rollout and training of our new CRM and ERP systems that we talked about for the past couple of years. We are finally getting those implemented, and the teams are pretty excited about it.

John Lovallo -- Bank of America Merrill Lynch. -- Analyst

Okay, that's helpful. And then finally, will you keep the Sharp brand in Atlanta and Doug is the Sharp management team going to stay in place?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Yes and yes.

John Lovallo -- Bank of America Merrill Lynch. -- Analyst

Great, thanks, guys.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

The next question comes from Alan Ratner with Zelman & Associates. Please go ahead .

Alan Ratner -- Zelman & Associates -- Analyst

Hey guys, good morning. So good to hear about the April, May trends. I was curious if you could talk a little bit about what was going on with incentives and pricing over that time period. And just bigger picture, do you think, we're kind of past the worst of the incentive pain.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

So our incentives at the end of this quarter stood at an average of approximately $34,000 per home. That's up from around $22,000 per home a year ago, which is impacting a lot of our margin guidance. And so in the quarter, incentives grew very modestly around $3,000 to $4,000 per home.

Alan Ratner -- Zelman & Associates -- Analyst

Hey Marty, is that on closings or orders just to clarify?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Those are in contracts -- order.

Alan Ratner -- Zelman & Associates -- Analyst

In contracts. Okay, got it. And then I guess just if I look at kind of the guidance, if we kind of strip out some of the moving pieces, you mentioned the purchase accounting, the delays in California. It kind of feels like all else equal the back half would have been closer to that 23% range that you guided to for this quarter originally. So just as we think about all the moving pieces in your portfolio, the mix shift toward some lower priced product, the entry into markets like Atlanta and Salt Lake and Portland, which is also going to be below Company average.

Are there any differences in kind of margin profiles bigger -- longer term or do we -- is this kind of fairly representative of where you see the business longer term?

Douglas C. Yearley -- Chairman & Chief Executive Officer

I think it's fairly representative, Alan. We're delivering now what we sold six months to 12 months ago. So back then, our sales were a bit slower, as we all know, and there were obviously some incentives in certain locations. There is a mix change, but we're still a margin-driven Company. We're very,very focused on that. I am very hopeful that as if April and May trends continue, the incentive will come down to more of our historical norm, which call it the mid to high $20,000 per house. And so I think that would be encouraging for us as California does deliver, particularly Northern Cal if it's being pushed a little from Q3 to Q4 and then naturally into Q1 and Q2 of next year.

Those are high margined markets. Even New York City, we mentioned two units that we believe will close in Q3 and Q4 at a lower margin. That was not indicative of the City Living business. Those were two legacy very large, very expensive units in one of our older buildings that we are happy to be selling because the newer City Living buildings that we will be delivering. They're not at that 50% margin that we used to brag about four years and five years ago, but they are still high margins, they're higher than the Company average.

So I don't -- even with the shift to some different markets and some lower price point, I don't see a significant change in the margin profile of the Company.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Right and positively, we've seen cost stabilize for contract signed this quarter. On the labor and material cost of home construction, on average only increased around $250.

Douglas C. Yearley -- Chairman & Chief Executive Officer

And California was down $5,000.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Right. And that $250 compares to kind of a marching army over the past few years of $3,000 to $4,000 a quarter. So that's a positive.

Alan Ratner -- Zelman & Associates -- Analyst

That's great, Marty. And then just to squeeze one last one in on that cost front. Any -- just any quick thoughts on tariffs and impact that that might have going forward?

Douglas C. Yearley -- Chairman & Chief Executive Officer

They have had no impact on us to-date and we do not anticipate an impact in the future.

Alan Ratner -- Zelman & Associates -- Analyst

Thank you very much. Good luck.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thank you.

Operator

Our next question comes from Matthew Bouley with Barclays. Please go ahead.

