This is a partial transcript from Your World with Neil Cavuto, May 29, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.
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BRENDA BUTTNER, GUEST HOST: One guy closely watching the situation in the Afghan region is Robert Toll. He's the chairman and CEO of Toll Brothers (TOL), the nation's leading builder of luxury homes. Today, Toll reported record earnings for the second quarter. The Pennsylvania-based company's earnings rose 19 percent, the highest for any quarter in its history.
Joining me now is Robert Toll. Well, congratulations to you, another great earnings quarter.
ROBERT TOLL, CHAIRMAN & CEO, TOLL BROTHERS: Thank you.
BUTTNER: But are you concerned about what is going on in that part of the world?
TOLL: Yes. I wouldn't say that it's the first thought in the morning and the last thought at night. But when you open your paper and you read about the possibility that these two huge nations can go to war with one another with nuclear weapons, it has got to be a concern.
I was asked this morning what concerns me. I think the questioner expected me to talk about management or finding more ground. A nuclear war would certainly impact all of our businesses and our lives a lot more than extending management, finding ground, worrying about interest rates would become trivial.
BUTTNER: Yes. I think we all learned that after 9/11, that all of this is paramount. But, you are right. It would effect your business in some significant way. I mean, just the uncertainty on Wall Street, the uncertainty of people to go out and buy homes.
TOLL: Sure. I would like to say that we are impervious to a whole lot of things because we have got the lots and there is such a constraint in lot supply in good communities within which one could find a home today. And there's such a virgining demand because of the growth in the population that we are going to do well no matter what. In the New York area, I would say can you imagine if I had 500 acres, upper Westchester, put a golf course community in? I don't care what would happened, I would be selling homes...
BUTTNER: And high-end homes too.
BUTTNER: You make the high-end stuff.
TOLL: But maybe that wouldn't be true if there were a couple of nuclear blasts, and it is something that has to concern us.
BUTTNER: Yes. Your stock has not concerned Wall Street at all. You've outperformed the homebuilding index by a mile. And I think you are up some like 38 percent so far this year. Are you going to keep up that kind of growth to make Wall Street happy?
TOLL: That's not up to us. I hope so. In terms of growth or stock price, that's not up to us.
BUTTNER: Yes, but they look at your earnings and they expect you to keep making, you know, the 19 percent and the record quarters and all that.
TOLL: Yes. It seems as though we will because our contracts were up 30 percent for the quarter over the same quarter last year, which was a record last year. Our backlog is $1.7-plus billion. The backlog won't be completed if we don't sell another home for about 12 or 13 months. So that gives you a pretty good view into what our earnings are going to be like, what our business is going to be like for the next 12 to 13 months, at least.
And we do expect to sell some more homes between now and the end of 12 or 13 months. And when you add that to the backlog, it seems as though we will continue to increase. The last one, three, five, seven, 10 years, no matter how you slice or dice it, we've had a compound annual growth in earnings each year of 29 percent. I can't suggest that we can continue that for the next 11 years, but I don't think we are going to be that far away from it for the next several years anyway.
BUTTNER: People are buying homes, no question about that. Robert Toll, thanks so much for joining us.
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