Matthew Bouley -- Barclays -- Analyst

Hi, thank you for taking my questions. I wanted to ask back on California. Just kind of reflecting on I guess, the order patterns from the past few months and where the backlog is and kind of outside of the noise around weather. How should we think about revenue growth in California? At this point, do you see, we kind of can understand where things might look like in the next quarter or two, but is the implication from where the backlog is that perhaps revenues can I guess remain somewhat under pressure at the beginning of fiscal '20. I know, you're not going to give guidance, but we've talked about this in prior quarters, but what's the implication from that to gross margins. Perhaps recovering in early 2020, or what else can you say there? Thank you.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

So I think, as we said at the beginning of 2019, California will be bigger in our income statement in 2019 than it was in '18. And it will be smaller toward the back end of 2020 than it was in '19 unless we see a significant change in the marketplace. And so we feel good about California, it's still a top 10 market, but as we've said a few times here, it's not quite as strong or as significant as it was a year ago.

Part of the strategy we tried to deploy it, again, a bit more diversified as an organization.

Matthew Bouley -- Barclays -- Analyst

All right. I appreciate that. Thank you. And then I wanted to follow up on the SG&A side, I think, Marty, you mentioned that there is a lot of spending kind of in the books already for 3Q, is that just kind of a function perhaps near term there is some less flexibility around that. But as we look into 2020, do you suspect that you might be able to kind of rightsize some of the SG&A spend at all based on where the top line is. Thank you.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

So the spend for our CRM and our ERP system should continue a bit into the beginning of 2020 and then trail off, and hopefully, we begin to see some efficiencies from those new pieces of technology from that point forward, just -- so we're aware that that G&A is generally fixed and the sales is much more variable, and so, we're actively managing the G&A as we always do and we feel very optimistic about the successful implementation of these couple of pieces of software and their ability to drive some efficiencies longer term.

Matthew Bouley -- Barclays -- Analyst

All right. I appreciate it. Thank you very much.

Operator

The next question comes from Mike Dahl with RBC Capital Markets. Please go ahead.

Mike Ising -- RBC Capital Markets -- Analyst

Good morning. Actually Mike Ising (ph) on for RBC. Following up on some of the commentaries you guys had both regionally and the sequential cadence of improvements in April. Just wanted to follow-up, you mentioned a number of markets that showed great improvement. Are there any markets or areas of weakness that are still down year-over-year in April?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Our bottom three of are Seattle, which is still struggling. I think, there's still some sticker shock in Seattle. I think, the economy is strong. Obviously, the job market and diversity of that job market is pretty incredible. But we had such huge price increases over the last three or four years that I think the market is digesting a bit. Dallas has been slow, but we are encouraged of late and then the third one that has shown some softness would be Michigan.

Mike Ising -- RBC Capital Markets -- Analyst

Okay. Got it. Very helpful.

Douglas C. Yearley -- Chairman & Chief Executive Officer

And that's for the quarter. That's not for the -- I know you asked about the month of April. I'm not going to give that specific, but that's -- what I just gave is commentary on the quarter.

Mike Ising -- RBC Capital Markets -- Analyst

Sure. Helpful. Thank you. And then around the incentives commentary, similar vein, can you help us think about where that step-up in incentives per home if there's different pockets where you've been able to pull back on incentives as affordability has become somewhat better with the move-in rates or any areas where you're seeing more rational pricing actions?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Yeah, the one thing I do want to point out, the incentives were up $4,000 from $30,000 to $34,000 and our average houses in the 8s. So it's a 50 basis point move in incentive. I still find an incentive that's 3.5%, 4% range to be healthy, even in very good markets, we always have -- have some modest incentive because when you buy a house at that price point, you want to feel like you want, you want to get a little something, a little credit at the design studio, when you pick out your finishes. Where it's spread out? It's really, it's community by community, it's market by market, there are not a handful of isolated markets where that move-in incentive, I can attribute that move-in incentive to just a few markets. I mentioned Dallas has been slower. Well naturally Dallas has had some higher incentives. I mentioned Seattle has been slower, we've raised some incentives in Seattle. So it, it really moves by the demand and it -- I can't point to just a handful. I think it -- sort of each community has its own story.

Mike Ising -- RBC Capital Markets -- Analyst

Got it. And very helpful. And then one more if I can sneak it in. Now that tax season is past, can you help us think about, you guys have some more exposure to SALT-impacted states. And what are you hearing from your sales people and is there any expected impact from the changes in the tax code? Thanks and good luck.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thank you. Just to finish up on the incentive conversation, Gregg just showed me a few markets that are big markets for us. Where the incentive has come down, and they are East Coast markets of Greater Philadelphia, we call it Pennsylvania and Northern Virginia. SALT, we are not hearing about it at the sales centers of California, New Jersey, New York, Connecticut. We do hear a bit about it in the sales centers of Boise, Reno, Las Vegas, Phoenix and Dallas where there are some people that are leaving the state of California to take advantage of -- the non-SALT or lower SALT. So there is still a lot of people that buy in California. California has always been a very, very expensive state to live in, pre-SALT. But I think, we are well positioned for those that are a bit fed up and they want to go to the other locations, where we have great offerings.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Chad. We had a question come in via email and that concerns -- what is Toll's view on investment grade ratings specifically with respect to the recent outlook change from S&P and how might that impact our capital allocation plans specifically share repurchases, and debt reduction?

So we were very pleased with the upgrade from S&P. Often that sort of move telegraphs a subsequent upgrade to investment grade in a 12 to 24-month cycle. We are investment grade with Fitch, a notch below with both Moody's and S&P. And so achieving investment grade is something we would love to have. We'd be very respectful of. And I think, based on where we currently stand and the flexibility we have in our capital structure, it shouldn't impact too much of our stock, we choose to buyback or debt we choose to to retire.

Operator

Thank you sir. The next question is from Scott Schrier with Citi. Please go ahead.

Scott Schrier -- Citi -- Analyst

Hi, good morning. I wanted to ask a little bit about your average contract price. In many your markets it increased and I'm curious if you could parse some of that out what was between whether it was product mix, base price, design studio, options lot premiums. And then also what are your assumptions going forward in terms from margins in terms of those lot in option premiums.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Scott, there has not been a change between the base price of the home and the lot premium and the options. Our buyers still spend about 20% of the delivered price of the home on the options, which is a combination of the structural changes to the home that add rooms, move walls and the finish options that are purchased at our regional design studios and that number really has not moved. Lot premiums are based on the local community, if you're -- if you have views of the Pacific Ocean, we may actually get a $1 million lot premium, if you're on the 18th Green, we may get a couple of hundred thousand and if that's more Vanilla community, $10,000; $20,000; $30,000 tends to be the range in our strategy and the buyers' willingness or appetite for premiums really has not changed at all.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

I'd encourage you to take a look at the contracts data on Page 10 of our release, it shows all six of our regions. Our average price of units in contracts for the third quarter went down roughly $70,000 -- second quarter, excuse me. But we were up in five of the six quarters. And so that average contract is really impacted by the California situation being not as strong as last year. Five of six regions, excuse me.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Well that's just math because in California the price sells up. There is just less of them.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Correct. Right. We've seen price increases in five of six of our regions on an average basis. But on a Companywide basis, the average price has gone down because of the impact to California.

Scott Schrier -- Citi -- Analyst

Great, thanks for that. And then for my follow-up. And I know it's early, I just wanted to ask a little bit about your investment in the build-to-rent model. Are you seeing a preference or competition from build-to-rent homes in your markets even at your price point. I'm curious if the investment is indicative of losing share in your view, meaning, this is might be a way to recapture some of that or is this just viewed as an ancillary income stream?

Douglas C. Yearley -- Chairman & Chief Executive Officer

It's viewed as an ancillary income stream. We are not losing share. We see this as more and more renters may prefer to raise a family or live in a single family home versus a apartment complex or community or building and so it is part of our apartment living group, it is not at the price point or the monthly payment of our for-sale business, strictly ancillary.

Scott Schrier -- Citi -- Analyst

Great, Thanks a lot for that. I appreciate it. Good luck.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thank you.

Operator

The next question comes from Jade Rahmani with KBW. Please go ahead.

Ryan Tomasello -- KBW -- Analyst

Hi, everyone. This is Ryan Tomasello on for Jade. In terms of M&A, I was hoping to get your view on large scale transactions like merging with a similar sized peer. Would the strategic rationale make sense in terms of improving scale, construction efficiency, offsite capabilities and product diversity and also as you know, some of the other builders have apartment businesses and are adapting their land strategy. So it seems like there could be overlap there as well?

Douglas C. Yearley -- Chairman & Chief Executive Officer

All of what you say, makes sense. We have no deal cooking, as you know there is always conversations between big to big; mid to mid, big to mid, big to small, public to private, integration and synergies is difficult, it's proven to be difficult over the years with many of these larger deals, but you gave a lot of good reasons why it does make sense. Everyone has our phone number. We have all their phone numbers. There is nothing cooking at the moment.

Ryan Tomasello -- KBW -- Analyst

And as a follow-up, I am not sure if I missed it but can you give color on the 2Q impairments, which seems a bit outsized relative to recent quarters?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

So we had roughly two communities that made up about three quarters of those impairments, one in Illinois and one in suburban Philadelphia.

Ryan Tomasello -- KBW -- Analyst

And was it specifically related to changes in -- in underwriting or current demand levels in those communities. Any color you can provide?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

I think the one in suburban Philadelphia was reflective of current demand levels and the need to adjust price and I think the one in Illinois was reflective of a put more -- get there -- return the capital to the Company and put it to work elsewhere mentality and build through the situation we have. We have been struggling at that community for quite a while and it's time to get our money back and move on.

Douglas C. Yearley -- Chairman & Chief Executive Officer

I think the one in Illinois is a little more reflective of the market and the one in Philadelphia is not as Pennsylvania has done very well for us, it's a unique property that had a unique land plan, unique architecture and in retrospect was a bad land buy.

Ryan Tomasello -- KBW -- Analyst

Got it. Thanks for taking the questions.

Operator

The next question will be from Jack Micenko with SIG. Please go ahead.

John Micenko -- Susquehanna Financial Group -- Analyst

Hi, good morning. Wanted to just ask first about the other income line. The full year guidance down from I guess 2018 and I know you've got a big pipeline of apartments in the hopper, but is that just a function of a flat spot in timing of monetizing or is there some strategic shift here where maybe you're holding on more of these for operating income versus some of the merchant build gains, curious what your outlook is there?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Jack, that's a flat spot as you referred to it. We're working on three separate deals that will each generate $10 million to $20 million in gains in the future and that will be reflected in that line item. Two of these are not reflected in our guidances, our best estimate has been closing early in 2020, there is potential for them to move up, but we just didn't feel comfortable moving on.

John Micenko -- Susquehanna Financial Group -- Analyst

Okay. And then you know clearly more bullish on the M&A commentary on the call today. I guess, the question is, is it the bid side or the ask side, you talked a lot about diversifying your business both geography and product wise. I'm guessing the back half of 2018 was a reality check for some smaller builders but curious, how much of it's bid, how much of it asked, how much is it you as a Company saying, well we got to accelerate the diversification of our business versus sellers becoming more rational?

Douglas C. Yearley -- Chairman & Chief Executive Officer

I think, it's a combination of all of that. I think bid-ask was coming a bit, I think you're right that some smaller builders, got a little spooked by the market nine months ago. They are now -- they got through '07 to '011, they are now a decade older and they saw what happened last fall and they are thinking maybe this would be a nice time to move to Florida.

So I think, it's a combination of our appetite for sure. The bid-ask coming in and a few more sellers out there that are motivated.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

I think we have to find something that matches up well with us as well.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Always.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

We looked pretty hard in the Salt Lake market and the Portland, Oregon market. We had a builder under contract in Portland and it didn't work out. But in Salt Lake, we didn't find anybody, we felt like dancing with.

John Micenko -- Susquehanna Financial Group -- Analyst

All right, thanks, guys.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Welcome.

Operator

The next question comes from Megan McGrath with Buckingham Research. Please go ahead.

Megan McGrath -- Buckingham Research -- Analyst

Good afternoon now, thanks for taking the call -- question, just wanted to quickly to ask about, you mentioned going into, getting some property on the West Coast and City Living, you've been talking about that for quite some time. So just curious, what changed? Was it just timing of these properties coming on to market that you've been watching or has anything changed in that area that allowed you to make these purchases?

Douglas C. Yearley -- Chairman & Chief Executive Officer

We've been studying West Coast opportunities for quite a while now and have one, we think great one (ph) in LA. It's a low. It's a mid-rise infill property in a great location and then we have a second high-rise, right next to the new Amazon Campus in the heart of Downtown Seattle that we're excited about. The market comps there doing extraordinarily well. And I hope that's the first two of many on the West Coast.

Megan McGrath -- Buckingham Research -- Analyst

Great, thanks. And then I apologize if I missed this, I don't think we've talked about the source of the beat on the top line this quarter versus your guidance. So just curious if that coming in above the high end of your range. Was it any specific geography or area or was it pretty broad-based that you were able to close more than you had anticipated?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

I think, it was closing more than we had anticipated on a broad level. Our delivery guidance for Q2 included in expectations for continued elevated cancellations that we saw in Q1 and that didn't happen. So that was a positive development for us and the ops teams did a great job getting things over the finish line and close.

Megan McGrath -- Buckingham Research -- Analyst

Great, thanks very much.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

The next question comes from Carl Reichardt of BTIG. Please go ahead.

Carl Reichardt -- BTIG -- Analyst

Thanks, again. I wanted to ask about the -- the national sales event, Dough that you guys ran in April and trying to parse it, it looked like it was kind of a store by store basis. But could you give me some details about kinds of the incentives or what you were offering to consumers, given the pickup in orders in April relative to March, I have to believe, it had a pretty positive impact beyond just the organic improvement in demand.

Douglas C. Yearley -- Chairman & Chief Executive Officer

We always run the event in April, so it's been the same -- was the same in '18 as it was in '19, the incentives are very similar. It is a combination of vendor participation where some of our larger partners will offer upgraded flooring, upgraded kitchen cabinets, upgraded plumbing fixtures, at either a reduced price or no additional price and then we in selective locations will add our own little something to -- just to increase the overall impact, but it hasn't changed and it certainly has some impact on April. But that's not what I attribute to my optimism because we had the same program in '18 and as I said, our sales were up 11%, which was not the case in March over March, and February over February. The other little encouraging piece is Easter fell in April this year, which is a pretty quiet week for sales and last year, Easter fell in March.

So that makes me even feel a little bit better about the April numbers.

Carl Reichardt -- BTIG -- Analyst

Fair enough, thanks. And then just on the next quarter's orders and the comp, if I recall right, you had a fair amount of Metro Crossing orders in Q3. I might be wrong about that. Is that going to create a tougher comp for you in Q3 on orders, just because of that community, especially in California, or it might, I'm not sure, I might be wrong about that, but I'm just looking at the numbers, and that's what it appears to me will be the case.

Martin P. Connor -- Senior Vice President & Chief Financial Officer

California last year was down year-over-year 4% in orders in the third quarter. So that comps much easier than the first two quarter comps of this year. There is a little less inventory available to sell for Metro Crossing and California isn't quite as -- as strong this year as it was a year ago. Overall, I think our orders grew in the third quarter last year by 6%. So as I mentioned earlier, the comps for the third and fourth quarter get quite a bit easier for us as a Company on the whole.

Carl Reichardt -- BTIG -- Analyst

Thanks, Marty.

Operator

The next question comes from Alex Barron of Housing Research Center. Please go ahead.

Alex Barron -- Housing Research Center -- Analyst

Yeah. Thanks a lot. Yeah, I wanted to ask about the single-family rental business. If you could discuss a little bit more, I guess what is going to be your role in the partnership, are you going to be the builder or just the financial investor and what are the type of homes that you guys are targeting to build and what's the buyer demographic, if you can, are they going to have the Toll brand. I know there's number of questions there. But if you can just kind of address some of those?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Sure. The venture will be marketed as BB Living. It will not be branded Toll Brothers. Our role is yes, financial partner but also parental supervision of operations. We will be, we will be looking at land opportunities because it's in markets that we were in. We will be helping with architecture, we will be helping with construction. BB will play the lead role when it comes to management and lease up. The locations are primarily in master planned communities, large master planned communities that have a wide variety of price points and products now and the master plan developers are excited to bring in a single-family or town home product that looks the same as many of the other builders. The for-sale builders product. It will just happen to be a rental, the buyer demographic is primarily younger families.

But as I said, want to rent, but they want to raise a family, want to rent in the home and BB Living has had great success before us in Phoenix. We will now be joining them for future opportunities in Phoenix and expanding their operations into the markets I mentioned earlier.

Alex Barron -- Housing Research Center -- Analyst

Similar sizes. I guess the general builder community like let's call it roughly 100 units, that type of size?

Martin P. Connor -- Senior Vice President & Chief Financial Officer

So I think, I think these are going to be 1,500 to 2,000-square-foot homes in the $240,000 to $300,000 price point. If you were to sell them. That's not our intention, and these are in master plan communities in pods of 100 to 200 generally. And as Doug mentioned, BB is an expert in the Phoenix market and they're looking for us to help them expand their business to other markets, where we have a significant presence.

Alex Barron -- Housing Research Center -- Analyst

Got it. Okay, that's helpful. And then if I could ask one on the M&A side, I think today, if I recall, the only M&A you guys have done is mainly private builders and mainly to enter intra- market. So what would it take for you guys to consider something different like going down acquiring a public builder, what characteristics would be, I guess, would you be looking for there -- for to switch in that direction?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Alex, it would be similar to the analysis we've done on the 10 other builders we've acquired. So I wouldn't get hung up on whether it's private or public. It would be based upon the quality of the opportunity and our feeling of a good fit, and the ability to grow the Company and make more money.

Alex Barron -- Housing Research Center -- Analyst

Okay, great, thanks a lot.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

The next question comes from Justin Wen (ph) with Citi. Please go ahead. Please proceed. Mr. Wen. Your line is open.

Kira Sterling -- Chief Marketing Officer

Chad, I think we should move on.

Operator

All right. We'll move on to our last question of the day, which is a follow-up from Michael Rehaut with JP Morgan Securities. Please go ahead.

Michael Rehaut -- JP Morgan Securities -- Analyst

Thanks very much, appreciate it. Just wanted to ask about incentives and I know, you kind of addressed this in a couple of different ways during the call. And I might have missed exactly the full answer. But just wanted to try and get a sense when you looked at incentives on your orders during the quarter, if you could give us a sense of what it was on a year-over-year basis for the quarter overall on the orders? And how that year-over-year dynamic might have changed as you progressed from February to April?

Douglas C. Yearley -- Chairman & Chief Executive Officer

So Michael, our incentives currently are $34,000 on average. They were approximately $30,000 a quarter ago, and they were $22,000 a year ago.

Michael Rehaut -- JP Morgan Securities -- Analyst

And that's on orders not closings?

Douglas C. Yearley -- Chairman & Chief Executive Officer

Correct.

Michael Rehaut -- JP Morgan Securities -- Analyst

Great, thanks so much.

Douglas C. Yearley -- Chairman & Chief Executive Officer

You're welcome.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Doug Yearley for any closing remarks.

Douglas C. Yearley -- Chairman & Chief Executive Officer

Thank you, Chad. Thanks, everyone, have a fantastic holiday weekend.

Operator

Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Duration: 71 minutes

Call participants:

Douglas C. Yearley -- Chairman & Chief Executive Officer

Martin P. Connor -- Senior Vice President & Chief Financial Officer

Gregg L. Ziegler -- Senior Vice President & Treasurer

Kira Sterling -- Chief Marketing Officer

Trey Morrish -- Evercore ISI Institutional Equities -- Analyst

Paul Przybylski -- Wells Fargo -- Analyst

Timothy Daley -- Deutsche Bank -- Analyst

Kenneth Zener -- KeyBanc. -- Analyst

Michael Rehaut -- JP Morgan Securities -- Analyst

John Lovallo -- Bank of America Merrill Lynch. -- Analyst

Alan Ratner -- Zelman & Associates -- Analyst

Matthew Bouley -- Barclays -- Analyst

Mike Ising -- RBC Capital Markets -- Analyst

Scott Schrier -- Citi -- Analyst

Ryan Tomasello -- KBW -- Analyst

John Micenko -- Susquehanna Financial Group -- Analyst

Megan McGrath -- Buckingham Research -- Analyst

Carl Reichardt -- BTIG -- Analyst

Alex Barron -- Housing Research Center -- Analyst

More TOL analysis

All earnings call transcripts

AlphaStreet Logo

10 stocks we like better than Toll Brothers
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor , has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks  for investors to buy right now... and Toll Brothers wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

Motley Fool Transcribers has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.





This article appears in: Personal Finance , Stocks
Referenced Symbols: TOL



More from Motley Fool

Subscribe







Motley Fool
Contributor:

Motley Fool

Market News, Investing












Research Brokers before you trade

Want to trade FX?